Walmart’s continued e-commerce growth, as evidenced in its most recent set of quarterly results, should give Amazon plenty to ponder, a leading analyst has said.
According to Walmart’s second quarter results, published yesterday, the Bentonville, Arkansas-based retailer saw e-commerce sales up 40%.
The retailer has also invested heavily in ensuring that the online sales process is a smooth, fluid experience.
“Much of this is down to improvements to the website, which is easier to shop, has a much wider assortment, and is now more connected than ever to services like in-store pickup,” said Neil Saunders, managing director, GlobalData Retail.
“From our data, the addition of more premium brands, including the Lord & Taylor initiative, is starting to have an impact as there has been a notable increase in the number of higher income customers visiting the site over the past couple of months.
“This is exactly the kind of result Walmart needs to achieve if it is to compete more effectively with Amazon.”
Pace Of Change
Saunders added that the pace of digital innovation at Walmart is also notable, with the group investing in its warehousing capabilities with a view to competing with its more illustrious online rival.
“The trial of automated picking capabilities in New Hampshire and of self-driving vehicles in Arizona are both signs that Walmart is on the front foot when it comes to emerging technologies,” he said.
“Equally, the JetBlack subscription service which allows customers in New York City to order items for same day delivery by text message has proved popular; and we see significant scope for future growth.”
Profit Decline
Saunders did note, however, that Walmart had a relatively weaker quarter in terms of profit, with operating income falling by 3.7%.
He said that the decline in operating profit is “concerning”, as it reflects “ongoing pressures from investing in lower prices, customer service, digital infrastructure, and store refurbishments, as well as increased labor and transportation costs. These pressures are unlikely to dissipate as the year progresses.
“As we have noted before, as painful as they are, the erosion of profitability and margins are necessary evils. Maintaining a price leadership position as well as ensuring the company is an omnichannel leader are clear priorities that require investment.
"These investments are being made and they are delivering growth, which we believe in a sign that Walmart is succeeding in securing its future as one of the world's leading retailers.”
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
