NEW YORK – Walmart will continue investing in e-commerce and automation in 2024, when deflation and falling prices are likely.
Even after the coronavirus pandemic, Walmart's number of digitally active customers continues to grow, Chief Financial Officer John D. Rainey said at a conference in New York on Dec. 6. Speaking at the Morgan Stanley Global Consumer & Retail Conference.
“We're known as a brick-and-mortar retailer,” he says. “We've been doing it well for 60 years, but we've outdone ourselves in the e-commerce space. That's why we're confident that our customers want to shop with us that way. That's why we're investing as much as we do to be there.”
Digital sales are particularly strong in China.
“This is about a 50/50 business for us in terms of physical and digital,” Rainey said. “Some of our best-performing stores are in China. We have a value proposition, especially around groceries, that particularly resonates with our Sam's[Club Store]members.”
Scan-and-go, where consumers use their phones to scan items and skip checkout, is gaining popularity at Sam's Club.
“About a quarter, almost a third of transactions are done this way,” Rainey said.
Walmart is increasingly automating inventory storage and retrieval, including at distribution centers. Rainey said automating pallet storage would result in “significant savings.”
Rainey was asked about his thoughts on the outlook for deflation in 2024.
“General merchandise is currently down in the 5% to 6% range,” he said. “This has been a fairly consistent trend, to the point where prices are lower than they were two years ago.
“Food as a category for us is flat to slightly up, consumables are a little higher than that, but if you look at the trend and drag it to the right, when you consider the following This may suggest that our entire business may fall into a deflationary environment. ”
Rainey said deflation could lead Walmart customers to buy more general merchandise, which has higher gross margins than groceries.
“We are a company that makes money regardless of economic conditions,” Rainey said. “I think our value proposition will resonate even as the situation gets tougher and there is probably even more pressure on consumers. I think a lot of the things that we're focusing on and a lot of these new parts of our business are going to be things that really resonate with our customers if we start to see that. So we We feel we are in a very good position.”
