Wednesday, 17 October 2018

Walmart is aggressively shifting away from its most legendary shopping format

Walmart (WMT) continues to kill off the American shopping creation it’s most known for, the massive supercenter that sells everything under one roof.
With the U.S. market already having more than 3,500 Walmart supercenters and a focus by CEO Doug McMillon to increase spending on eCommerce and India, Walmart said Tuesday it will open a mere 10 supercenters in 2019. Capital expenditures are seen at $11 billion next year, unchanged on a year over year basis.
The company has reduced emphasis on the store format pioneered by founder Sam Walton – which could average a gargantuan 178,000 square feet – in recent years. Walmart has opened a fewer number supercenters in the past three years. This year, it plans to open only 15 supercenters.
The WalMart Supercenter signage is seen in Springfield, Ill. (AP Photo/Seth Perlman)
Instead, the world’s largest retailer is seeking ways to get more productivity from the supercenters it does have open. Walmart said Tuesday it will have its new grocery pickup option available at 3,100 locations by the end of next year. The option allows a shopper to place an order online, park in a spot at a Walmart store and have a clerk bring out the packages and load them into the trunk.
The free service is available at more than 1,800 Walmart locations.
Walmart added that grocery delivery will be available at 1,600 locations by the end of next year, up from about 800 sites this year. The retailer only began rolling out the same-day delivery service this year using delivery agent Postmates and Spark Delivery.
Wall Street didn’t instantly warm up to Walmart’s ongoing digital dive on Tuesday. Shares initially fell about 3% in early trading as the retailer lowered its full year profit guidanceciting pressure from investments in its new India-based Flipkart business. The company now sees earnings this year in a range of $4.65 to $4.85 a share, down from $4.90 to $5.05 a share previously.
Shares of the Dow Jones Industrial Average component finished the session up 2% amid a strong 550 point rally in the benchmark index.
Walmart’s initial crack at 2020 guidance also under-whelmed. The company expects Walmart U.S. same-store sales to rise 2.5% to 3% next year and operating income to fall, owing to Flipkart investments. Online sales are expected to pop 35%, cooling from the 40% pace set in the second quarter of this year.

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