Walmart Strives to Manage Costs Despite Strong Sales Growth in Rising inflation

Walmart produced solid top-line performance across all of its segments in the third quarter, and its value proposition is resonating with customers and members all around the world. The non-regular customers are now shopping with Walmart more frequently, which also includes higher-income customers. This is quite evidently visible across the key in-store and online grocery businesses in markets such as the U.S. and Mexico. 

Walmart is focusing on balancing the inventory levels by expenses and category as the company moves towards the fourth quarter and plans for next year. The company is choosing to remain aggressive in some areas while becoming more conservative in other areas. Additionally, Walmart is integrating and expanding more recent, closely-related capabilities into its larger business such that they complement one another. Examples include fulfillment services, marketplace, and advertising. 

Walmart is doing well across the board in terms of its stores, clubs, and online sales. Back-to-school season in the US and Mexico gave a boost to Walmart's top line, which persisted through festivals in China and India as well as early Deals for Days events in the US. Sam's Club in the United States had a terrific quarter, and Walmex also did well as the business kept up its trend of double-digit comp club sales growth. Transactions are up, and Walmart's e-commerce sales penetration continues to increase. 13% of the company's total sales to date this year have been initiated digitally, with Walmart International leading the way with a 20% market share. 

More customers and members are choosing Walmart because of the value and variety the company is known for, as well as because of the adjustments Walmart has made to save them time, despite the pricing of everyday items still being persistently high in too many categories. In light of this, the business is concentrating on acquiring repeat customers who are now making more regular purchases than in the past. For instance, Walmart prioritizes a strong presence across fresh and apparel, in addition to executing pickup and delivery to provide a wonderful experience and save customers time. Additionally, it entails selling more Walmart Plus memberships in the case of Walmart US. 

Walmart leverages its application to introduce many of these newer capabilities to customers. Walmart’s customers and members can benefit greatly from the app, including easily building a shopping cart, scheduling a time to pick up or have an order delivered at a time that is convenient for them, skipping the line with scan & go, or finding an item in their local store.

On eCommerce, Walmart’s President and CEO, Doug McMillion, said, “If we double-click on advertising with Walmart Connect in the U.S., we see it's benefiting from growth in e-commerce and from improvements made within the business itself, and we've seen strong growth in return on ad spend over last year. In turn, this helped drive the highest ad spend all year for sponsored search in Q3. These improvements underscore Connect's strengths and position the business for continued growth.”

As Walmart moves forward, the company has updated this year’s outlook in the Q3 results and continues to remain balanced while moving forward in the rest of Q4 and the coming year. Inflation is particularly resistant in some sectors, such as dry grocery. Living with high prices throughout this year has had an overall effect on Walmart's consumers, particularly for those who are the most budget-conscious, therefore Walmart is concentrating on lowering its costs and prices as rapidly as possible by item and category. No matter their income level, families are today more price-conscious. Walmart intends to continue providing them with value in order to earn their trust. 

Walmart is striving to position itself to prosper irrespective of demand levels through the value and experience the company gives and the way Walmart is positioning its inventory and expenses. Walmart plans to continue managing its costs despite its strong sales growth in a sustainable manner.