Retail Champions 2020: Walmart

This is the sixth online installment of the HomeWorld Business 2020 Retail Champions, a special report from the May 18th print edition examining six retailers that will lead the post-COVID-19 retail recovery. View a digital version of the entire May 18 edition by clicking one of these links: Flipbook or PDF.

BENTONVILLE, AR— It would be tough to find a retailer better suited to dealing with the COVID-19 pandemic as it has rolled across the U.S. than Walmart, and the retailer is almost certainly going to come out of the crisis stronger and more capable.

With the overwhelming majority of U.S. consumers living within 10 miles of a Walmart, the company is accessible with one-stop shopping appeal at a time when authorities are asking people to limit outside excursions, plus, in or through a growing proportion of its locations, available services include curbside pickup of groceries, pick up desks and towers, and delivery. Walmart has one of the most robust omnichannel operations going, providing another way for consumers to get vital products, whether important for day to day needs or to thrive in domestic confinement.

Walmart had another leg up as the reality of the COVID-19 outbreak took hold, its experience in China, where it operates hundreds of stores. At the 2020 UBS Global Consumer & Retail Conference in early March, Brett Biggs, Walmart’s CFO, said that, in China, Walmart saw consumers buying more online during that country’s coronavirus outbreak among other changes in behavior, so the company had some sense of what to expect in the U.S.

“Having an e-commerce business, having online grocery able to serve customers in really different ways, customers and associates knowing that we’re caring for their safety, is important from a trust standpoint,” he said.

As the coronavirus pandemic hit the U.S., Walmart’s presence as a resource for absolute necessities helped to make the retailer a convenient place where consumers could go for products that might make stay-at-home requirements more bearable.

As shelter in place guidelines and restrictions began to hit more communities in March, Walmart saw a surge in specific categories. By mid-April, clear patterns emerged. Not surprisingly, network connectivity and streaming devices registered dramatic sales gains, as did desks and office chairs, folding tables and TV trays.

Consumers spending additional time at home are, naturally, preparing more food at home, and often trying to make mealtimes more fun. Outdoor cooking items such as charcoal, wood pellets and grills grew in popularity, but so did indoor cooking appliances and microwaves. Bread makers saw a sales resurgence as many consumers became more determined to address their own particular preferences and, for families, initiate a potentially participatory activity. Products that could extend the shelf life of food gained, with in-demand products including freezers, plastic storage, vacuum seal machines and accessories, and canning supplies and accessories advancing.

Besides cooking, homebound consumers turned to domestic projects, boosting sales of interior paint and seeds. With many personal service providers having closed shop, sales of trimmers, hair coloring, nail care products, pet grooming items benefited, as did exercise, activity and gaming products.

COVID-19 has affected Walmart in any number of ways, including one close to home. The company decided to hold its 2020 annual shareholders’ meeting on June 3 in a virtual meeting format, thus marking a profound change to a core part of the company’s corporate culture.

Still, because the retailer has been pursuing so many initiatives that have turned out to suit the market as upended by the coronavirus, the developing situation has effectively become a catalyst helping to drive shoppers to try more of Walmart services faster than they otherwise might. Of course, online grocery has been a critical driver behind much new consumer behavior as experienced at Walmart.

According to Coresight Research, the proportion of Walmart shoppers who purchase some, much or all of their groceries online surpassed 40% in a 2020 March survey compared to about a third in a study conducted a year earlier. Today, 52.3% of online grocery shoppers say they purchase from Walmart, up about 15% from last year and only about 10 points shy of the Amazon number. No other major online grocery seller had anything like a 15-point gain and Amazon came in flat year over year.

Walmart continues to bring more convenient options to consumers. In a service it rushed in getting to the COVID-19 marketplace, Walmart has begun rolling out Express Delivery, a new service that delivers from the store to customer doors in less than two hours. Walmart accelerated the development of the service, testing Express Delivery in 100 stores beginning in mid-April. Walmart set a goal of expanding the service to about 1,000 stores by early May and to almost 2,000 total stores over the following weeks. Express Delivery customers can order from more than 160,000 items from Walmart’s food, consumables and general merchandise assortment including groceries, household items and electronics. And, like Walmart pickup and existing delivery services, it will be a no-contact means of interacting.

In early May, Walmart CEO Doug McMillon stated that, even before the coronavirus crisis, Walmart’s online pickup and delivery operations were enjoying significant gains that accelerated as social distancing became the norm in spring. He added that people who have embraced new Walmart services in that period are likely to view them as just another part of what’s normal in a post-coronavirus crisis world.

Daniel Keyes, research analyst at Business Insider Intelligence, said he expects Walmart to continue advancing its major omnichannel initiatives and enhance its methods of reaching out to consumers by applying lessons it has learned overseas in some operations that are very different than those it runs across the U.S., and by looking at fulfillment automation and use of dark stores to distribute groceries and other merchandise. In the U.S., Walmart can be Walmart in new ways, focusing on the big middle of the market as it leverages its distribution and technical abilities to push others toward extremes of the marketplace it doesn’t covet.

“Walmart can reach just about all consumers,” Keyes said. “It can’t serve them all, but it can serve huge groups.”