The retail sector is struggling and that is no more apparent in the number of store closures reported throughout the market. One company has been largely immune to these metric—Walmart Stores, Inc, obviously—but it looks like they are also feeling the pinch. Now, the company has not necessarily reported that any stores will be closing but they will slow the number of new stores they plan to open.
“We expect Walmart to leverage physical assets to drive seamless shopping across online and offline channels,” explains Cowen & Company. “Customer loyalty across multiple channels, a broadline product offering, un-Amazon-able service options should drive attractive overall spend and basket size economics.”
These “un-Amazon-able” services include things like: pharmacy, auto, and health care visits. Of course, this is important because Amazon continues to grow online (while Wal-Mart continues to struggle getting hold), so for the retailer to focus on those things Amazon can’t do.
As such, Walmart will rely more and more on same-store sales growth and increased efforts to improve e-commerce sales in order to drive the top-line. Of course, the company will look for more ways to expand and increase e-commerce profitability with technology as well as other areas where they can improve.
Accordingly, Walmart US chief executive Greg Foran comments, “Next year, you will see us put more capital allocation towards remodels versus new stores. Our focus is on getting higher-quality new stores and then getting them to profitability as we would expect them to perform quickly.”
Foran goes on to comment that hundreds of Walmart Neighborhood Market stores will get a makeover in fiscal year 2018, adding online grocery options, as well.
“Walmart’s retail footprint remains a powerful asset given 90% of the U.S. population lives within 15 minutes of a Walmart store,” Cowen also adds, noting that remodeling stores, improving checkout speed, and increasing customer service training are all good investments for the company.
“In turn,” he continues, “we believe a better shopping experience should aid traffic and continued comp store sales growth of 1% to 2% over the next few years.”
Obviously, brick-and-mortar retailers are looking for more ways to compete with Amazon—particularly as Prime grows. There are now in excess of 60 million Amazon Prime members, and two-thirds of those are in the United States. And subscribers spend 4.5 percent more than non-Prime Amazon shoppers.