Walmart, like Target before it, announced tepid fourth quarter sales results this week. According to Walmart’s earnings call presentation, Walmart U.S. comparable sales rose 1.9%, with digital growth coming it at approximately +35% and accounting for roughly +210 bps of overall comp sales growth. Walmart cited strong business in online grocery, yet declining sales in the same categories that plagued Target, namely toys. Take the digital statistics and then back into the store comp numbers and what one sees quickly is hard to argue. Despite all Walmart’s best efforts, store traffic is still quite the predicament.
It is an incontrovertible fact at this point — physical stores are no longer the most convenient option for consumers across all categories.
Yes, grocery is still a strong beachhead for Walmart, and Walmart is right to focus there, but for how long? Or, is grocery just a bilge pump for survival as Amazon and other European competitors come guns a blazing for the nearly $1 trillion business that has not evolved since the days of Piggly Wiggly in 1916?
Don’t think the above is an indictment of Walmart’s grocery strategy either.
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Walmart is doing all the right things — Super Bowl ads about order pickup, microfulfillment centers in New Hampshire, experimenting with various delivery options, including autonomous vehicles. The rub though is that none of these tactics are really all that new or differentiating. Amazon knows how to do them just as well. At best, they just help Walmart maintain what it already has. Meanwhile, water continues to leak slowly out of the boat as other categories of business that Walmart sells continue to move online.
Therefore, just making grocery more convenient isn’t enough for the long haul.
Instead Walmart needs to do more. It needs to get innovative faster and back to its roots. It needs to do what it does best — help people to save money and to live better — and to put that philosophy even more at the core of everything it does.
Here then are three strategies Walmart could deploy this very same year, all with very little effort, and still make a palpable difference in the communities it serves long after Amazon gets into grocery:
1. Bring Installment Financing Into Stores
No interest installment financing is exploding online and is well-ingrained in other countries already. The concept is simple. Consumers sign up with a service, said service works with retailers to share the risk of financing, and then the consumers buy whatever they want online in generally four to six easy payments.
Typically, people think of installment purchasing for big-ticket items like TVs and furniture, but it doesn’t have to be that way. In the future, installment financing could also involve entire grocery bills or entire clothing bills, the latter of which is a concept H&M is experimenting with now, both online and in stores.
Implementing this concept at Walmart would also be quite straightforward.
Consumers would simply download a mobile app, go do their grocery shopping, and instead of paying the full amount all at once, they could break it up into a set of installment payments, triggered by the scan of a barcode at checkout.
Walmart customers could then stretch their budgets in ways they never could before, and Walmart would have a seat at the table and gain national notoriety for doing all that it could to help people to put food on theirs.