NEW YORK – Walmart will continue to invest in e-commerce and automation in 2024, a year that could bring deflation and falling prices.
Even after the COVID-19 pandemic, the number of digitally active Walmart customers continues to increase, said John D. Rainey, chief financial officer, Dec. 6 at the Morgan Stanley Global Consumer & Retail Conference in New York.
“We’ve been known for being a brick-and-mortar retailer,” he said. “We’ve done that well for 60 years, but we are punching below our weight in the e-commerce space, and that’s why we’re investing as much as we are there because we certainly see that customers want to shop us that way.”
Digital sales are doing especially well in China.
“That is a business that for us is roughly 50/50 in terms of physical and digital,” Mr. Rainey said. “Some of our best-performing stores are in China. We’ve got a value proposition particularly in grocery that really resonates particularly with our membership in Sam’s (Club stores) over there.”
Scan-and-go, where consumers use their mobile phones to scan items and skip checkout, has become popular at Sam’s Club.
“We have roughly about one in four, almost one in three, transactions (that) are done this way,” Mr. Rainey said.
Automation at Walmart is increasing in storage and retrieval of inventory, including at distribution centers. Automating pallet storage brings a “huge savings,” Mr. Rainey said.
Mr. Rainey was asked about his views on deflation prospects in 2024.
“General merchandise is deflating today in the 5% to 6% range,” he said. “It’s been a pretty consistent trend, and prices are getting to a point where they are lower than two years ago.
“Food as a category for us is, call it flat to up slightly, and then consumables are a little bit higher than that, but if you look at the trends and you drag them out to the right, it could suggest that when you consider the overall mix of our business that we could be in a deflationary environment.”
Deflation might lead to Walmart consumers buying more general merchandise, which has a higher gross profit than grocery, Mr. Rainey said.
“We’re a company that is going to benefit irrespective of the economic backdrop,” Mr. Rainey said. “If times get tougher and there’s probably more pressure on the consumer, again, I think our value proposition resonates. If we get to a better, healthier economy and we see more growth, I think a lot of the things that we’re leaning into, a lot of these new parts of our business really resonate with customers as well. So we feel very well-positioned."