Amazon is encroaching on the physical realm to win over more customers
By Anne D’Innocenzio and Michelle Chapman
AP Business Writers
NEW YORK (AP) — Walmart is all about online, anticipating digital sales next year will rise about 40 percent and that it will double the number of U.S. curbside locations for online grocery shoppers at its stores.
The retail behemoth is predicting net sales growth at or above 3 percent, driven by online sales and growth from existing stores.
The company reiterated its per-share earnings guidance for next year and launched a two-year, $20 billion share repurchase program.
Walmart opened its annual investor meeting Tuesday in Bentonville, Arkansas.
They retailer is armoring up online to take on Amazon.com and more traditional rivals, like Target. The company paid more than $3 billion for the online retailer Jet last year to speed its evolution. It’s also been acquiring smaller players like ModCloth, Moosejaw and Bonobos. It’s also deploying digital kiosks called Pickup Towers at a hundred of its stores which spit out products bought on Walmart.com. The company has fast expanded the number of U.S. stores that allow online grocery shoppers to pick up orders at the curb. It currently has 1,000 U.S. locations participating.
The company went live with voice-activated shopping with Google in answer to Amazon’s Alexa-powered Echo devices. Walmart said customers can now start shopping for more than 2 million Walmart items via Google Assistant as well as Google Express and its app. Walmart announced its partnership with Google in August.
And starting next month, returns may be getting easier. Customers can scan goods they no longer want with a smartphone and drop them off at a customer service desk. Walmart says that will take 35 seconds or less. Returns right now take about four times that, not including any wait in line.
Earlier this year, Wal-Mart revamped its shipping program and now offers free, two-day shipping for online orders of its most popular items with a minimum purchase order of $35.
But as Walmart moves into the digital space dominated by Amazon, Amazon is encroaching on the physical realm to win over more customers.
In August, Amazon closed on its $13.7 billion purchase of Whole Foods Market and quickly prices on key products. It’s also cut a deal with Kohl’s that allows for the return of Amazon goods at stores in Los Angeles and Chicago, which are packaged and shipped out by workers there.
Moody’s lead retail analyst Charlie O’Shea said Walmart is giving shoppers a “compelling online alternative to Amazon” and views its online sales forecast as “an impressive goal, especially on the heels of the 30 percent outlined at the 2016 investor meeting, which at the time seemed aspirational.”
Walmart has increasingly linked its massive fleet of stores with online services, but the emphasis on expanding the number of stores it runs, at least in the near future, appears to have ebbed. Walmart expects to open less than 15 SuperCenters and fewer than 10 Neighborhood Markets in the U.S. next year.
“The redeployment of significant capital expenditure dollars from new stores in the U.S. to online improvements and store remodels, especially the 1,000 store increase in in-store grocery pick-up locations, will help Walmart maintain its market-leading position in the US grocery segment,” O’Shea said.
