As COVID-19 recedes, the “new normal” for Walmart and other retailers will mix the pre-pandemic consumer environment with the behavioral changes brought by the health crisis, Walmart U.S. President and CEO John Furner said at the National Retail Federation’s NRF Retail Converge conference.
“We’ll think of 2020 as some sort of point of inflection for all of us personally, professionally,” Furner told NRF President and CEO Matthew Shay yesterday in a keynote chat at the online-only event. “In some ways, it feels like we’re getting back to normal, but I think what we’re really heading to is a new normal, which will be a blend of what we were before the pandemic and some of the things we’ve learned to do — just like we’re talking today, remotely. Some of that will continue. I think some of our trends with shopping that have changed will continue, and we’re looking forward to seeing what’s next.”
The picture isn’t clear yet for retailers in terms of what changes in shopper habits will be lasting for the post-pandemic period, according to Furner. But e-commerce growth has accelerated by several years, and consumers can be expected to embrace an omnichannel approach to shopping as they return to stores, he said.
“It’s probably a bit too early to tell. It was definitely too early to tell last year,” Furner explained. “What happened last year for Walmart, we probably skipped about four years worth of change, evolution, transformation, growth — whatever we’d like to call it — in the e-commerce space. Just in the first quarter of this year, we were up 37% [in e-commerce sales] on top of 77% last year, so well over double the business in two years. While there will be some fluctuations, and there’s still some settling to do. I think underlying trend is what the trend would have been. And there’s been a steady shift from a combination of in-store shopping to in-store shopping and pickup and in-store shopping and delivery to home.”
Walmart has responded to pandemic-induced uncertainty in the consumer space by building in the flexibility to meeting changing shopper needs, Furner noted.
“What we try to think about is how we’re positioned to be able to do anything a customer needs at any time. That’s really the strength of the positioning of Walmart. We’ve got a store footprint that’s up to about 4,700 locations. The supply chain is able to serve fulfillment centers and stores. Stores are now acting not only as a store, but as a fulfillment center in some ways, because we’re able to pick orders for pickup, for delivery InHome for Walmart+ members and for e-commerce,” he said. “Just yesterday, a friend sent me a text from Dallas and said, ‘I ordered something from Walmart.com and it showed up a few hours later on my doorstep. How’d you do that?’ Well, it’s just the team has really spent a lot of time in the last year thinking about the positioning, the advantage of having forward-deployed inventory in so many communities.”
That enables Walmart to keep customers stocked up on basics at home as well as to act quickly, such as through the Walmart Express service.
“Yesterday, I used Express. I made a grocery order at exactly 10:00 and at 11:11, it showed up at the front door,” said Furner. “It all has to work on top of what is a great store network, where we have friendly associates and clean stores and they’ve just done an amazing job positioning. We’re going to be really flexible for the customer. And whatever the situation with the customer is, we think we can be flexible enough that we can be there given any change in the environment.”
In the latter part of the first quarter, Walmart saw in-store traffic shift from negative to positive year over year, coinciding with the one-year mark of the COVID outbreak in the United States and potentially signaling that consumers feel more comfortable shopping in stores again.
“It’s still a bit too early to call, and I’m probably going to say that in a year. Because the thing I know about customers and have learned over the years is that they will continue to change based on the experiences they have, and customer expectations continually rise,” Furner said. “For those that meet customer expectations and change with customers, they’ll be successful. And when you don’t meet customers’ expectations, and don’t change with them, you tend to be unsuccessful.”
Consumers define value mainly as quality and price, but it also involves “the time taken away from customers,” Furner pointed out. “It’s always about understanding what is possible for the us and the customer together. We need to be anticipatory,” he said, adding, “We spend a lot of time thinking about where the customer’s going, where the market’s going, and we’ve got to at least be as fast or faster than our competitors.”
Keeping that edge will require new thinking about the supply chain, as everyone learned during the disruptions brought by the pandemic, Shay and Furner agreed.
“We’re investing in our supply chain in a big way over the next few years, not only in the physical supply chain but also about how our supply chain can be more dynamic,” Furner said. “If consumers are shopping both physically and virtually, or a combination thereof, what they’re expecting is for it to be delivered in the way they want it, when they want it. And we’ve got to be able to handle the complexity of the supply chain in the background. I think over the next few years, you’ll see supply chains become more dynamic and the timeline from idea to delivery speed up.”
Besides evolving to an omnichannel fulfillment model, Walmart also is sharpening its focus on U.S. manufacturing to bring more proximity to the supply chain.
“We just announced a $350 billion commitment over the next few years for U.S. manufacturing,” said Furner. “And I’ve been able to visit a couple of those [suppliers]. I said something earlier about having inventory forward, deployed closer to the customers. It’s the same with final-assembly manufacturing. These products that are grown, made or assembled in the U.S. will help us be more dynamic and get to customers in a more flexible way.”
Furner also spoke of balance when Shay asked how Walmart can reconcile its long-term planning and investment before the COVID-19 pandemic with learnings from its recent experiences during the global crisis.
“Certainly my career, I’ve worked or lived through something like that, and hopefully we won’t have to again, because it had such an effect on so many people,” Furner said. “You’ve always got to think about balancing the long term and the short term. In situations like what we were in last March, April, May, June and July, there were more short-term things to think through, and you could put in a 24-hour day. But we never can stop thinking about the changes that this is going to have on customers and the way they act, the way they show up and the way that the market will respond in the future. So what I try to do and continue to try to do is to make sure that there’s time available and resources put against building for the future while managing the present.”