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E-commerce wins for Walmart’s Q1; tariffs, discounters pressure price

walmart grocery pickup
Walmart is using pop culture “cars” to promote its grocery pickup, a move many retail observers say will help drive home big gains in e-commerce this quarter.

Walmart Inc. (BB #:143789) posted the best same-store sales in nine years, and solid e-commerce growth in the first quarter of 2019, but the company remains vigilant of the price pressures from dollar stores and discounters like Lidl and Aldi.

In a company earnings release on May 16, Walmart said it experienced 37% growth year-over-year in e-commerce, with online grocery a strong contribution to those numbers.

Total revenue was $123.9 billion, up 1% over the first quarter of 2018.

Same-store sales were 3.4%, marking the fourth consecutive quarter of comps over 3%.

Sam’s Club also had a solid quarter in e-commerce, up 28% and same store sales up 0.3%.

The company currently offers grocery pickup in 2,450 stores and same-day delivery in nearly 1,000 stores. By year’s end, the company plans to expand delivery to a total of 1,600 stores and pickup to 3,100 stores.

That expansion will offer same-day delivery to about 50% of the population, and pickup to 80% of the population, said Greg Foran, President and CEO of Walmart US, in the earnings report.

“Our strategy to elevate the omni-channel offering is resonating with our customers,” Foran said. “We’re pleased with the quarter but recognize there’s more we can do.”

Private labels also were a strong point in food, Foran said.

“Private brands are doing better with us primarily because we’ve improved the quality, and also, we’ve taken action on price where we’ve needed to,” he said.

Competition from discounters, particularly Aldi and Lidl, continues to put pressure on price.

“The discount is a weirdly competitive piece,” Foran said. “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. Aldi continued to get out and remodel, and 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.”

Brett Biggs, Executive Vice President and CFO said Walmart continues to monitor trade and tariffs, but there could be higher prices on the horizon.

“We’re going to do everything we can to keep prices low, that’s who we are,” he said. “However, increased tariffs will lead to increased prices, we believe, for our customers.”


Pamela Riemenschneider is the Retail Editor for Blue Book Services.