THE future of a major retailer could look very different in the coming years, according to comments from the Chief Financial Officer.
Walmart will reportedly shift its focus to making a profit from the company’s online ventures within five years.
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According to John David Rainey, Walmart’s CFO, the retail giant will look to make more money from its ad sales on Walmart.com, along with merchant fees from its online marketplace and delivery program.
“Today, the vast majority of our total profit is attributable to physical stores in the US,” Rainey explained at a recent Raymond James conference.
“If you fast-forward five years, we’re much less dependent on that as a revenue stream than some of these other high-growth parts of our business.”
Rainey continued that the fees Walmart can charge third-party advertisers on their site and the work they do together to market and fulfill orders are part of their “higher-margin, faster-growing parts” of the company, according to ESM Magazine.
Walmart’s retail media business is therefore expected to surpass brick-and-mortar retail locations in terms of profitability.
The CFO believes that this kind of thing will completely change Walmart’s upcoming profit and loss statements.
In 2021, the company’s retail media space was rebranded as Walmart Connect and offered third-party brand data on Walmart buyers to help target ads.
“The more viewers come to your digital platforms, the more advertisers are willing to spend,” Rainey said.
“The common thread running through them all is greater digital engagement with our consumers.”
The companies would even be allowed to use the customer data on websites that Walmart does not own or operate.
According to Walmart’s recent quarterly reports, the Connect program has benefited sales significantly.
The company’s total revenue increased about 30 percent to $2.7 billion as of January 31.
Walmart also reported that ad sales have grown steadily by 41 percent over the past few years and in the fourth quarter.
Rainey said Walmart.com has also grown, offering a whopping 400 million products to online shoppers.
This effort to build a robust online store coincides with shoppers’ desire for convenience and e-commerce, Walmart’s CFO said.
“Convenience…really resonates with consumers, and it allows us to have these points of distribution as consumers become more e-commerce inclined over time,” Rainey noted.
“They’re all very connected.”
The US Sun has reached out to Walmart for official comment on their shift in focus to online retail.
FURTHER CLOSURES
Walmart’s alleged refocusing on e-commerce and online advertising comes as several closures of its brick-and-mortar stores in the United States continue.
As The US Sun previously reported, a Walmart location in Washington DC is closing for good on March 31, leaving some residents “devastated.”
Not to mention at least five other stores are closing this month alone as the “retail apocalypse” continues to loom, according to Reuters.
The stores that will close soon include:
- Walmart Supercenter in Plainfield, Illinois (March 10)
- Walmart Supercenter in Homewood, Illinois (March 10)
- Walmart in Albuquerque, New Mexico (March 10)
- Walmart Supercenter in Milwaukee, Wisconsin (March 10)
- Walmart in Pinellas Park, Florida (March 17)
In addition to Walmart’s shifting focus, the reasoning behind these closures can be attributed to inflation.
That, combined with an increase in online shopping, has reduced consumer demand, making it increasingly difficult for all retailers to survive.
For related content, check out The US Sun’s full list of retailers closing locations in 2023.
The US Sun also has the story of five supermarkets confirming major closures this week.
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