As the demographics of brick-and-mortar stores versus online shopping continues to shift, Walmart has made it clear that the retailer is focused on both its online and mobile products.
But before Walmart can fully execute a mobile strategy, it needs to master e-commerce. And that’s what the next two years will involve for the retailer, as Walmart executives said the company will have to balance investment while dealing with expected operating losses due to less foot traffic. To combat that, Walmart is hoping to leverage its e-commerce efforts by offering an omnichannel experience by merging its physical store, online, pickup and mobile efforts to enable a multi-channel shopping experience for its customers.
“The heaviest investment in e-commerce will come over the next 18 to 24 months, as we further integrate the shopping experience, appealing to our customer’s desire for convenience, access, and assortment. We then expect to see operating losses start to moderate at the end of that period. We continue to seek the right balance between sales growth and profitability for e-commerce,” Walmart CFO Charles Holley said during the company’s Q4 earnings call Tuesday (Feb. 17).
Overall, Walmart brought in $486 billion in revenue for 2014, with e-commerce sales growth of approximately 22 percent to more than $12 billion. Revenue for the fourth quarter was hit $131.6 billion, which was a 1.4 percent increase ($1.9 billion) from the year prior. The small to modest revenue growth was pointed out as one of the concerns of Walmart’s earnings expectations moving forward. Walmart CEO Greg Foran spoke about that briefly during the call with analysts.
“We achieved what we set out to do in the short-term, but we’re not satisfied and recognize that we have more work to do to accomplish our longer term goals,” Foran said.
Looking specifically at e-commerce and its mobile impact, Foran spoke about the past holiday season and how it’s impacting Walmart’s attention toward mobile commerce. He said nearly 70 percent of Walmart.com Web traffic in the U.S. came from mobile during the holidays. But the gap between mobile browsing and mobile buying is still one that retailers like Walmart are facing. Walmart is looking to address that issue on a global scale by investing more in its mobile products.
“We’re leveraging technology to strengthen our e-commerce and mobile capabilities, and integrating these digital assets with our more than 11,000 stores globally,” Foran said. “One of the headlines in e-commerce is the tremendous growth from mobile devices. …Customers who previously shopped using their laptops are now using their phones and tablets. And this isn’t just a U.S. trend, for example, traffic from the mobile app in Brazil nearly tripled on the Black Friday holiday. Around the world, we’re well-positioned to create a strong mobile experience for customers this year and beyond.”
Growing Walmart’s global e-commerce presence has also been another main target for the retailer. Neil Ashe, Walmart’s president and CEO of global e-commerce, spoke about the retailer’s ability to work across digital and physical channels in order to expand the company’s global technology platform.
“I refer to this as the operating system for commerce, because it is the foundation for serving customers digitally, [and] enables the integration of digital and physical commerce,” Ashe said. “Building and deploying a new platform is one of the most challenging projects for an e-commerce business, particularly at our scale. We launched most key elements of our site and mobile shopping experience on the new platform before holiday on Walmart.com in the U.S.”
Other big news that came out of Walmart’s earnings call was the wage hike that the retailer announced for all of its associates. Walmart hourly associates were granted a wage increase to $9 per hour starting in April and current associates will earn at least $10 per hour by next February. This will impact approximately 500,000 full-time and part-time associates. Following the release of this news, National Retail Association CEO and President Matthew Shay released a statement.
“Today’s announcement by Walmart regarding associate wages is just another example of the power of the marketplace. Like many other retailers, Walmart made its decision based upon what is best for their employees, their customers, their shareholders and the communities in which they operate,” Shay wrote. “Government mandates that arbitrarily require businesses to implement politically driven policy are unnecessary and, in fact, create hurdles to job creation, curtail capital investment and pose as barriers to a sustained economic recovery.”