Walmart Sets Its Sights On More Than Just Selling Stuff

In Walmart’s earnings call for the full year ending January 31, 2022, the company discussed the major wins for 2021 and what we can expect leading into 2022. Walmart’s full-year revenue was up 2.4% from the prior year reaching $572.8 billion, primarily driven by strong performance in the U.S. market including stores, e-commerce and clubs. While company executives discussed the details of the performance both for the fourth quarter and the fiscal year which runs February 2021 through January 2022, they also discussed how a more diversified business model will help drive future growth and provide a stronger bond with its customer base. 

Walmart U.S. showed strong year-end sales 

Comparative (comp) sales for the U.S. were up 6.4% versus last year with e-commerce up 11%. Sam’s Club sales ended the year up 9.8%. Membership revenue and other income were up 27%. Walmart International’s net sales decreased 16.8%, negatively affected by company-related divestitures. 

Sam’s Club sales in fourth-quarter showed strong performance in apparel and home 

While total company fourth quarter (Q4) revenue was relatively flat to last year (up only 0.5%), Sam’s Club had remarkable performance delivering a 10.4% comp sales increase for Q4. Sam’s Club merchandise categories for the fourth quarter were very strong in apparel and jewelry, a trend that was seen across the U.S. market for 2021. Toys, tires, seasonal and grocery were also strong in Q4 with sales increases in the mid-teens. Consumables (laundry, home care, pet supplies and baby care) experienced high-single-digit increases. Transactions in the warehouse club were up 7% with a 3.2% increase in transaction value. For the Walmart store locations in the U.S., sales were up 5.7% while the number of transactions grew by 3.1%. Walmart International revenue was down 22.6%.

A diversified business model is the new normal for retail

Doug McMillon, CEO of Walmart, said, “Building a seamless omnichannel experience for customers and prioritizing convenience for them is critical. Our stores have become hybrid, they are both stores and fulfillment centers.” The future of Walmart is to broaden its product and service offerings including retail, financial services and health/wellness. 

McMillon discussed Walmart’s focus of serving families more broadly with a mix of products and services that are complementary. These include the recently announced fintech start-up, ONE, expansion of delivery services, growing e-commerce marketplaces, expanding the health and wellness business and growing its advertising revenue. 


Financial services provide customers with access to money management tools

John Furner, President and CEO of Walmart U.S., discussed the importance of providing affordable financial solutions to customers who otherwise would not have easy access to these types of services. The recently announced acquisition of EVEN and ONE (pending approval) will provide customers with a financial services app to holistically manage finances in one place.

E-commerce marketplaces continue to grow

Walmart added over 20,000 new sellers to the U.S. marketplace platform last year and plans to add nearly 40,000 more this year. The company plans to continue to expand its fulfillment services which last year grew by over 500%. The online assortment for e-commerce and marketplace boasts over 200 million items, providing more product selections for customers. 

Delivery services are growing fast, adding convenience and staying green

Walmart InHome, a service that delivers products and groceries into a customer’s home, is being expanded to reach 30 million homes in the U.S., up from 6 million. To support the expansion, the company is adding roles for more than 3,000 delivery drivers and building out a fleet of all-electric delivery vans with a goal of a zero-emissions logistics fleet by 2040.

A focus on helping customers live better

Health and wellness was the fastest-growing Q4 comp business and the company will continue to expand these services including pharmacy and telehealth. Furner stated, “The combination of retail, financial services and health and wellness allows Walmart to live its purpose which is to help customers live better.”

Advertising becomes a core business revenue stream for the future

The traditional retail business model is changing and one area where Walmart is looking to further expand is by selling advertising to brands in what the company calls Walmart Connect. Advertising is a key initiative for the future to drive incremental revenue, and it works synergistically with the growth of the e-commerce business. McMillon discussed its global advertising business reaching $2.1 billion, and in the U.S. active advertisers using Walmart Connect increased 136%. Connect allows buyers, sellers and suppliers to efficiently interact. The large seller base has access to the customers, who gain a better awareness of sellers and products available. 

The future for Walmart includes a mix of products and services

When asked about the future of Walmart, McMillon said, “Social commerce, wearables, AR and mixed reality will be a part of the future for Walmart.” McMillion discussed the importance of creating synergies around these various products, services and experiences to create magic for the customer. “Reducing friction and costs makes it more delightful for customers to transact with Walmart.” 

A diversified business model including retail products, services and marketplaces, financial solutions and health/wellness services is the focus for the future and will provide long-term growth for the company. For the upcoming fiscal year starting in February 2022, Walmart is providing modest guidance for 3% revenue growth.

The Tycoon Herald