Walmart slows new store openings in favor of mobile, online investments
Walmart will be scaling back the opening of new stores to focus on improving its mobile and online commerce channels, following many other big retailers after the industry as a whole saw a surge in mobile shopping and digital continues to dominate.
The plan was outlined at Walmart’s 2016 Investment Community Meeting. The retailer cemented its plans to focus on mobile and online commerce as its main driver of growth for the next few fiscal years.
“Mobile experienced 40 percent growth this year and, for the first time, it was reported that apps are generating more sales than mobile websites,” said Wilson Kerr, VP Business Development & Sales at Unbound Commerce. “Walmart’s focus on it’s online business generally, and mobile in particular, is very smart, as this is a huge growth area.”
CEO Doug McMillon spoke in the meeting about the company’s future and what were the main areas they would focus on in the immediate future.
The first three areas of focus were related to its regional business models, continued momentum in the U.S. business; solid growth in key international markets, including Mexico and Canada and a sharpened focus in China.
The last area of focus however is international. Mr. McMillon stated that ecommerce and digital investments would be one of the top drivers of growth for Walmart over the next few years.
The retailer is planning to take resources and time that would have been geared towards opening new physical locations, and funnel it into revamping its global online and mobile commerce models.
“Walmart has its own mobile wallet called Walmart Pay, a free shipping program similar to Amazon prime, in-store pick up and a dedicated customer base,” Mr. Kerr said. “They are making the right moves and have all the ingredients to reap ever bigger rewards from mobile app usage. Walmart saw online sales increase 12 percent in the second quarter of this year, and saw total digital sales hit $14 billion in 2015.
“They are doing something right, and dedicating money and shifting focus and resources towards this high growth area will help them deliver a single omnichannel Walmart experience by blurring the line between in-store, online, and mobile.”
The move is a clear prediction of where the retail industry is moving, as more and more customers turn to online, mobile or a mix of the two over in-store shopping as their go-to way to purchase products. Walmart is aiming to allocate resources more intelligently in the coming years to better reflect the changing shape of the modern marketplace.
More and more, consumers are turning to their mobile devices not just as tools of research and price comparisons, a trend that has been well-documented before, but mobile’s share of the overall number of online transactions is growing. Brands and big retailers such as Walmart need to build up an efficient and mobile-first marketplace if they want to compete with other retailers for consumers’ valuable mobile screen time.
That Walmart has had its eye on the top spot in the world of mobile commerce has been no secret. Its partnership with Jet.com in August put it in the running to be one of the largest online retailers in the world, rivaling the powerhouse that is Amazon in its scope (see story).
Walmart would not make an investment like that – reportedly $3.3 billion to acquire Jet – if it was not completely committed to turning its online and mobile channels into one of its most potent growth drivers.
On the mobile side, Walmart has also completed investment and a full national rollout in Walmart Pay, the retailer’s own first-party answer to the rising tide of mobile payment options being offered to consumers every day. Since then, Walmart has seen a 45 percent increase in week-over-week growth in the use of Walmart Pay (see story).
As of the investment meeting, these moves have finally been confirmed to be a part of Walmart’s strategy for the next few years.
“Walmart has been making some big moves to keep up with the sea change of consumer behavior,” said Michelle Skupin, senior director of global corporate communications at RetailMeNot. “Over the past several years, consumers’ attention has shifted from the physical world, to desktop/ecommerce, and more recently to mobile.
“With this shift, we’ve seen mobile wielding influence over purchasing decisions in all channels, and now we will begin to see growth in mobile transactions. The technology is better, and consumers are more comfortable on mobile.
“This is an opportunity for smaller retailers to follow suit and make investments in mobile if they haven’t already. Mobile has become the first screen, and it’s no longer a question of if it will be a viable commerce channel.”