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Walmart’s new model

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BENTONVILLE, Ark. — Wal­mart will double the number of U.S. curbside locations next year where online shoppers can pick up groceries and other merchandise, hastening its transformation into a channel-agnostic retailer, company executives said at Walmart’s annual meeting with investors this month.

At the same time, Walmart is scaling back new store growth in the U.S., with plans for just 25 in the fiscal year beginning February 1. About 15 of the new stores will be Supercenters.

“We think the future is a combination of digital and physical retail,” chief executive officer Doug McMillon said during his presentation. “Customers are shopping in-store, online, with apps and mobile, a little with their voice and, in time, AR [augmented reality] and VR [virtual reality] and whatever comes after that. And they’ll do it seamlessly. … The same person will shop in different ways without thinking about channels. It’s all just shopping at Walmart.”

Walmart forecasts a 40% increase in digital sales next fiscal year. E-commerce is expected to be a driving force in a 3% rise in net sales.

McMillon and his team intend to hit their sales targets by growing comparable-store sales in lieu of new store growth. The company is focused on remodeling stores, and it intends next year to bring about 500 stores up to date, Walmart U.S. CEO Greg Foran told investors.

Foran also said Walmart wants to add another 1,000 locations that let shoppers buy online, have store employees fulfill the order and then drive to the store at their convenience to pick up their groceries. Walmart now has 1,000 stores with curbside pickup capabilities, which Foran said are popular with shoppers and provide a halo effect to the stores, which run more efficiently and do a superior job managing ­inventory.

Additionally, Walmart sees online grocery shopping as a key to attracting shoppers who go on to order cosmetics, apparel and other items. McMillon noted that customers who shop online and in stores spend twice as much as those who shop solely in stores.

Marc Lore, head of Walmart U.S. eCommerce, told investors that his team has made a number of moves to help the company operate more efficiently and become more customer-centric.

The team is adding as many as 50 category specialists each month to merchandise and oversee product sales online, and manage the top 1 million items that are most ordered online to ensure the retailer has the right mix while offering great values and quality products.

Walmart in August announced a partnership with Google that allows voice-activated shopping for Walmart items via Google Assistant, the virtual assistant that resides on devices such as the Google Home smart speaker. Consumers can utilize Walmart’s Easy Reorder feature through an integration with Google’s shopping service to buy more than 2 million Walmart products.

Earlier this year, Walmart revamped its shipping program, and it now offers free, two-day shipping for online orders of its most popular items with a minimum purchase order of $35. And the company is testing such concepts as home delivery by employees and using third-party services such as Uber and Lyft to make deliveries.

“In summary, the strategy is very simple,” Lore said. “We’re going to be maniacally focused on just nailing the fundamentals. We’re going to play offense by leveraging unique assets. And we’re going to be focused on innovating for the future.”

Lore said that he expects the online business will become profitable as it builds scale and continues to leverage Walmart’s massive supply chain.

Meanwhile, Walmart continues to invest in its e-commerce platform, its stores and employees in the service of “making every day easier for busy families,” McMillon said.

“They’re the center of the bull’s eye,” he said. “They’re more connected. They’ve embraced mobile in a big way. In fact, globally, mobile commerce has grown by about 80% in just two years. The way I think of it is that technology is basically being hired by the customer to do anything they don’t want to do. Imagine any friction in the shopping experience. Technology is going to be aimed at taking that out of the system.”

McMillon added, “We are well positioned to win the future of retail, and I wouldn’t trade places with anyone.”


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