Walmart’s Omnichannel Focus Driving Up Sales

Walmart just might be proving that traditional, big box retailers have a chance in the digitally shifting retail ecosystem.

And while the retailer has its share of challenges, it’s managed to show it can shift its focus in order to better connect its online and offline channels.

Last quarter, Walmart posted a slight sales boost but failed to meet expectations. That caused Walmart to adjust its guidance for the rest of the year in order to match expectations. While Walmart’s forecast may have come down, the retailer managed to hit on the points it needed to and posted better than expected earnings.

Walmart’s Q3 earnings, posted Tuesday morning (Nov. 17), showed that same-store sales and a rise in foot traffic has helped the retailer drive up sales — which produced an earnings report that shot up its stock 4.8 percent just before noon EST. Sure, Walmart isn’t out the woods in terms of maintaining growth, but its most recent earnings report could give investors a sigh of relief for the moment about the retail slump woes.

“Expectations have come down a lot, and they met them,” Meredith Adler, an analyst at Barclays Capital in NYC, told Bloomberg.

While profit is still down for the quarter, as net income fell 11 percent from last year’s Q3 to $3.3 billion, Walmart’s sales saw growth for a fifth straight quarter with an added $2.7 billion in sales. Sales at the U.S. stores were up 1.5 percent on the quarter and traffic increased 1.7 percent.

“We are pleased with the continued sales growth in Walmart U.S. and in our international business. Strong traffic and our fifth consecutive quarter of positive comps in Walmart U.S. stores show we are taking the right steps to win with customers. Although we still have work to do, we are positioning for sustainable growth through investments in people and technology to deliver a seamless shopping experience at scale,” Doug McMillon, Walmart’s CEO, wrote in the company’s prepared release.

The real sweet spot for Walmart this quarter has been its store overhaul focus, but also its attention toward its digital products. And, once again, eCommerce also continued to be another strong focus for Walmart as online sales and GMV increased roughly 10 percent on the quarter. Despite the efforts put in to building eCommerce, McMillon noted that online sales are not as strong as the retailer wants, and he emphasized that Walmart will “continue to strive to balance sales growth and profitability.”

“We’ve accelerated our expansion of online grocery pickup and we’ve seen that customers who start using online grocery spent nearly 50 percent more than similar customers who shop only in stores.”

But that could shift as Walmart’s online grocery shoppers are even proving to be Walmart’s best customers. McMillon also gave insight into Walmart’s app growth.

“We’ve accelerated our expansion of online grocery pickup and we’ve seen that customers who start using online grocery spent nearly 50 percent more than similar customers who shop only in stores. This is the customer we’re going after. The shopper in our sweet spot who accesses Walmart in multiple ways,” McMillon said in the earnings call.

As for its online grocery pickup plans, McMillon indicated that Mexico and Canada are next for the retailer to test out similar programs. Walmart also may look to build a similar platform to help grow its presence in China.

“We also began the chain-wide use of a mobile service that can tell us when a customer is coming to pick up an online general merchandise order before they even walk into the store. We launched a new digital wish list that you can build at home or simply by scanning items in a store. We expect more than 210 million visits to our app in November and December up from 18 million in 2012,” he added.

Walmart is building off its Q2 eCommerce momentum as eCommerce sales last quarter increased globally by 16 percent, and eCommerce GMV increased 18 percent. In Q2, Walmart migrated all of its customers to the new cart and checkout technology platform. And through the implementation of responsive design, Walmart gave its digital platform an overhaul so that its site better adapts to the customers’ needs based on what devices they are using.

That vision continued through this quarter, as mobile was specifically highlighted in the company’s earnings call with analysts. New features mentioned include mobile check-in capabilities and other omnichannel opportunities that are helping Walmart connect with their audience across channels.

Now, however, Walmart is focused on technologies like mobile services that alert the retailer when an online shopper is coming into the store to pick up those goods. Walmart has also rolled out a digital wish list that customers can create at home or while in-store. Additionally, it’s introduced sensing technology that alerts associates when members drive into the parking lot.