Walmart Plays Up its Embrace of Tech to Shareholders

June 3, 2016, 9:15 PM UTC
Wal-Mart Shareholders
Katy Perry performs during the annual Wal-Mart Shareholders Meeting at Bud Walton Arena in Fayetteville, Ark., on Friday, June 3, 2016. (Jason Ivester/NWA Democrat-Gazette via AP)
Jason Ivester — AP

Walmart (WMT) has grown to be the largest U.S. retailer, with $300 billion in annual sales, by offering bargain basement prices on a huge assortment of products and dotting the country with its big-box stores.

But now the 54-year-old discount chain is trying to prove it can renew its playbook, showing off things like its use of drones and mobile payment apps at parent company Wal-Mart Stores’ annual shareholders’ meeting on Friday in Fayetteville, Ark.

This month alone, the company founded by Sam Walton will have set up all of its U.S. stores to accept its in-house Walmart Pay mobile payments app, and will start testing the use of Silicon Valley startups Uber and Lyft to deliver groceries in Denver and Phoenix.

“We have the opportunity to re-imagine retail. Again,” CEO Douglas McMillon told workers and shareholders gathered at an arena in Fayetteville. “That’s what we’re out to do.”

As if to prove the point that Walmart is tech savvy, McMillon used a digital book depicting the history of Walmart in making his address to shareholders and later broadcast part of the meeting on Facebook Live.

The event was packed with 14,000 people. The annual gathering is part meeting, part pep rally, and this year’s installment was hosted by late-night comedian James Corden and featured performances by music acts Katy Perry, Nick Jonas, and Maxwell.

For years, all Walmart had to do was “build it and they will come.” But its price leadership has been threatened by the likes of (AMZN), even as dollar stores have improved their assortment and mushroomed across the country, making it less necessary for customers to drive to a Walmart store.

And so tech is playing an increasingly central role in every aspect of its business, well beyond its e-commerce site, from gathering more information on a customer’s most commonly purchased items, to making sure a store is fully stocked to tracking merchandise inventory.

Earlier this week, Walmart showed off to journalists a drone it was testing in warehouses, to better track merchandise inventory. While supply chain issues like those might sound like dry, prosaic matters, they’re key to making sure stores avoid stock-outs and are able to step in to fill in online orders.

Walmart also announced it was expanding its curbside pickup service for online grocery orders to 14 new markets for a total of 54 by early summer.

There is no doubt that Walmart is making digital progress: it is the second largest online retailer in the U.S., with sales of about $13 billion last year. In April, its web site drew 87 million unique visitors, making it the second most visited e-commerce site after (In dollar terms, Amazon generates about six times more than Walmart does online.)

And yet Walmart’s online sales growth has slowed of late, rising only 7% last quarter. (The company does not break out U.S. results, though eMarketer estimates that the U.S. market generates 90% of online sales.)

In the three months ended in late April, Walmart U.S. comparable sales rose 1%, good enough to beat many retailers, but modest enough to show how crucial reigniting e-commerce growth will be. What’s more, Wal-Mart Stores is looking to add $60 billion to its annual sales in the next three years. (Last year Wal-Mart Stores, the parent company that also owns Sam’s Club and a large international business, reported its first ever decline in sales as a public company.)

Walmart said after the meeting that shareholders had approved all 12 company-recommended board members and rejected shareholder proposals it had opposed. (About 51% of Wal-Mart’s stock is controlled by the Walton family.) That included the re-election to the Walmart board of two tech leaders: Kevin System, the CEO of Facebook (FB) unit Instagram; and Marissa Mayer, CEO of Yahoo (YHOO), two people McMillon has said are crucial in guiding Walmart’s digital future.

“There is momentum in this business. It’s real,” McMillon told his staff and investors.

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