Each year, Walmart hosts a biannual investor summit. The investment community has an opportunity to hear from Walmart’s leadership about company performance, visibility in the upcoming year and insights into the evolution in strategy.
This year’s meeting felt different. It was somehow more exciting and robust and not simply because of the pandemic challenges explored. CEO Doug McMillon teed up the meeting in his opening remarks discussing how today’s Walmart is not the one of yesterday, and it’s not the Walmart of the future. It is one of evolution and adaptation. It was great to see the passion and verve from the team’s entirety around the idea that Walmart is “in the early stage of building a new business model” designed to put the consumer at the center and serve them through an integrated ecosystem of services and products.
BUSINESS MODEL TRANSFORMATION
Previously, Walmart’s leadership has focused on investments in different countries to fit the company’s growth initiatives best. This year they have taken it several steps forward and examined their capabilities and areas where consumers have unmet needs for which Walmart can uniquely provide solutions. Further, they identified areas where the company can generate better returns by addressing suppliers’ needs.
The road map laid out is much broader than traditional retail or e-commerce. It is one of service and services. We can expect to see more focused activity in healthcare, financial services and payments, and e-commerce supplier services such as advertising networks and fulfillment in the intermediate-term.
E-COMMERCE & AUTOMATION
E-commerce is now fully integrated into the operating P&Ls of the business. That should enable Walmart to achieve its objective of winning with the shopper in everyday stock-up trips and providing a seamless experience between digital and traditional purchasing. That will allow the shopper to have access to the options most convenient for them.
In support of this, Walmart outlined some of the ways they will do this in an economically sustainable way. They are moving expeditiously to streamline their associates’ processes and automate much of the high touch/low-value activity. A key driver of this is the scaling of their market fulfillment centers (MFCs).
Walmart will build the MFCs into some of the operating stores and other locations in its markets. By increasing and shifting capital expenditures from new stores and other brick-and-mortar investments into these initiatives, they will continue to identify and invest behind “next generation automation” to continue to drive service and efficiency.
Walmart found ways to meet the pandemic’s challenges and glean new learnings about its business model. Beyond the transactional and supply chain learning, company leaders learned more about their healthcare and financial services’ needs.
The company made it clear it expects to develop a vital advertising business. The goal is to build a top-10 media platform in the next five years through the Walmart Connect platform. The product will be an integrated model serving ads both on and off the platform and designed to help suppliers provide more targeted and meaningful messaging to shoppers.
We learned that Walmart focuses its efforts around four priority markets: Canada, China, India and Mexico. The overall idea is to scale the tech stack innovation from around the world into market right solutions. The intent is to build a customized business for each market and be powered by Walmart’s technology, IP and services.
The robust thinking presented at the meeting was riveting, focusing on systems-based approaches and developing complementary businesses that feed the flywheel. I encourage you to watch the discussion for yourself. It’s available at this link.
Clint Lazenby is the co-founder of Legacy Retail Solutions in Rogers. The opinions expressed are those of the author.