On May 17, Walmart released its earnings for the first time since the reveal of its CapEx reallocation plan to invest in more digital innovation. This highly awaited release proved to be worth the wait as Walmart flaunted its surprising 6% YoY sales growth with Walmart U.S. e-commerce growing 37% and Walmart International e-commerce growing 49%. This is a successful lapping of high growth from Q1 2020 and shows the continued strength of Walmart’s e-commerce portfolio. Below are other key metrics to consider when assessing the retailer:
Source: Walmart Corporate
After a year of unprecedented growth, change and dynamic shifts in consumer behavior, Walmart’s release of its 2021 Annual Report provides clearer lanes and opportunities for vendors. It showcases not only Walmart’s growth in terms of earnings, but also lays a foundation for what horizons Walmart is looking to.
While EDLP continues to be the cornerstone of its business, convenience and omnichannel-focused strategy dominated innovative next steps for Walmart.
Walmart’s e-commerce Marketplace grew triple digits while the U.S. e-commerce channel as a whole grew by 37%. This creates several basket-building challenges, but the convenience of the channel has helped it become nearly 12% of all Walmart sales. Nearly all of Walmart’s capital expenditures will be shifted from store expansions to remodels and digital infrastructure this year. While we are seeing gains in share across non-food categories, this shift to e-commerce threatens in-store cross-selling opportunities for all products, especially while grocery traffic to stores is continuing to shift online.
Outside of brick-and-mortar and dotcom sales, Walmart’s increased focus on sustainability costs may pose roadblocks to vendors this year. With the retailer’s commitment to being carbon neutral by 2040, suppliers should expect Walmart to take big strides on plans, with the potential of additional costs associated with new regulations.
Top Opportunities for Suppliers in 2021
Walmart+ and Walmart Connect activations
Create e-commerce-optimized products and packaging
Expand the experiential aspect of digital
Consistent optimization of on- and offsite brand presence
Over the past few months, Walmart has made several announcements surrounding its initiatives to build a smarter e-commerce supply chain. In the previous quarter earnings release, Walmart announced an incremental CapEx investment of nearly $14 billion to be used for technology and supply chain advancements. While Walmart has not released the detailed plans for this investment, it has tested several technologies to help improve its fulfillment capabilities inside and outside of stores to help optimize the process for fulfilling digital orders. Along with these conversations of automation, Walmart has also implemented an aggressive compliance timeline in its Supplier Quality Excellence Program (SQEP) and rolled out several sustainability initiatives around packaging.
Source: Walmart Corporate