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Walmart expects ‘connected customer’ to lead 40% e-commerce growth by 2019

BY David Salazar

BENTONVILLE, Ark. — Walmart is counting on the “connected customer” and strong e-commerce growth as its two competitive weapons in the ongoing digital retailing war.

Walmart has augmented its fiscal year 2019 guidance with an expectation that e-commerce sales growth in the United States will increase by a staggering 40% by 2019. Walmart also predicted that consolidated net sales will grow at or above 3%, driven by comp-sales and e-commerce growth.

“We’re combining the accessibility of our stores with e-commerce to provide new and exciting ways for customers to shop,” Walmart president and CEO Doug McMillon said. “I’m proud of the team we have in place, the work we have underway and how we are positioned for success in the future.”

With the acquisition of Jet.com in September 2016, the company has stepped up its e-commerce game by expanding its online assortment, adding two-day free shipping with no membership fee, and operating over 1,000 online grocery pickup locations. These efforts have contributed to both traffic and comp sales improvements, as well strong e-commerce growth over the past year.

McMillon also used the event to highlight Walmart’s global innovations, such as one-hour delivery from stores in China, commitments to sustainability, service to communities, especially in times of disaster.

The company has also successfully invested in associates and empowering them to drive results and better serve customers. Specifically, the company is equipping associates “with training and technology so they will continue to innovate in our stores, clubs and through e-commerce to find ways to deliver an enjoyable shopping experience that is easy, fast, friendly and fun,” McMillon added.

Digital experiences remain front and center going forward. For example, the company’s guidance for 2019 includes a plan to add 1,000 online grocery locations across its U.S. operation. It also expects to leverage expenses, and that its effective tax rate will be approximately 32.5%.

The discounter expects capital expenditures to be approximately $11 billion for fiscal years 2018 and 2019. Walmart plans to use capital for store remodels and digital experiences over investing in new stores. Among its planned e-commerce investments are enhanced supply chain capabilities.

Overall, the company expects global unit growth of approximately 280 locations, including new, expanded and relocated units, for each of the fiscal years 2018 and 2019. Specifically, Walmart U.S. expects to open fewer than 15 Supercenters and fewer than 10 Neighborhood Markets in fiscal year 2019.

Walmart International expects to open approximately 255 new stores with a focus in key markets, such as Mexico and China. In addition, Walmart International will invest in fulfillment capabilities, according to the company.

Walmart operates more than 11,600 stores under 59 banners in 28 countries and e-commerce websites in 11 countries.

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Walmart streamlines returns process with new mobile effort

BY Deena M. Amato-McCoy

BENTONVILLE, Ark. — Eager to streamline the often frustrating task of merchandise returns, Walmart will introduce Mobile Express Returns. Starting Nov. 9, the new service will enable online customers to use the Walmart app to begin the returns process — before even heading to their local store.

Here’s how it works: Customers follow prompts on the Walmart app to find their transaction and pinpoint the merchandise they want to return. Once completed, they can go to their local Walmart store, and enter the Mobile Express Lane.

Here, they scan a QR code displayed on their Walmart app directly onto on a dedicated card reader. The refund is credited back to the shopper’s payment account by the next day, according to Walmart.

The returns process, which the company estimates will take 35 seconds or less, can be completed across Walmart’s more than 4,700 locations.

The discount giant plans to streamline the process even further in December, when it enables customers to instantly receive their refund without even making a trip to the store to physically return the item. This service will initially be available on select household items, such as shampoo and color cosmetics, and others items to be added over time, Walmart said.

“We know that returning an item and waiting for a refund, especially for a product purchased online, isn’t always seamless, so we’ve completely transformed the process for our customers – whether they are shopping in stores or at Walmart.com,” said Daniel Eckert, senior VP, Walmart services and digital acceleration, Walmart U.S. “By leveraging our physical stores and the Walmart app, we’re changing the returns game in ways that only Walmart can do.”

To ensure that shoppers don’t abuse the system and keep merchandise they have already been reimbursed for, the discounter has invested in technology to make sure the service isn’t exploited and even detect shoppers who might be abusing the privilege, according to The Street.

Looking ahead, store purchases will be integrated into the program in early 2018. The company also is creating a similar streamlined returns process for items sold by third-party sellers on Walmart.com, according to the discounter.

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Costco rolls out expanded delivery options amid Q4 results

BY Marianne Wilson

ISSAQUAH, Wash. — Costco Wholesale Club is upping its home delivery game for online food orders as the grocery delivery market continues to heat up.

The retailer has introduced a new two-day delivery service, called CostcoGrocer, for customers across the United States (with the exception of those in Alaska, Hawaii, and Puerto Rico.). The service, which has a fee of $3, offers delivery of non-perishable foods and sundries, with about 500 items available. The delivery fee is waived for orders over $75.

Costco also is expanding its same-day delivery partnership with Instacart to more markets. The program, which includes both dry and fresh foods, is available at some 375 Costco locations. It also is being expanded to include more products.

Costco's moves to expand online delivery come as Walmart and Target are also upping their games. On Oct. 3, Walmart announced it had acquired Parcel Inc., a last-mile delivery startup that specializes in delivery of perishable items and general merchandise to customers in New York City. Target recently expanded the rollout of its next-day delivery service of household essentials, Target Restock, to eight new markets.

“There’ll be a number of additional U.S. locations planned – added between now and the end of calendar 2018 as our partnership expands,” Costco CFO Richard Galanti said during the company’s fourth-quarter earnings call.

The call accompanied the wholesaler’s posting of better-than-expected fourth-quarter sales results, which notably saw e-commerce sales rise 21% over the year-ago period.

Net sales for the 17-week fourth quarter ended Sept. 3 rose 15.8% to $41.36 billion, compared with $35.73 billion in the year-ago period, which had 16 weeks. Total same-store sales rose 6.1%, with a 6.5% increase in the United States and a 4.9% increase in Canada. International same-store sales rose 5.6%.

Costco's net income for the quarter was $919 million, compared with $779 million last year. 

Net sales for the 53-week fiscal year rose 8.7% to $126.17 billion. Net income was $2.68 billion, compared with $2.35 billion last year.

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