While most of the coverage of Walmart’s BB #:143789 4th quarter earnings pointed to lower-than-expected profits, the bright spots show the retailer’s strength in grocery, particularly online grocery.
The company reported 37% growth in e-commerce in the 2020 fiscal year and expects to continue at a 30% growth rate over the next year.
It expanded grocery pickup to 3,200 stores and delivery to 1,600 stores, including in-home delivery pilots in three markets.
“If you look at the grocery side of things, the first thing that goes through my mind is product quality and what we’re doing in the supply chain to make sure the stores look great,” CEO Doug McMillon said during an investor presentation. “No only is that product what we put in front of our customers every day in the store, but it’s what we pick and what we deliver.”
Walmart’s grocery pickup and delivery is a relatively new arm of the business, but early indications show it is popular with customers.
“As we’ve lapped anniversary in stores that we’ve rolled out, it has continued to show strong comps, and we have the opportunity to add more stores and then we’re layering delivery on top of that,” McMillion said.
Walmart is aiming higher with its online grocery, and Sam’s Club, targeting consumers with higher incomes, and that’s because customers who use e-commerce spend twice as much as store-only shoppers, McMillon said.
John Furner, president and CEO of Walmart U.S., says higher income online shoppers are attracted to Walmart’s larger assortment, like organic produce.
“Those quality levels then enable us to be able to appeal to that consumer across other channels,” he said.
Produce has been a strong driver for Walmart, Furner said.
“I love what I’m seeing in produce,” he said. “We talked about improvements over the last few years and several times in the last quarter it’s exciting to hear Martin (Mundo), who leads the produce department, talk about another record sales day.”
Produce has momentum, Furner said.
“You can feel the energy when you talk to the team when it comes to items and the ways they’re taking days out of the supply chain,” he said.