Walmart’s annual investors’ meeting last week was a solemn affair as the world’s largest retailer realigned its growth predictions.
Walmart had a lot to discuss, as was proved by the meeting going on for more than eight hours. The main conclusions drawn from the event were the significant downgrading of sales projections for 2015, which have been readjusted from between 3% and 5% to between 2% and 3%.
Although lower than first thought, growth of 2% to 3% for Walmart equates to an increase of around $10bn (£6.2bn) to $15bn (£9.3bn) year-on-year.
Walmart’s future strategy includes a deceleration of expansion. Next year the retailer expects to add 26 to 30 million sq ft of new floor space globally, compared with 32 to 34 million sq ft this year.
Walmart is also to dispel the notion of its one-size-fits-all policy in international markets. Instead, it will focus on each individual market.
It will also wind back new floorspace development in the US (15 to 16 million sq ft versus 21 to 22 million sq ft).
The readjustment in square footage growth mirrors the lowering of sales projections. Capital expenditure will be only slightly less, at $11.6bn (£7.2bn) to $12.9bn (£7.9bn), as opposed to $12.5 (£7.7bn) to $13bn (£8bn) this year.
Within the capital plan, there will be a significant change in the areas the retailer invests in. Ecommerce and digital will be the main beneficiary.
Ecommerce spend is to be increased from $1.2bn (£743m) to $1.5bn (£929m), compared with $1bn (£619m) this year (and just $400m (£247m) in 2013).
Walmart has recognised the ‘heyday of retail’ has changed and times of aggressive expansion and rapid sales growth are long gone. Instead the industry has moved towards smaller formats, convenience, focusing more on the consumer and working its existing sales space harder.
As a result the retailer has delivered a very honest appraisal of its position in the market and recognised the right strategic course to ensure long-term prosperity.
Ultimately Walmart has acknowledged the ‘bigger picture’ and has moderated its strategic position to counter this. It is putting in place initiatives to ride with industry changes in order to drive its business further.