Walmart US CEO John Furner has recently disclosed the company’s strategy for managing inflationary periods to investors. According to Furner, Walmart aims to be the last to raise prices in order to maintain its competitive edge and offer low-cost goods and services to customers for as long as possible. This approach is part of the retail giant’s successful capitalization on interrelated trends of inflation, e-commerce growth, and cost reductions.
Firstly, Walmart is benefiting from inflation, with customers flocking to the retailer in search of affordable alternatives to high prices elsewhere. As more customers turn to online shopping, Walmart is able to increase sales and reduce the relative cost of offering goods and services. This leads to the second trend of lowering e-commerce fulfillment costs through densification and increased efficiency in order delivery.
By saving on fulfillment costs, Walmart is able to reinvest those savings into making price cuts on over 7,000 items. These price reductions lead to a 45% increase in discounts compared to the previous year. These price reductions, combined with improvements in store operations and a focused merchandising strategy, attract even more customers to Walmart, creating a cycle of success.
Walmart’s ability to leverage these three major trends – inflation, e-commerce growth, and cost reductions – allows it to win and retain new customers during uncertain economic times for consumers. By maintaining low prices and offering discounts while also enhancing its e-commerce capabilities, Walmart positions itself for continued success in the retail market.
