Walmart’s Earnings Release and Growth Plan
In late February, Walmart released its fourth quarter earnings, which underperformed against Wall Street expectations with e-commerce growth at 69% and same-store sales at 8.6%. Company statements provided some insights into Walmart’s future, with the company saying it expects to use this year to build the base for an entirely new business model, setting up Walmart for future success leaning on omnichannel retail. Walmart plans to expand its capital expenditure by nearly $4 billion to automate its supply chain and expand capacity for store pickup and delivery options to stay ahead of increasing demand. Along with this expanded fulfillment, Walmart officials released several statements pointing toward expanding healthcare services, subscription benefits and marketing opportunities within its Walmart Connect team.
In the coming months, Walmart is expected to roll out several advancements that will replace or renew outdated systems and structures that hinder its growth. Although the specifics of these changes have not yet been released, suppliers should be ready to act on new opportunities as they surface. To prepare for changes and shifts to more streamlined systems, suppliers need to strategically focus on how digital sales now compare to overall sales and where they plan to expand their digital presence or leverage digital for brick-and-mortar sales. Along with this strategic plan to provide a basis for decision-making, suppliers need to stay in the know to remain ahead of competitors and maintain category share or capitalize on new growth opportunities. Our team at Sage Tree will continue to provide the most up-to-date information on changes for “the new Walmart” and information on what it means for your team.
Walmart Simplifies Search Advertising
Walmart is making it easier for brands and advertisers to manage their search campaigns by simplifying the way search ads are purchased and served across Walmart.com and Walmart Pickup & Delivery (OPD). Starting March 1, brands will no longer be required to choose whether their ads serve on Walmart.com or OPD. Search ads will automatically serve in the most relevant placements across the entire platform. As a result, omnichannel reporting will be available. Walmart will also roll out additional Display Campaign and Creative Creation capabilities and increase brands’ overall control of audience targeting. With Walmart and The Trade Desk’s partnership, Offsite targeting will still be a managed service, but expect demand-side platform (DSP) capabilities to grow exponentially with this new connect.
In 2020 we saw Walmart’s heightened focus on an omnichannel solution for its shoppers. With the state of the world accelerating the use of digital platforms by at least five years, Walmart continues rising to the challenge of rolling out changes to better meet the needs of today’s shoppers. The integration The Trade Desk with Walmart Connect, will provide Walmart’s access to huge amounts of shopper purchasing data (both digital and in-store) that have not been captured effectively in the past. With 150 million visits to its stores, website and app each week, Walmart is crafting tools to support and drive businesses across all channels. To ensure you fully capitalize on this opportunity, brands already invested with Walmart Media Group (WMG)/Walmart Connect should transition to using Walmart Connects self-service platform.
Walmart Announces Savings for Brands Joining Marketplace
Walmart announced a new program to push and scale its Marketplace. New-Seller Savings offers 30 days of commission-free sales to new sellers who apply to Walmart Marketplace by March 31 and go live by May 1. Walmart has made going live on Marketplace even more attainable for brands who use Shopify, and now BigCommerce, to upload their active assortment directly through the portal. For brands interested in learning more, Walmart is hosting a webinar on March 18.
Our team has seen success with brands who have adapted a “hybrid” model of selling as both 1P and 3P Marketplace sellers. This “hybrid” model allows brands to sell a broader assortment, focusing on items not yet in brick-and-mortar stores. New-Seller Savings also allows brands to apply for Walmart Fulfillment Services (WFS) — Walmart’s option for two-day Marketplace shipping. With competition for physical and digital shelf space higher than ever, turning to Walmart’s Marketplace allows for agility, a broader assortment and potential to bring that growth to your in-store merchant team as an option to grow 1P assortments long term.
Walmart Enhances Focus on Social Change and Sustainability
Walmart is the largest employer in the country. At this pivotal time, 59% of shoppers believe retailers should take a stand on social justice issues. In response to this elevated desire for transparency on socioeconomic issues, Walmart collaborated with McKinsey & Company to fund a report titled “Race in the Workplace: The Black Experience.” The study both qualitatively and quantitatively details the employment challenges Black Americans face across the private sector. Walmart also pledged $14.3 million in grants to 16 nonprofit organizations and an additional $3 million to OneTen, a coalition of corporations in the U.S. working to “upskill, hire and advance one million Black workers over the next 10 years into middle-skills jobs.”
Walmart also announced the nine winners of the “Beyond the Bag Challenge.” The goal of this initiative — spearheaded alongside Target and CVS — is to accelerate the pace of innovation meant to move beyond plastic bags to viable, sustainable solutions. The winners will receive funding to help test, pilot and scale their efforts. Walmart Mexico announced 72% of stores were no longer providing plastic bags by the end of December 2020. In the U.S., the retailer recently launched a bagless pilot in Vermont.
More than ever consumers are choosing to vote with their dollars. Taking steps now to clearly call out sustainability and other positive impacts of your brand will be imperative for the conscientious shopper.
Did You Know?
Digital commerce has accelerated beyond retailer websites and apps. Brands should meet shoppers where they are, looking beyond the walls of the store or site to connect with younger shoppers on top social media platforms. Ask us about our Social Commerce solutions!