Walmart Scales Back Supercenters, Focuses on Smaller Stores, Omnichannel Strategy
Walmart management is trying to turn a very big ship. As supercenters underperform, the focus has shifted to small stores and omnichannel initiatives, moves confirmed by Walmart CEO Doug McMillon during a meeting with analysts.
McMillon declared there was "no excuse" for its weak U.S. performance, and the plan to fix it includes scaling back supercenter growth in the United States while simultaneously allocating more funds to building out omnichannel capabilities, including distribution that supports same-day delivery.
The enterprise-wide approach is new for Walmart.
"In the past, we've tended to roll up our plans from markets and segments, but this year we've started with an enterprise-wide approach. The Internet, mobile, data and technology present opportunities across the world and across our businesses to better serve the changing customer," McMillon said. "We've taken a fresh look at where we want to play–what businesses, markets, formats, and services we need and how to win–what our customer value proposition should be.
"Our strategy will guide our approach to capital discipline. We will change the mix of our capital spend through reductions in areas we have invested in historically to fund investments in new growth opportunities. Specifically, we will moderate the growth of investments in stores, and we will increase our investments in e-commerce," he said.
Improving short term performance is a priority at Walmart and small stores, with its Neighborhood Market chain of grocery stores a particularly bright spot.
Walmart will continue to invest in e-commerce and its next generation fulfillment network and expanding assortment. The retailer will expand next-day delivery capabilities and open two new fulfillment centers serving the eastern United States. The 1.2 million sq.-ft. facilities will come online by mid-2016, according to the company.
"With the fulfillment centers and our 4,300 stores, combined with the capabilities we have in both distribution centers and our transportation fleet–we're trying to put all that together to give a unique experience for our customers which is everyday low-cost–which is kind of our mantra–along with offering several million customers up to next-day [delivery] depending on where they live in the United States," Brent Beabout, Walmart's senior VP of supply chain and logistics for global e-commerce told TechCrunch.
Walmart plans to double its ship-to-store and ship-from-store capabilities, and by mid-2015 roughly 65 percent of U.S. shoppers will have access to next-day service, said Beabout.
There are improvements in store for Walmart's website as well, with shorter checkout processes (fewer pages) and improvements to item and category pages.