Walmart flexes its muscle against Amazon
Walmart, armed with grocery and other online services, is proving it can do battle with Amazon.
The world's largest retailer delivered strong third-quarter results Thursday, extending a streak of sales growth into its 11th straight quarter that showed it's pulling shoppers online and in store. It also raised profit expectations for the year heading into the holiday shopping season.
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. But they are also benefiting from the misfortunes of others. Toys R Us has gone out of business, while the bankruptcy of Sears is creating more opportunities to grab sales.
Walmart sales were strong in such areas as fall seasonal merchandise and fresh food. That helped sales at stores open at least a year rise 3.4%, a bit slower from the previous quarter's 4.5% 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 1.2% increase in customer traffic and a 2.2% increase in transactions.
Walmart has been expanding its online business and 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.
Under Walmart U.S. CEO Greg Foran, the retailer 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 workers who are taking on new roles or redefined responsibilities while using scanning robots and other automation.
Walmart is deploying giant pickup towers that spit out online orders in hundreds of its stores. Customers can now also better find items in the store because of digital maps on their smartphone. Workers, armed with apps on their mobile device, are also 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 and at the same time it is going to help us be much more precise," said Foran.
Still, he acknowledges it's facing stiffer competition from Amazon as well as other traditional chains like Target this holiday season. Consulting firm Bain & Co. 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.
In fact, in the free shipping arena, Walmart found itself the laggard during the start of the holidays. Target announced last month that for the first time it was getting rid of its $35 threshold for two-day delivery for the holidays. That move was followed by Amazon, which announced earlier in the month that it was going to make two-day shipping available to all shoppers including non-Prime customers, without the $25 spending requirement.
Amazon is also expanding its cashier-less physical stores, pushing Walmart and others to speed up checkout, a source of frustration for many shoppers. In time for the holidays, Walmart has rolled out a program that allows its staff to check out customers and provide receipts right on the spot in the busiest sections of the store. Foran told The Associated Press that it's looking to bring back Scan & Go, which allowed shoppers to scan items while they shop with their own personal device or a Walmart device and walk out. It had been shelved twice after customers found it too clunky.
The company on Thursday posted third-quarter earnings of $1.71 billion. The world's largest retailer posted revenue of $124.89 billion, about in line with forecasts.