Walmart doesn’t just sell stuff

In Walmart’s earnings call for the full year ending Jan. 31, 2022, the company discussed key wins for 2021 and what we can expect through 2022. Walmart’s revenue for the full year grew 2.4% year-on-year to $572.8 billion, driven primarily by strong performance in the U.S. market, including stores, e-commerce and clubs . While company executives discussed performance details for both the fourth quarter and the fiscal year that runs from February 2021 to January 2022, they also discussed how a more diversified business model will help stimulate future growth and strengthen ties with its customers.

Walmart US posted strong year-end sales

Comparative (com) sales in the US grew 6.4% year over year, with e-commerce growing 11%. Sam’s Club sales ended the year up 9.8%. Membership revenue and other revenue increased by 27%. Walmart International’s net sales declined 16.8%, negatively impacted by business-related divestments.

Sam’s Club sales in the fourth quarter showed strong performance in the apparel and home sectors

While the company’s total revenue in the fourth quarter (Q4) was relatively flat compared to last year (up only 0.5%), Sam’s Club recorded a remarkable performance with a sales increase of 10 .4% for T4. Sam’s Club merchandise categories for the fourth quarter were very strong in apparel and jewelry, a trend that was seen in the U.S. market for 2021. Toys, tires, seasonal goods and groceries were also strong. strong in the fourth quarter with sales increases in the mid-teens. Consumables (laundry, home care, pet supplies and baby care) saw single-digit increases. Transactions in the warehouse club grew 7% with a 3.2% increase in transaction value. For Walmart stores in the United States, sales increased by 5.7% while the number of transactions increased by 3.1%. Walmart International’s revenue fell 22.6%.

A diverse business model is the new normal for retail

Doug McMillon, CEO of Walmart, said, “Creating a seamless omnichannel experience for customers and prioritizing convenience for them is critical. Our stores have become hybrids, they are both stores and distribution centers. Walmart’s future is to expand its product and service offerings, including retail, financial services, and health/wellness.

McMillon discussed Walmart’s goal of serving families more broadly with a mix of products and services that are complementary. These include the recently announced fintech start-up ONE, the expansion of delivery services, the growth of e-commerce markets, the expansion of health and wellness businesses and the increase in advertising revenue.

Financial services provide customers with access to money management tools

John Furner, President and CEO of Walmart US, spoke about the importance of providing affordable financial solutions to customers who otherwise may not have easy access to these types of services. The recently announced acquisition of EVEN and ONE (pending approval) will provide customers with a financial services application to comprehensively manage their finances in one place.

E-commerce marketplaces continue to grow

Walmart added more than 20,000 new sellers to the US marketplace platform last year and plans to add nearly 40,000 more this year. The company plans to continue to grow its fulfillment services which grew by more than 500% last year. The online assortment for e-commerce and marketplace has over 200 million items, providing more product selections for customers.

Delivery services are growing rapidly, adding convenience and staying green

Walmart InHome, a service that delivers produce and groceries to a customer’s home, is expanding to reach 30 million homes in the United States, up from 6 million previously. To support the expansion, the company is adding roles to more than 3,000 delivery drivers and building a fleet of all-electric delivery vans with the goal of having a zero-emissions logistics fleet by 2040.

Focus is on helping customers live better

Health and wellness was the fastest growing compensation business in the fourth quarter and the company will continue to expand these services, including pharmacy and telehealth. Furner said, “The combination of retail, financial services, and health and wellness enables Walmart to live out its purpose of helping customers live better lives.”

Advertising becomes a basic source of revenue for the future

The traditional retail business model is changing, and one area Walmart is looking to expand further is selling advertising to brands in what the company calls Walmart Connect. Advertising is a key initiative going forward to generate additional revenue, and it works in synergy with the growth of the e-commerce business. McMillon spoke of its global advertising business reaching $2.1 billion, and in the United States, the number of active advertisers using Walmart Connect increased by 136%. Connect allows buyers, sellers and suppliers to interact effectively. The large base of sellers has access to customers, who gain a better understanding of the sellers and the products available.

Walmart’s future includes a combination of products and services

Asked about Walmart’s future, McMillon said, “Social commerce, wearables, AR and mixed reality will be part of Walmart’s future.” McMillion spoke about the importance of creating synergies around these different products, services and experiences to create magic for the customer. “Reducing friction and cost makes it more enjoyable for customers to transact with Walmart.”

A diversified business model comprising retail products, services and marketplaces, financial solutions and health/wellness services is central to the future and will ensure the company’s long-term growth. For the next fiscal year beginning in February 2022, Walmart provides a modest forecast for revenue growth of 3%.

About Patrick K. Moon

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