Wal-Mart Stores is rich with cash but the retail giant said it uses discipline when deciding how to spend that money. Headlines from this week indicate Wal-Mart is doling out at least $320 million over the next three years to try and boost sagging sales in Brazil.
Brazil has been a disappointment for Wal-Mart over the past several years as the retailer failed to win significant market share against its competitors. The deep recession felt by the Brazilian people didn’t leave consumers seeking Wal-Mart supercenters nearly as much as Carrefour and smaller grocers. In the fourth quarter comp sales for Wal-Mart Brazil were down 4%, disappointing given the strong 8.9% results recorded by Walmart stores in Mexico and Central America in the same period.
Walmart International has said it plans to spend $320 million in Brazil by 2020 to upgrade store infrastructure in hopes of wooing back customers hit hard by a lingering recession. Some analysts have previously said Brazil might be a market Wal-Mart could exit given the troubles it’s experienced in growing market share.
IGD analysts recently noted that Walmart International is trying to re-energize its business in Brazil with a combination of store closures and increased investments in other store remodels as it tries to create a store network that’s better equipped for long-time success.
IGD said the Sam’s Club and the Maxxi (cash and carry) wholesale business have been the better performers in that market through the fourth quarter of last year. The analysts said Wal-Mart’s challenge is that it has a much smaller presence of the popular cash and carry stores than its rivals who have more marketshare than Wal-Mart.
“Consolidation of its distinct Brazilian operations around core banners and operations should provide new impetus to growth and drive efficiencies in the future, but in a competitive marketplace where broader economic growth remains hard to come by, Walmart will need to work hard to drive significant growth in Brazil,” IGD analysts noted.
BEAUTY BOX SUBSCRIPTIONS
Wal-Mart CEO Doug McMillon recently told Wall Street that one of his biggest challenges was flooding the engine with too many new ideas. But he’s also been an advocate for failing fast and piloting lots of ideas that seek to win the retailer favor with consumers, such as the new two-day free delivery for online orders of $35 or more.
The retail giant is also dabbling in the subscription model with its launch of the Walmart Beauty Box available through a partnership with Hello Subscriptions and IDR Marketing Partners. Consumers can sign up online for the subscription box which is delivered each quarter. The beauty box contents are curated by the partners with product samples including makeup, hair care and bath and body care items.
Walmart Beauty Box for Spring began shipping last week. The cost for the sample box is free but there is a $5 fee for shipping and handling. Walmart Beauty notes on the website the primary objective is to provide consumers with the information and product samples of popular products sold in its stores and online. Once a consumer signs up the subscription box is sent at the beginning of each quarter coinciding with the seasons. The subscription can be cancelled at anytime to stop the automatic seasonal shipments.
TWEAKING E-COMMERCE TALENT
On the heels of a somewhat deep corporate staff reduction, Walmart.com said this week it plans to increase hiring for its tech operations in the San Francisco Bay area.
“We are in the process of hiring hundreds of merchandise and category specialists for Walmart.com,” said Ravi Jariwala, a spokesman for Walmart.com. The retailer employs about 2,300 between the San Bruno and Sunnyvale locations.
Walmart eCommerce CEO Marc Lore recently announced a restructuring plan for the retailer’s online business segment which eliminated nearly 200 jobs around the Walmart.com business. But he said at the time there would be more investments made in people and technology throughout the year.
“We are shifting our investments and building up teams that can launch two-day shipping and other customer-facing initiatives that further enhance the digital shopping experience,” Jariwala said.
Analysts have largely supported the retailer’s efforts to invest in the online/omnichannel business. McMillon told analysts Tuesday that the supercenter fleet is running more profitably and having a true omni channel focus that marries online with stores is the retailer’s best chance to win against competitors.