On Tuesday, Walmart reported its first quarter financial numbers, beating analyst expectations and demonstrating that it is successfully navigating the coronavirus pandemic. But the financial numbers aren’t the real story behind Walmart’s success, it’s the strategy by which it got them that provides lessons for leaders looking to navigate these uncertain times.
Retailers such as Walmart and Target have been big winners during the pandemic as customer have stocked up on home supplies and other products heavily used during the stay-at-home spring. Alongside Amazon and other home-delivery services that have rapidly responded to changing customer shopping habits, both Walmart and Target have maintained their strong market position, especially for shoppers who have continued to shop in person over the past several months. In its most recent earning report, Walmart reported that same store sales were up 10% for the quarter due to increased sales of food and other consumables, as well as health and wellness products.
But key the factor that had a major impact on the Arkansas-based retailer’s success over the past few months have been its eCommerce sales, which grew 74% as a result of strong results from grocery pickup, and delivery services, Walmart.com and marketplace products. While the data from the most recent earnings report is eye-popping, the seeds for Walmart’s current success were actually planted far before the coronavirus started spreading around the planet.
Several years ago, in the bolstering of its’ competitive position against Amazon, Walmart invested heavily in its eCommerce capabilities. Although Walmart just announced that it is shelving its Jet.com online retail strategy, it was the $3 billion purchase of the online retailer in 2016 that helped accelerate Walmart’s capacity for online commerce that it is heavily relying on today.
The Jet.com acquisition gave Walmart a boost in online commerce that, coupled with its global footprint of over 11,500 stores across 27 countries, made it a multidimensional retailer that could compete both in-person and online. Investing in Jet, Walmart was able to rapidly learn and deploy ‘basket economics’ — an approach to eCommerce that relies on packaging and delivering products to customers in a localized, efficient and transparent way. Harnessing the online delivery mindset with the capacity of local stores to provide pick-up, Walmart started to build a winning strategy, the success of which it is reaping today.
By leveraging combination of efficiency and proximity, customers not only can make purchases more frequently, but also purchase more products. And in times like now when shopping in person is less appealing than online purchasing, the basket-building mindset it critical – especially when customers are not only purchasing for current consumption, but also with an eye towards stockpiling.
In other words, Walmart didn’t need to substantially change its eCommerce strategy to respond to the pandemic, it just needed to lean into the capacity it started building several years ago. That is why it is winning today.
The lesson to leaders then is obvious. While the present circumstances are requiring many leaders to make critical pivots in their business models, those who laid out strategies, digital or otherwise, far in advance of the pandemic are on more solid footing. And while it feels like every decision needs to be based on the ‘here and now,’ some of the wisest decisions leaders can make today will not be how to respond to present demands, but how to build the capacity to respond to future ones as well.
In a time of unprecedented challenge, leaders don’t always need to rely on unprecedented ideas. In fact, it might be the optimistic strategies that they have slowly built over time that will be their best vaccine for future uncertainty. And while not every business has the capacity of Walmart to build big bet strategies the likes of which it is benefiting from today, every leader can think a bit more like the big box retailer, and that lesson is simple:
Start now, because who knows what tomorrow will bring… or deliver.
Source : Forbes