Walmart - Mike Mozart

Walmart Expects Big Gains in Online Sales Next Year

October 13, 2017         By: Steven Anderson

Walmart will soon be a store chain in flux, according to the latest word of an investor meeting. Company executives are planning cost-cutting measures that will ultimately provide more resources on hand for store improvements and online sales operations. With these in mind, the company hopes to remain competitive—likely with Amazon and similar ventures—and expects online sales to represent a much bigger part of its revenue profile. A 40 percent bigger part of revenue, in fact, in 2018.

The plan doesn’t exactly look like it will mean a lot of job losses; reports suggest new store openings will be kept to a minimum, and expenses will be reduced to “a percentage of sales.” While Walmart plans to open just 25 new stores in the United States, it’s planning significant overhauls of current stores, and stepping up things like home grocery delivery. It’s also looking for online sales to play a bigger role, reaching the aforementioned 40 percent boost.

CEO Doug McMillan noted that he expects the “vast majority” of grocery shopping to continue to take place in brick-and-mortar stores, and that it will continue so to do for some time to come. However, McMillan is also said to be putting more investment into delivery operations, bringing in third-party services to help with that last-mile connection.

Walmart’s already made quite a few moves on the online side of things; remember the whole “keep it” program that’s still in the works? Easier online returns are definitely a help here, sufficiently so that even Amazon’s looking into operations like that to keep shoppers in the fold. The “return to Kohl’s” concept is a great move and one that’s likely to keep shoppers happy. Walmart can keep pace here, thanks in large part to its incredible physical network of stores. It’s not surprising that Walmart is slowing construction—already plenty of people live within a short drive of Walmart—but upgrading some of these older stores will likely be helpful. No one really wants to shop in a dingy old wreck of a store; I remember terrible experiences of K-Marts over the last 10 years.

Walmart may well be able to compete going forward thanks to its sheer mass and willingness to adapt to changing conditions. Only time will tell if all this is enough, though.