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How Wal-Mart Stores, Inc. (WMT) Is Re-Imagining Company’s Future

Wal-Mart Stores (WMT) Doug McMillon

At the 46th annual shareholders meeting, Wal-Mart Stores, Inc.  President and CEO Doug McMillon urged the company’s associates and shareholders to “reimagine retail again.” McMillon called on the company’s 2.3 million associates to write the next chapter in Walmart’s story.

Wal-Mart Stores (WMT) Doug McMillon

The world’s largest retailer plans to expand its online presence. The company will be focusing on improved online shopping system, fast delivery service, and user-friendly apps and website. “We have the opportunity to reimagine retail again,” McMillon said.

More than 14,000 people attended Wal-Mart’s annual meeting. McMillon outlined three critical steps for the retailer’s reinvention: supporting and engaging Walmart associates, serving customers and serving communities.

McMillon reinforced the call to action by announcing that Walmart is now working with Uber and other partners to test deliveries to customers from U.S. stores and clubs. He also took to Facebook Live to connect directly with Walmart associates around the world and thank them for their service.

Wal-Mart is planning to its marketplace in the U.S. The company will focus on more convenient delivery options, including a fast home delivery through Uber and others and a new two-day shipping pass.

The retailer has set a goal of $60 million in revenues over the next three years.

Home Delivery Through Uber, Lyft and Deliv

Wal-Mart Stores, Inc.  said it will test grocery home delivery service with ride-sharing services Uber, Lyft and Deliv. The tests are expected to begin within the next two weeks in Denver and Phoenix.

When a customer from the test locations will place an order, the online retailer will ask a driver from Uber or Lyft to come pick up the customer’s order and take it directly to the customer’s location. “We’ll also let them know their order is being delivered by a driver from Uber or Lyft,” the company said. There will be no additional fee to customers.

The retailer is developing pickup or delivery capabilities in 11 countries. In China, the company is moving aggressively with pickup and delivery.

Drones To Manage Warehouses

Additionally, the retailer is testing drones to manage inventory at its large warehouses, in a bid to compete with Amazon.com, Inc. (NASDAQ:AMZN). The retailer plans to use flying machines to handle inventory at its warehouses in the future.

The drone will tested in the next six to nine months across the company’s distribution centers. Last year, Wal-Mart applied to the Federal Aviation Administration for permission to begin testing drones. Shekar Natarajan, vice president of last mile and emerging science, said that drones could help catalog in as little as a day what now takes employees about a month.

Wal-Mart’s Online Presence

Wal-Mart plans to focus on improving the digital shopping experience. The retailer has made progress online this year. The company’s website, Walmart.com, had 87 million unique visitors in April, the second most-visited online site after Amazon.

“We’re connecting all the parts of Walmart into one seamless shopping experience with great stores, easy pickup, fast delivery, and apps and websites that are simple to use,” McMillon said.

To improve the checkout experience, the retailer is going to offer Walmart Pay in every store by the end of this month in the U.S. The company recently announced an unlimited two-day shipping option from its website, Walmart.com.

“As the world becomes more digital, it will be the humanity of Walmart that differentiates us and wins with customers. Our investments in education and training, store structure, wages, hours and sales floor technology are to support you and enable you to serve your customers and members. Every associate has a role to play. The actions of 2.3 million of you add up to something big,” McMillon said.

Wal-Mart For Families

McMillon said that he wants to see Wal-Mart as the first place where families go to save money and time on their everyday needs.

“This is our ambition globally: we want to be the first place busy families go to save money and time, especially on their everyday needs,” McMillon said.

Wal-Mart is bringing back the “Smiley” face to represent low prices on items in its stores. The company reiterated its commitment to low prices noting that “low prices have always been our key differentiator and we have an unwavering commitment to providing our customers with low prices every day”.

“Our customers care about their neighbors, their planet and their children’s future. They want to buy products that are good for the environment and the people who made them,” he said. “They want items that are safe and healthy for their families. And ultimately they want to spend their money with a retailer they trust. We earn trust by operating in a way you and your family can be proud of. We’ll do that and more.”

Wal-Mart and Investors

Shares of Wal-Mart Stores, Inc.’s stock have gained 14.9% year-to-date. The company has a market cap of over $222 billion. For the first quarter of fiscal 2017, the company reported operating income of $5.28 billion, representing a year-over-year decrease of 7.1%. It posted quarterly revenue of $115.9 billion, versus $114.8 billion in the same period last year.

Wal-Mart seems to be doing better than most other peers, at least in the short term. That is what most analysts appear to think. For instance, it spent $2.7 billion to improve its staff by raising entry-level wages and more training. This led to higher customer service scores as well as store visits. Cowen Analyst Oliver Chen observed that there is positive traffic seen in US stores. This talks a lot about the real change the firm has brought about in the store experience. Even abroad, 10 out of the 11 markets in which the firm operates are in black.

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