BIRMINGHAM, England (FNS) -- Wal-Mart Stores, Bentonville, Ark., today may be a mere shadow of its dominant self when it comes to selling over the Internet, but the world's largest retailer is about to turn much more of its attention to the Web with "tons of initiatives."
"We are selling some stuff on the [Internet], but we're not happy with where we are right now," said Kevin Turner, Wal-Mart's vice president and assistant chief information officer. "Some categories have exceeded expectations, some have surprised us and some have disappointed us. But there are tons of initiatives under way, as we speak, for us to become a heavy player in the on-line world.
"Over the next 12 months you will see a total change in how we are doing e-commerce across all our business units," Turner added. He declined to provide more details on Wal-Mart's e-commerce plans.
Turner discussed Wal-Mart's imminent push in electronic commerce at the Retail Solutions 1999 conference here late last month. Responding to a question from the audience following his presentation, he acknowledged Wal-Mart is lagging behind in the race to build a strong presence in Internet retailing. But that will soon change, he said.
Any large-scale move by Wal-Mart into the e-commerce arena would be significant and closely watched by the retail industry, given the company's continued stunning growth and soaring profits. Wal-Mart's earnings again exceeded analysts' expectations in the latest quarter ended April 30, 1999, when net income rose 34.1% to $1.1 billion on sales of $34.7 billion. For the year ended Jan. 31, 1999, the company reported net income of $4.4 billion on sales of $137.6 billion.
Turner said 1998 sales increased more than $20 billion over the year prior and he anticipates annual sales to grow another $20 billion this year. "That means we will be a $157 billion-plus company by year's end," Turner predicted. Wal-Mart operates more than 3,600 stores worldwide.
Wal-Mart's caution thus far about investing heavily in the the Web, Turner said, stems from one simple and glaring fact: Virtually no one is yet making money from Internet retailing. Wal-Mart's re-evaluation of its Web offering is geared to determine how to sell via the Internet -- and to do so profitably.
"The lack of return on investment is the main reason we're not a big player now," he told attendees at the conference sponsored by RMDP, a British publishing firm based in Hove. "There's no magic to selling things at a loss and increasing your sales; people have been doing it for years. These guys' losses increase and their stock goes up; other retailers' profits fall and their stock falls. Everybody is calling these guys geniuses and that's a shame."
Turner indicated that Wal-Mart's plan is to use its formidable strengths as a bricks and mortar retailer and leverage those into e-commerce. He pointed to Wal-Mart's expertise in infrastructure, logistics, product assortment, stores and sales associates as key points in its favor for succeeding in the Internet arena.
But he stressed that, in Wal-Mart's view, the Internet is never going to replace conventional retailers.
"We think it will be a choice, and we want the customer to choose us [on the Web] just as they choose to walk into one of our stores. Computing is changing the face of retailing, but it doesn't mean bricks and mortar will go away. The Internet will just be another choice for the consumer," he said.
It also is conceivable that the future will involve a combination of stores and on-line retailing, Turner indicated. "It's not just about shopping at home."
For example, Wal-Mart might use computers to simplify the shopping experience by enabling shoppers to order something at a distant store that was out of stock at their local store -- and then have it delivered directly to their homes. Another example might be to allow customers to send a gift from one store to another for pick-up by someone else, or to have the gift sent directly to the recipient's home.
Turner's comments on e-commerce came during a question-and-answer session following his speech, which focused on how companies could -- and must -- convert their information systems departments from cost centers into profit centers.
Calling it an industrywide problem, Turner said making such a shift is the most important issue facing the IT departments today. IT departments, he stressed, must ensure that everything they do has an immediate impact on a retailer's operations and profitability. "It's not doing what the customer or the business units want; it's doing what they need," he said. "If it's better, it will be different; if it's different, it can be observed; if it can be observed, it can be measured, and if it can be measured you can put a dollar value to it. This is how you get return on investment.
