Retail

Wall Street Likes Walmart’s Digital Ambitions

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.”

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