Walmart recently announced its Q1 earnings, reporting its best comps in 9 years. Here’s our quick take on comments made during the retail giant’s media call:
We continue to make the shopping experience fast and easy. And we now have more than 2,400 grocery pickup locations, nearly 1,000 grocery delivery locations offering same-day grocery delivery and of course pickup towers in more than 900 of our locations. We’re on track to offer same-day grocery delivery from 1,600 stores this year, while also offering grocery pickup from 3,100 stores by year-end. That covers about 50% and 80% of the population, respectively.
As a Genius brand in Gartner L2’s Digital IQ Index: Grocery, Walmart continues to lead grocers in omnichannel offerings. Leveraging its extensive physical footprint, the retailer has been aggressively expanding both delivery and pickup, as evidenced by its goal to cover approximately 80% of the US population by the end of 2019. This physical footprint is a major advantage compared to Amazon, which has worked to expand its physical locations but still lags behind Walmart. It will likely continue to push on this front moving forward into 2020.
Same day delivery out of our Supercenters, combined with next day delivery from our fulfillment centers, offers customers powerful ways to make fast and convenient shopping choices.
In addition to the most recent earnings release, Walmart also recently announced the rollout of one-day shipping, with functionality already appearing on-site. This follows Amazon’s similar announcement, and marks a new shift in customer expectations. Notably, in the press release, Walmart ties next-day delivery with its grocery fulfillment options, indicating how important it is for customers to be able to receive their items any way they want them.
We also saw our highest sales growth in our home and fashion businesses, two categories that are important to customers but also have the highest contributed profit margins, and by driving better margin mix.
Grocery is only one of the areas where Walmart is expanding. It is also moving further into the fashion space, not only with its private label lines, but also with a more general campaign. Its We Dress America looks to appeal broadly across customers and astutely showcases both its own private label items with name brands.
[W]e re-launched Walmart Media Groups to suppliers for a more integrated way to reach customers and measure the effectiveness of their efforts across from our sites, absent stores in the US. This is where we have a deep quality advantage. We acquired Polymorph Labs which offers a platform that simplifies the process of placing ads with suppliers, serves ads faster in a really efficient way.
Per a Digiday survey, 90% of surveyed media buyers purchased ads on Amazon, 23% purchased on Walmart, and 16% on Target. Given the success Amazon has had in this field, both Walmart and Target have been making moves to improve their own on-site ad offerings. As Amazon has recently come under attack for its aggressive promotion of its own private label goods, only time will tell if Walmart and Target can convince vendors to advertise with them instead.
I think the competitive environment out there is much the same as I’ve seen over the last few years. The discount is a very weirdly competitive piece – it keeps us extremely honest and intense about price position. There was the activity, I guess about 18 months ago when Lidl started opening stores, and we’ve seen some more recent activity from them recently, Aldi continued to get out and remodel, we know how active Dollar Stores are in terms of opening, so each of those players are very, very price competitive and we track them closely. It’s clearly very important to our DNA to maintain low prices, so we’re active all the time in the marketplace to ensure that our customers get the lowest price possible.
Given the continued expansion of Dollar General in the past year and its plans for 2019, it’s no surprise that Walmart sees the discount environment as a very competitive field. As Dollar General continues to open in areas that Walmart has historically not seen as viable markets, Walmart will have to keep an eye out to ensure it continues to deliver on its slogan to help customers “Save Money. Live Better.”