Wall Street appears to be loving Walmart’s new strategy to slow down its store openings and place an emphasis on its eCommerce business.
“Walmart is a brick-and-mortar retailer that’s trying to strike a balance and trying to remain relevant,” Laura Kennedy, Kantar director of retail insights told MarketWatch. “By our account, WalMart and Amazon are neck-and-neck with penetration in American households… It’s a battle to be America’s retailer because there’s a lot of competition.”
While Walmart CEO Doug McMillon told analysts at the company’s annual investor meeting last week that Walmart was even more bullish on eCommerce and a digital transformation than most realized.
“This company over time will look like an e-commerce company,” according to McMillon.
At that same meeting, McMillon said that Walmart planned an investment of $11 billion in capital spending to boost its online sales business, while at the same time planning to reduce the number of brick-and-mortar stores it opened in the coming year. Walmart plans to open just 35 new supercenters in the coming year, down from 69 the year before; only 20 new Walmart Neighborhood Markets will be opened in the coming year as well, a sharp decrease from the 161 Walmart opened in 2015.
“We expect Walmart to leverage physical assets to drive seamless shopping across online and offline channels,” Cowen & Company wrote in a Monday note. “Customer loyalty across multiple channels, a broadline product offering, un-Amazon-able service options (pharmacy, auto, health care visit, others) should drive attractive overall spend and basket size economics.”