How Walmart Wants to 'Win the Kitchen'

Walmart's investments in omnichannel capabilities and alternative revenue streams give the company strong positioning in an evolving retail environment where consumers demand ever-more flexibility in how they buy and access products and services, Walmart Chief Financial Officer Brett Biggs said at a Baird virtual conference June 9. 

On the omnichannel front, Biggs said—echoing comments made during the company's first-quarter earnings call last month—Walmart is spending to expand fulfillment center capacity and enhancing technology in distribution centers. Tech that makes palleting easier and more efficient, for example, will support getting product from distribution centers to stores more quickly, and augmented reality technology available soon through the new Me@Walmart app will help store associates identify product ready to go out to the floor more quickly. 

Efficiency improvements in distribution centers and store-adjacent microfulfillment centers as well as on store floors themselves will help Walmart "be able to flex in the way that the customer wants to shop," said Biggs at the Robert W. Baird Global Consumer, Technology and Services Conference.

"The way we're thinking about capital and putting capital toward omni-fulfillment, omni-technology—that's where we're going as a company, and I feel really good about it," Biggs said.

One of the services poised to deliver greater flexibility for Walmart customers is in-home delivery, which is currently available in select neighborhoods in Kansas City; Pittsburgh; Vero Beach and Palm Beach County, Fla; and around Walmart's home base of Bentonville, Ark. For a $19.95 monthly fee after a free 30-day trial, Walmart InHome users can get unlimited tip-free deliveries into their kitchen, whether they're home or away. Delivery personnel will put away groceries in refrigerators or freezers as needed; they also wear face masks and sanitize surfaces before leaving a residence, according to Walmart.

The offering "can just keep us on the leading edge of everything that's going on around the customers' lives," Biggs said. There's no need for customers to be home within a certain window of time to be able to put away temperature-sensitive groceries, and the service opens the door—literally—for customers to be able to make more-convenient returns: Customers who want to return an eligible item they bought from a Walmart store or on Walmart.com can place the item outside their door, sans shipping or return label, for pickup by an InHome associate. Coming soon, according to Walmart's website, is in-home pharmacy delivery.

"We're really excited about not just winning the porch, but winning the inside of that kitchen," Biggs said.

Within grocery, a heightened focus on supply-chain efficiency in the past several years to get fresh items to stores faster has bolstered Walmart's grocery positioning, Biggs indicated. "I feel great about grocery," he said. "It's how we're going to lead with the customer, and that then gives us the ability to sell general merchandise and sell other services."

Walmart's status as the country's biggest grocery seller—and one of the more accessible options for fresh foods in some communities underserved by traditional grocery stores—meant that inventory issues at the start of the COVID-19 pandemic hit Walmart harder, earlier than some of the company's competitors experienced, according to Biggs. "We took store hours down a little more quickly and kept them down longer than some of our competitors," he said. "We were never horribly concerned about market share because of what we knew was going on in the market. ... We're seeing that come back."

Asked about inflationary pressures that rising numbers of producers have issued warnings on, Biggs rang no caution bells. "Because of our scale and the way we work with our supplier partners, we're able to work with them, have a pretty good sense of input costs, and where we can help them keep their costs in line, we'll do that," he said. With interest rates unmoved so far and certain input costs declining from where they were earlier this spring, he said, there are signs that some of the pressure may be transitory as the country continues to emerge from the pandemic.