Walmart online sales surge, more shoppers at stores
BENTONVILLE, ARK. — Walmart saw online sales surge as it changed up its shipping offers, and drew more shoppers to its stores as well in the most recent quarter even as retail overall is more competitive.
The world’s largest retailer said Thursday that sales at established stores rose for the 11th straight quarter, and customer traffic rose for the tenth quarter in a row. That’s a contrast with many rivals that saw both those figures drop.
Online sales at Walmart.com rose 63 per cent, dramatically up from the 29 per cent growth in the previous quarter. Though the company has been buying up smaller Internet retailers, Walmart said a majority of the increase was through Walmart.com and was fuelled by changes in its shipping strategy and a discount for shoppers who pick up their online orders.
“We’re transforming to become more of a digital enterprise,” said Doug McMillon, CEO and president of Wal-Mart Stores Inc.
Walmart’s report stood out amid a largely gloomy environment for retailers, after chains like Macy’s, Kohl’s, J.C. Penney and Target saw declines in comparable-store sales. Even offprice retailer TJX Cos., which has done better than many as customers hunt for bargains, missed forecasts for that sales measure. And it underscores Walmart’s efforts to narrow the gap between itself and online leader Amazon, and widen the distance between itself and other competitors.
Retail bankruptcies in the United States are setting a record pace this year, and store closures are expected to exceed those of 2008 after the financial crisis. Research firm RetailMetrics, which tracks results from more than 100 chains, said overall they are expected to record a flat increase in revenue at established stores for the quarter, the worst performance since the third quarter of 2009. Excluding Walmart’s results, there would be a 0.8 per cent decline.
“Walmart is effectively competing in a tough retail environment, and given its size, scale, and leverage will be able to stay the course on the current strategy,” Stifel analyst Mark S. Astrachan wrote in a note.
The Bentonville, Ark.-based company has retooled how it operates online, as customers get used to free shipping and other enticements that add costs and hurt the bottom line. It has also accelerated that shift with its acquisitions.
Walmart spent more than $3 billion for Jet.com last year in its bid to lure younger and more affluent customers. With Jet.com founder Marc Lore installed as head of Walmart.com, it bought ShoeBuy.com, outdoor gear seller Moosejaw and trendy clothing seller ModCloth. The clothing sites are operating as standalone operators, separate from Walmart.com, and appeal to younger shoppers.
The company is still looking for startups to buy. Since Lore joined the company, the number of items available, including on its third-party online marketplace, has risen to more than 50 million. That’s up 10 million from a year ago. Walmart is working to accelerate the integration between Walmart.com and Jet.com, and trying to take advantage of its scale in areas like shipping.
McMillon said that while the acquisitions have garnered lots of attention, “the plan in e-commerce is not to buy our way to success.”
“The majority of our growth is and will be organic,” he said. “The acquisitions are helping us speed some things up.”
Walmart is aggressively trying to compete with Amazon’s juggernaut Prime membership, scrapping a fee-based shipping program test earlier this year in favour of free, two-day shipping for online orders of its most popular items with a minimum purchase order of $35. Lore told reporters Thursday that Walmart customers are placing more orders and spending more than before.