More Bullish On Walmart (WMT)

Retail
Written By Rick Watson

Walmart Q1 FY22 Earnings Call Recap

Strong and Patient quarter. More bullish leaving the call than I was before. Their model is a mix between Target and Amazon.

A few points:

  1. They are starting to figure out the flywheel dynamics that Amazon perfected. In particular 1P/3P mix, WMT Connect (ads), and Walmart Fulfillment Services. The key phrase used was “shape of the P&L is changing”. This is what happens when you add new higher-margin revenue streams to the model.

  2. Store Capacity I came away more bullish in Walmart’s investments in stores. Store Capacity is the big motivator behind its automation / micro-fulfillment investments. Faster picks and more windows. This type of logistics is stuff Walmart should be good at. I am more bullish on the Walmart vs the Kroger/Ocado approach because the fundamental investment is in the Stores, not in separate facilities which I think will prove to be a major strategic mistake for Kroger.

  3. The biggest surprise I heard was that Walmart+ is not the biggest priority for them. Worries me because these investments should mostly be digital. It indicates a lack of talent in understanding consumer behavior and may point to a strategic weakness going forward that Target, Instacart, and Amazon can continue to take advantage of.

Rick Watson

Rick Watson founded RMW Commerce Consulting after spending 20+ years as a technology entrepreneur and operator exclusively in the eCommerce industry with companies like ChannelAdvisor, BarnesandNoble.com, Merchantry, and Pitney Bowes.

Watson’s work today is centered on supporting investors and management teams incubating and growing direct-to-consumer businesses. Most recently, in partnership with WHP Global, Rick was a critical resource in architecting the WHP+ platform, a new turnkey direct to consumer digital e-commerce platform that powers AnneKlein.com and JosephAbboud.com.

Watson also hosts a weekly podcast, Watson Weekly, where he shares an unbiased, unfiltered expert take on the retail sector’s biggest players.

In the past year alone, Rick has spoken at many in-person and virtual events as well as podcasts on topics ranging from retail/ecom to supply chain/logistics and even digital grocery including CommerceNext IRL, ASCM Connect, and Retail Innovation Conference.

https://www.rmwcommerce.com/
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