That’s the goal for Wal-Mart Stores Inc. as the world’s largest retailer aims for sales of $500 billion by 2016 — without acquisitions.
Mike Duke, the company’s president and chief executive officer, revealed the target at Wal-Mart’s annual meeting for the investment community on Tuesday.
A significant part of that growth is expected to come from the retailer’s e-commerce activities, which were expected to generate revenues of $9 billion in the current fiscal year, but in May that was raised to $10 billion. Walmart.com is seen having sales of $13 billion in 2014, “which makes us the fastest-growing site,” said Neil Ashe, president and ceo of global e-commerce.
Digital dominated a large part of the presentation as Wal-Mart aims to gain traction against its much larger online rival Amazon.com, which it has historically lagged.
“Neil and e-commerce shows how integrated this overlap of physical and digital is; it came to play in all the presentations,” said Duke.
Ashe shed light on Wal-Mart’s global technology platform Pangaea, which has helped e-commerce advance quickly at home and abroad. “We know who every person in the world is and we know every product in the world, and we’ll connect them,” Ashe said. “It’s built on a service-oriented platform. We’ve improved search; conversion is 20 percent-plus higher. We’re rolling Pangaea out to samsclub.com.”
Walmart.com in the U.S. has grown its assortment to 5 million stockkeeping units, compared with 150,000 sku’s in SuperCenters. “We’re pushing the boundaries on new vendors at walmart.com,” Ashe said, adding, “We’ve developed merchant tools. Pangaea can predict demand and deploy merchandise.”
Next-generation fulfilment networks are also enabling global e-commerce’s march. “We’re building technology assets and e-commerce-specific fulfilment aspects that combine with the existing assets of the world’s largest retailer, for example, truck fleets and a network of stores around the country. We use algorithms” to decide from where to ship an item. “Only we can pull all these things together. We have online-only fulfilment centers, DCs [distribution centers] and 4,100 stores that position Wal-Mart closer to our customers.” Ashe said walmart.com has sped up delivery times by 15 percent, while lowering costs by 10 percent.
Walmart.com now can monitor the competitive landscape, drilling down to the smallest Neighborhood Market or one of Asda’s biggest competitors in the U.K., Tesco. “We’re competitive in price online in the U.S.,” Ashe said. “We built incredibly sophisticated merchant tools. Seventy-five percent of the time, we’ll have the lowest price online.”
Rosalind Brewer, president and ceo of Sam’s Club, and Doug McMillon, president and ceo of Wal-Mart International, also touted technology. “The majority of members come to the clubs with smartphones,” Brewer said. “At the end of the second quarter, our redesigned mobile app helped improve overall shopping by 25 percent.”
Sam’s Club is building a member engagement platform that will bow next year, first through direct mail and then online. It includes a mobile app that sends consumers updates on products aligned with their needs and offers rewards at checkout. “It will revolutionize the way we do business,” Brewer said.
“We’ve had great gains across the business,” she added. “The first is apparel. We are more robust in our branded offerings. Apparel has seen a midsingle-digit comp increase.”
Charles Redfield, chief merchant at Sam’s, said three times as many new items were added to home and apparel versus a year ago. “We’re a house of brands,” he said. “We have the same brands as the big department stores in New York and Boston, with up to 60 percent [off]. We’re changing the merchandise. With new and different merchandise, I’m confident we’ll have a great holiday.”
“We’re seeing a shift from Boomers to Millennial,” Brewer said, noting that small businesses, Sam’s traditional base, are struggling.
Wal-Mart International also struggled, delivering softer sales — $135 billion — than expected. Country results were a mixed bag, with Brazil up 13.8 percent in market share and Japan down 8 percent. McMillon said new rules issued by the Indian government led Wal-Mart to change its agreement with Barti, which will take control of the retail stores while Wal-Mart will retain the Cash and Carries.
In Mexico, Wal-Mart sold its restaurant business, and in Brazil and China closed underperforming stores. The actions, together with India, will be dilutive to earnings by 5 cents to 7 cents, mostly in the fourth quarter.
Meanwhile, International has added capabilities in e-commerce and mobile and made investments in apparel and other areas. Walmart.com recently bowed in Canada. The retailer said it stepped up its game in the face of competition from Target Corp. “We spent a lot of time looking at our apparel and home ranges due to [Target] and we’re very pleased with them,” McMillon said. “Market share has remained very consistent.” McMillon said George at Asda in the U.K. will launch in Chile, Japan and South Africa, “so there’s real progress there.”
Wal-Mart U.S. accelerated its small-format openings and e-commerce fulfillment centers, increasing 2014 projected capital expenditures by $500 million to $6 billion to $6.5 billion. Wal-Mart Stores’ capex is expected to be $11.8 billion to $12.8 billion for 2015. The company maintains its 2014 capital forecast of $12 billion to $13 billion. Wal-Mart International will reduce its capex by $500 million due to fewer new store openings. The company will add 33 million to 37 million net retail square feet worldwide next year, with more than half of the increase driven by Wal-Mart U.S., including accelerated small-format openings.
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
For men’s fall 2018, @giuseppezanotti drew on elements from streetwear, sport, biker, combat and rock ‘n’ roll. Pictured here are a pair of shoes from the collection, featuring zippers, rhinestones, and silver hardware. Head to WWD.com to see a roundup of the accessories from Milan’s men’s fall 2018 shows. #wwdfashion (📷: Andrea Delb)
To celebrate the 25th anniversary of @ralphlauren’s snowboarding collection, the brand is mining its archives. The iconic brand is reintroducing vintage styles and dropping new designs for a color capsule that will be available in Ralph Lauren stores and @openingceremony on January 25. The capsule will consist of 10 pieces, including the Snow Beach Pullover, pictured here, which is a collector’s item that rapper Raekwon wore in Wu-Tang Clan’s “Can It Be All So Simple” video. #wwdfashion (📷: Tom Gould)
For @rochasofficial’s pre-fall 2018 collection, creative director Alessandro Dell’Acqua channeled the sophisticated and intriguing Catherine Denevue in the film “Belle de Jour.” Polished collarless coats, midi skirts, suits and ’60s graphic motifs were all featured in the collection, adding a sense of discreet luxury. See the rest of the photos on WWD.com #wwdfashion
“We tried to produce clothing of that couture quality, but the most daunting part was that we only had a matter of days [to do it],” said costume designer Lou Eyrich, who recreated Gianni Versace’s iconic looks for @americancrimestoryfx. Eyrich searched online retailers and vintage shops for original pieces from the design house and for @penelopecruzoficial, who plays Donatella Versace. Head to WWD.com to read how she created the Versace world. #wwdfashion
Only three months after her stellar debut catwalk season, @kaiagerber has inked her first big design collaboration –– with @karllagerfeld. The collection blends Lagerfeld’s Parisian chic aesthetic and the model’s signature West Coast casual style via RTW, accessories, footwear and more. The #KarlLagerfeldxKaia collection will launch in September with a series of events. Get all the details on WWD.com. #wwdnews #wwdfashion
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews