Walmart sales strong, both online and in stores

Consumer confidence benefits retailer Sales report suggests retailer’s efforts to improve customer experience are paying off.

ANNE D’INNOCENZIO

Walmart reported strong sales online and in its established store sales for its fiscal third quarter and raised profit expectations for the year heading into the holiday shopping season.

The report Thursday suggests that efforts by Walmart to improve the experience of its customers is paying off in its battle with online behemoth Amazon.

Like other retailers, Walmart is benefiting from a strong job market and rising consumer confidence. Home Depot and Macy’s raised annual profit expectations this week. They’re also benefiting from the misfortunes of others. Toys “R” Us and Bon-Ton Stores have gone out of business, while the bankruptcy of Sears Holdings Corp. is creating more opportunities to grab sales.

Walmart sales were strong in such areas as fall seasonal goods and fresh food. That helped sales at stores open at least a year rise 3.4 per cent, a bit slower from previous quarter’s 4.5 per cent at Walmart’s U.S. division, which marked its best performance in more than a decade. The measure, an indicator of a retailer’s health, was helped by a more 1.2 per cent increase in customer traffic and a 2.2 per cent increase in transactions.

Since buying Jet.com for more than $3 billion (U.S.) two years ago, Walmart has been expanding its online business by acquiring brands and adding thousands of items. It’s also been ramping up grocery delivery and pickup options. Grocery pickup is now offered at nearly 2,100 of its 4,700 U.S. stores, while grocery delivery is available in nearly 600 locations. Walmart has also revamped its website with a focus on fashion and home furnishings. That all helped to drive a 43 per cent increase in online sales in the U.S. during the latest quarter. That was up from a 40 per cent increase the second quarter period and a 33 per cent increase in the first quarter.

“We’re feeling confident going into this holiday season,” Walmart U.S. CEO Greg Foran said during an exclusive interview and tour last week at a Walmart store in Houston. “I think the standards, the flow of merchandise, our pricing are feeling better than it was a year ago.”

Walmart is promising more to come. Under Foran, Walmart is creating a tech-powered shopping experience at its stores, while transforming them into efficient distribution hubs that can fill online orders to reduce shipping costs and speed up deliveries. To do that, Walmart is doing more extensive training for workers who are taking on new roles or redefined responsibilities while using scanning robots and other automation.

Online shoppers can use its giant pickup towers which spit out online orders. Customers can now also better find items in the store because of digital maps on their smartphone. Workers, armed with new apps on their mobile device, will also be able to manage routine tasks, freeing them to serve the customer or check them out in key areas of the store.

“We can provide a much better customer experience because we are in stock of the right item at the right time; at the same time, it is going to help us be much more precise,” he added.

Still, Foran acknowledges it’s facing stiffer competition from Amazon as well as other traditional chains like Target this holiday season. Consulting firm Bain & Company predicts that Amazon in the U.S. will outgrow the market and capture up to half of all e-commerce sales by the end of the year, making it even stronger than a year ago. Bain estimates that Prime members increase their average monthly spending on Amazon by more than 50 per cent during the holiday period.