Wal­mart sees the fu­ture and it is dig­i­tal

El Dorado News-Times - - Business -

NEW YORK (AP) — Wal­mart is all about on­line, an­tic­i­pat­ing dig­i­tal sales next fis­cal year will rise about 40 per­cent and that it will dou­ble the num­ber of U.S. curb­side lo­ca­tions for on­line gro­cery shop­pers at its stores.

But the world's largest re­tailer con­tin­ues to scale back new store growth in the U.S., with plans to open only 25 in its fis­cal year 2019, which ends Jan­uary 2019. That com­pares with open­ing 230 new U.S. stores dur­ing fis­cal 2016.

The re­tail be­he­moth is pre­dict­ing net sales growth at or above 3 per­cent, driven by on­line sales and growth from ex­ist­ing stores for the next fis­cal year.

The com­pany re­it­er­ated its per-share earn­ings guid­ance for next year and launched a two-year, $20 bil­lion share re­pur­chase pro­gram.

Shares rose more than 4 per­cent on the news

"No doubt we are in a trans­for­ma­tional pe­riod of his­tory," said Doug McMil­lon, CEO of Wal­mart Stores Inc., in an ad­dress Tues­day to in­vestors at an an­nual meet­ing in Ben­tonville, Arkansas. "Our fu­ture is look­ing more dig­i­tal."

The re­tailer is ar­mor­ing up on­line to take on Ama­zon. com and more tra­di­tional ri­vals, like Tar­get. Wal­mart paid more than $3 bil­lion for on­line re­tailer Jet last year to speed its evo­lu­tion. It's been ac­quir­ing smaller play­ers like ModCloth, Moose­jaw and Bono­bos. It's also de­ploy­ing dig­i­tal kiosks called Pickup Tow­ers at a hun­dred of its stores which spit out prod­ucts bought on Wal­mart.com. But it has an eye on ex­pand­ing on gro­ceries on­line, an un­der­served mar­ket. Wal­mart has fast ex­panded the num­ber of U.S. stores that al­low on­line gro­cery shop­pers to pick up or­ders at the curb. Cur­rently 1,000 U.S. lo­ca­tions are par­tic­i­pat­ing.

Wal­mart is also test­ing the idea of a new ser­vice in Sil­i­con Val­ley that lets a de­liv­ery per­son walk into shop­pers' homes with in­ter­net-con­nected locks when they're not there to drop off pack­ages or put gro­ceries in the fridge.

The com­pany went live with voice-ac­ti­vated shop­ping with Google in an­swer to Ama­zon's Alexa-powered Echo de­vices. Wal­mart said cus­tomers can now start shop­ping for more than 2 mil­lion Wal­mart items via Google As­sis­tant as well as Google Ex­press and its app. Wal­mart an­nounced its part­ner­ship with Google in Au­gust.

And start­ing next month, re­turns may be get­ting eas­ier. Cus­tomers can scan goods they no longer want with a smart­phone and drop them off at a cus­tomer ser­vice desk. Wal­mart says that will take 35 sec­onds or less. Re­turns right now take about four times that, not in­clud­ing any wait in line.

Ear­lier this year, Wal-Mart revamped its ship­ping pro­gram and now of­fers free, two-day ship­ping for on­line or­ders of its most pop­u­lar items with a min­i­mum pur­chase or­der of $35.

Wal­mart says it's crit­i­cal to get shop­pers to spend both on­line and in stores. Store shop­pers who be­come on­line cus­tomers spend nearly twice as much over­all. And those who use on­line gro­cery pickup buy more over­all.

But as Wal­mart moves into the dig­i­tal space

dom­i­nated by Ama­zon, Ama­zon is en­croach­ing on the phys­i­cal realm to win over more cus­tomers.

In Au­gust, Ama­zon closed on its $13.7 bil­lion pur­chase of Whole Foods Mar­ket and quickly low­ered prices on key prod­ucts. It also cut a deal with Kohl's that al­lows for the re­turn of Ama­zon goods at stores in Los Angeles and Chicago, which are pack­aged and shipped out by work­ers there.

Moody's lead re­tail an­a­lyst Char­lie O'Shea said Wal­mart is giv­ing shop­pers a "com­pelling on­line al­ter­na­tive to Ama­zon" and views its on­line sales fore­cast as an "im­pres­sive goal, es­pe­cially on the heels of the 30 per­cent (growth) out­lined at the 2016 in­vestor meet­ing, which at the time seemed as­pi­ra­tional."

Wal­mart has in­creas­ingly linked its mas­sive fleet of stores with on­line ser­vices, but the em­pha­sis on ex­pand­ing the num­ber of stores it runs, at least in the near fu­ture, has ebbed. Wal­mart ex­pects to open less than 15 Su­per­Centers and fewer than 10 Neigh­bor­hood Mar­kets in the U.S. next year. It opened 40 new su­per­centers this year, down from 60 su­per­center open­ings the last fis­cal year.

"The re­de­ploy­ment of sig­nif­i­cant cap­i­tal ex­pen­di­ture dol­lars from new stores in the U.S. to on­line im­prove­ments and store re­mod­els, es­pe­cially the 1,000 store in­crease in in-store gro­cery pick-up lo­ca­tions, will help Wal­mart main­tain its mar­ket-lead­ing po­si­tion in the US gro­cery seg­ment," O'Shea said.

Shares rose $3.60 to $84.13 Tues­day.

Alan Diaz/AP

Plans: Cus­tomers walk out of a Wal­mart store in Hialeah Gar­dens, Fla. Wal­mart is ex­pected to pro­vide an up­date about its ex­pan­sion plans and is­sue an out­look for rev­enue and earn­ings at its an­nual share­holder meet­ing

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