Retailers that find ways to help consumers save time and take friction out of their lives are likely to enjoy success in the year ahead, despite the ongoing inflationary pressure that consumers feel in some categories, according to Walmart’s CEO.
Speaking at the National Retail Federation’s 4th annual State of Retail & the Consumer discussion this week, John Furner, president and CEO of Walmart U.S. and chairman of the NRF, said consumers are seeking to spend more time with their families, and the demand for convenient solutions to help them do that often outweighs price in their decision-making.
“An underlying trend that I think is here to stay is convenience,” he said. “People are willing to trade off in some cases, on prices, for things that are more convenient. The parts of the service sector or the retail sector that find more innovative ways to serve people, in a way that saves them time, takes friction out of their lives, lowers some of the decision-making they have to go through — I think those are the companies and the parts of the economy that will continue to win.”
Furner described the current retail and consumer environment as unprecedented in history, in part because of the rapidly evolving impact of technology on the ability of retailers to better serve their customers.
“One of the things that’s much different in 2024 than it was in the past is the evolution of our industry, [which] is so affected by intelligence, and machine intelligence, and now generative intelligence, that there are ways to serve customers in different ways and do things faster than we could just a few years ago,” he said.
He said he was optimistic about the health of the consumer in 2024, despite what he described as “stubborn inflation” in some product categories, including food, that is causing some price-conscious consumers to become more discerning in their spending.
“Most customers are saying they think 2024 will be better than 2023, and that’s a good sign,” Furner said.
Early sales data presented at the discussion supported his optimism, as the CNBC/NRF Retail Monitor showed that spending on health and personal care, for example, surged 9.66% in January and 11.18% in February.
“So far, consumers have turned out to celebrate and shop,” said Katherine Cullen, VP of industry and consumer insights, NRF.
Tech also boosts supply chain
In other comments during the discussion, Furner said that technology, along with the diversification of sourcing, are helping the retail industry overcome supply chain disruptions and putting the industry in a better position to manage future disruptions.
“At Walmart, we generally see things [in the supply chain] much more stable than they have been for several years,” he said, citing the company’s ability to behave more dynamically and flexibly through the use of data and technology.
The company is also seeking to diversify its sourcing, in part by buying more products made in the U.S.
He also discussed the NRF’s efforts to combat organized retail crime, which he said requires a collective effort among retailers and government agencies. Theft has wide-ranging impacts not only on retail profitability, but also on employment and local economies when stores are forced to close, he said.
Addressing the issue collectively “is an opportunity to keep prices down and serve local consumers in the way they want to be served,” Furner said.
