Walmart's Winning Strategy: Omnichannel Growth and Profitable E-commerce

The retailer saw a 4% growth in revenue, a decline from Q3, in comparable store sales in the U.S., excluding fuel. This growth was influenced by a softer performance in general merchandise but offset by strong performance in the grocery and wellness sectors. In Q4 2023, the retailer reported net sales reaching $173.4 billion. As per our shopper report for December 2023, 67% of shoppers expressed health and fitness resolutions, intending to purchase healthier foods in 2024. The report also revealed that 86% of shoppers plan to engage in both in-store and digital channel shopping throughout 2024. Walmart US has observed improvements in its omnichannel model and has achieved enhanced customer experience metrics.

Key Highlights 

E-commerce Performance 

Global e-commerce grew by 23%, surpassing $100 billion. Walmart US experienced a 17% increase in e-commerce, driven by robust delivery and pickup services. This growth is linked to a double-digit rise in store-fulfilled pickup and delivery, highlighting the effectiveness of these fulfillment methods. CFO John David Rainey emphasized the advantage of store proximity in fulfilling e-commerce orders, leading to a 40% reduction in last-mile store-to-home delivery costs over the past year, alongside shortened same-day delivery times in approximately 90% of stores.

Walmart Advertising 

Walmart US Connect ad sales experienced a 22% increase, with over 50% growth attributed to Marketplace sellers. The company observed substantial demand from new advertisers, leading to a 20% rise in active advertiser counts. In a strategic move, Walmart has agreed to acquire VIZIO HOLDING CORP., to enhance Walmart Connect in the U.S. This acquisition is intended to broaden customer connections and fortify the advertising platform. CEO Doug McMillon highlighted that global advertising and membership are anticipated to contribute to 20% of the annual operating income. Additionally, Grocery Doppio forecasts a 13% increase in retail media revenue in 2024, aligning with the company's efforts and industry trends.

Future Outlook 

In FY 2025, Walmart forecasts 3-4% sales growth and 4-6% operating income growth. The company expects low single-digit net sales growth and mid to high single-digit operating income growth. Walmart plans to remodel 650 U.S. stores and expand its e-commerce assortment, focusing on general merchandise.

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