At Walmart’s 2023 Investor Community Meeting in Tampa, Florida, the retail giant unveiled its strategy of people-centered growth and leveraging a state-of-the-art integrated supply chain network to drive strong revenue growth, margin expansion, and higher return on investment.
Walmart reported that it projects sales growth of 4% over the next three to five years, representing an increase of $130 billion. In addition, the company expects that by the end of fiscal 2026, about 65% of its stores will have automated services, approximately 55% of fulfillment center volume will move through automated facilities, and unit cost averages could improve by approximately 20%.
“We are in a unique position to serve our customers and members however they want to shop, which will fuel continued growth,” said Doug McMillon, Walmart president and CEO. “As we grow, we will improve our operating margin through productivity advancements and our category and business mix and drive returns through operating margin expansion and capital prioritization.”
As part of the meeting, the retailer is highlighting its purpose, unique culture, and the importance of its associates and unveiling its plan for a new, more connected, and automated supply chain to enhance its customer and associate experience while simultaneously increasing productivity.
Walmart is redesigning its supply chain to meet customer needs with a smarter, more connected omnichannel network enabled by increased use of data, intelligent software, and automation. The result is improved supplies, inventory accuracy, and flow, whether customers shop in stores, pick up their orders, or use home delivery.
Therefore, stores function both as places to shop and as distribution and fulfillment centers. Distribution and fulfillment centers stock a mix of items from suppliers and vendors. This allows Walmart to use its existing assets more flexibly and efficiently for new ways of working.
As the company transforms, there are shifts to roles that require less physical labor but are higher paying. Over time, Walmart anticipates higher output per person through automation while maintaining or even increasing its number of associates as new roles are created.
“It all starts with our associates,” McMillon said. “We are a people-led, tech-powered omnichannel retailer. As it relates to being people-led, it’s about purpose, values, culture, opportunity, and belonging. We serve our associates by creating opportunities. Opportunities that turn jobs into careers. We help bring dignity to work by enabling them to see how they’re serving others as part of a team and helping them achieve their potential. And as we serve them, they serve our customers and members well…they make the difference.”
The company expects its growth investments will transform its financial profile, focusing on three key pillars: growing sales from its omnichannel business model; diversifying profit streams through improved category and business mix; and expanding proven, high-return investments that drive operating leverage and improving incremental operating margins.
“The investments we’ve made have positioned us well and stand to generate steady and sustained growth at higher margins. Achieving our targeted 4% sales growth over the next five years would add more than $130 billion of sales on top of our roughly $600 billion base today. On top of that, we think the opportunity for operating income growth over the next 3-5 years could be better than what we’ve outlined,” noted John David Rainey, Walmart’s executive vice president and chief financial officer.