Walmart U.S. boss says ‘we think we have a good strategy’

Walmart U.S. comprises 68% of the retail giant’s total revenue and 82% of operating income so its financial health is closely watched. Walmart U.S. CEO John Furner said he and other top managers push for better customer service, selling more units, and keeping prices low.

Furner shared that sentiment at Tuesday’s (June 11) Oppenheimer Consumer Growth and E-Commerce Conference in a virtual chat with Oppenheimer analysts Rupesh Parikh. When asked about sustained inflation and a more promotional retail climate, Furner said consumers are more choosy about purchases.

“In early 2022, we saw consumers consciously switching products. And you can see that pronounced suddenly in the store. But based on what people are having delivered and our flexibility, convenience and other things that we have improved over the last few years, have made a difference in our ability to serve more of our existing customers more often with more units and then meet some new customers as well, which is great,” Furner said.

Since the pandemic, he said Walmart has seen a 2% shift to discretionary from non-discretionary spending.

“In other words, 2% more of our business is food and consumables than what it was before this period began. Fortunately, the business has grown,” Furner added.

He said fashion and beauty have come back and home goods are also rebounding.

“We manage inflation the best we can by keeping prices low for as long as possible, Then we work to keep them down through price rollbacks, 7,000 today, up 45% from a year ago,” Furner said.

He said Walmart will be among the first to take prices lower when inflation abates. He said consumers are smart and recognize value when they see it and that has resulted in a market share increase in private brands. Walmart has also been able to attract and retain higher-income consumers. Analysts wonder if that market share gain will be sticky as the economy improves.

“It’s our job to earn it and we think we have a good strategy. We wake up everyday knowing we have to execute very well or it will hurt us tomorrow. We have to be really good all year long,” Furner said.

While e-commerce is a growing part of the U.S. business, Furner said the segment continues to work toward profitability, but it’s not there yet.

“We hope to get there in one to two years as the number of customers we service continue to rise. We have blended three supply chains and have continued to automate fulfillment where possible. … We have 4,600 stores, many used as fulfillment centers and that puts the merchandise much closer to the customer,” Furner said.

He said the growing online marketplace to more than 400 million items and the services sold to sellers like fulfillment and advertising also help them grow sales as they deliver on time. Furner said home delivery is now outpacing store pickup for Walmart U.S. online orders.

Walmart continues to improve its search engine with AI to be more intuitive and return complete and accurate search requests such as “How do I decorate for a 7-year-old Unicorn theme birthday party?,” he said. Furner said this new search capability also allows for cross-merchandising across categories to solve customers’ requests.