Analysts attending the 23rd annual Goldman Sachs Global Retailing Conference on Wednesday had a lot of questions for Wal-Mart Stores Inc. chief financial officer Brett Biggs, including the strategy behind the retail giant’s recent $3 billion acquisition of

“There are a lot of different ways to think about the Jet transaction,” Biggs said. “I kind of break it out into three different pieces. The first will be just Jet on its own. They’ve grown very quickly. What they do with their SmartCart is interesting and unique in terms of the way they encourage the customer to build the basket.”

Jet founder Mark Lore has joined Wal-Mart as part of the deal. “The ability to take what the team knows, their industry knowledge, and help us to continue to grow Jet and also is certainly a big benefit for Wal-Mart,” Biggs said. “Mark and his team coming over and helping business and potentially doing different things with Jet is exciting.”’s existing business counts 15 million stockkeeping units, almost double the number it had a year ago. The retailer in the recent second quarter saw GMV accelerate to 13 percent.

Biggs said the two brands will coexist. “There is a good rationale for having this amazing [store] footprint with Wal-Mart, having and having a second e-commerce brand that stands for something else with consumers,” he said.

Biggs noted that Wal-Mart’s experience already includes operating stores with different nameplates in the U.S., including Neighborhood Markets and Sam’s Club, and globally, Walmex in Mexico and Asda in the U.K., among others, as well as country-specific e-commerce sites.

“There’s just opportunities to potentially try new things and access the different types of customers that Jet has,” Biggs said. “They typically have more urban consumers than has.”

A $1.5 billion deal between Wal-Mart and China’s in June was described as a “strategic alliance” by the two parties. acquired ownership of Wal-Mart’s China-based Yihaodian marketplace, which the latter will continue to operate. In exchange, Wal-Mart will receive nearly 145 million newly issued Class A ordinary shares, representing about 5 percent of the Chinese e-tailer’s total shares.

“There are other opportunities we can take advantage of over time,” Biggs said of the deal. “’s e-commerce culture is fairly similar to Wal-Mart’s.”

Switching topics, Biggs touted the retailer’s second-quarter results, which included a 1.6 percent comp-store sales increase. “The wage investment we made was an important part of that,“ he said, referring to Wal-Mart earmarking $2.7 billion over two years to raise U.S. associate wages to $10 an hour.

Another metric, inventories, was down 6.5 percent in the second quarter, Biggs said. “If you look at our inventory being down, but in-stocks being up, that’s a great combination.”

Biggs noted that the retailer has cut prices in some categories that help drive traffic and its gross margin has been increasing. “There are a lot of elements to gross margin,” he said, “things like shrink and costs of the products. There’s also logistics, which are being helped a little bit now with fuel prices.”

Food deflation is a serious issue Wal-Mart is facing. “I wish I had a crystal ball,” he said. “[Food deflation] has been fairly significant. Long-term, we want people to shop with Wal-Mart and that means making sure they get the right prices.”

Biggs acknowledged the growing competition in the grocery aisles. “Aldi and Lidl are fantastic businesses,” he said, noting that Aldi operates in the U.S. and Lidl is coming. “The size of the retail market here is different. Getting scale in the U.S. takes a little longer. They’re very good businesses. We have so many competitors in terms of online, grocery, category killers, dollar stores. We think we’re unique bringing together our physical assets with e-commerce.”

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