Walmart’s e-commerce and automation plans for 2024 amid deflation risks
Walmart is not slowing down its investments in e-commerce and automation for the next year, even as it faces the possibility of deflation and lower prices.
The COVID-19 pandemic did not stop the growth of Walmart’s digital customer base, according to John D. Rainey, the chief financial officer, who spoke at the Morgan Stanley Global Consumer & Retail Conference in New York on Dec. 6.
He said that Walmart has a long history of being a successful brick-and-mortar retailer, but it needs to catch up in the e-commerce space, where customers are increasingly shopping.
Walmart’s online sales are particularly strong in China, where it has a balanced mix of physical and digital business, Rainey said. He added that Walmart’s grocery value proposition appeals to its Sam’s Club members in China.
Sam’s Club also offers scan-and-go, a feature that allows customers to use their mobile phones to scan items and avoid checkout lines. Rainey said that this feature is used by about a quarter to a third of the transactions.
Walmart is also enhancing its automation capabilities in inventory management, especially at distribution centers. Rainey said that automating pallet storage results in “huge savings”.
Rainey shared his thoughts on the potential deflation scenario in 2024.
He said that general merchandise prices are already dropping by 5% to 6%, and they are lower than two years ago.
He said that food prices are flat or slightly up, and consumables are a bit higher, but the overall trend suggests that Walmart’s business mix could face a deflationary environment.
Rainey said that deflation could lead to more sales of general merchandise, which has a higher gross profit margin than grocery.
He said that Walmart is well-positioned to thrive in any economic situation, because of its value proposition and its new business initiatives.
He said that Walmart can attract customers whether the economy is weak or strong, and whether the prices are low or high. He said that Walmart is confident in its future.