December 23, 2017
What’s in a name? For Walmart, it will soon be a little less. Earlier this month the world’s largest retailer announced it was changing its legal name from “Wal-Mart Stores” to “Walmart” to reflect its increasing emphasis on e-commerce.
Walmart’s tweak upends a 47-year-old tradition. The company, which was known as Wal-Mart, Inc, when it incorporated in October 1969, added the word “stores” three months later.
While the change won’t boost Walmart’s bottom line, it is more than just cosmetic, some analysts say.
“It signals that the way in which Walmart sees itself has shifted, and it wants to ensure that view is communicated to others,” says Neil Saunders, managing director of retail consultancy Global Data.
It also could help keep those working for Walmart focused on attracting shoppers as eager to tap their smartphones as they are to visit a store.
“It might focus minds internally and help aid understanding of what Walmart is trying to do as it moves into the future,” Saunders says. “That said, it’s a small part of a much bigger picture.”
“While our legal name is used in a limited number of places, we felt it was best to have a name that was consistent with the idea that you can shop us however you like as a customer,” Doug McMillon, Walmart’s president and CEO, said in a statement. “As time goes on, customers will increasingly just think of and see one Walmart.”
Is Walmart positioning itself to take on Amazon?
Though Amazon is the most dominant player in the online shopping space, Walmart has become a fierce competitor, steadily increasing its offerings and online partners.
Unseating Amazon as the biggest player in e-commerce is a tall, maybe even impossible task. But Walmart is giving the online titan a run for its money.
“It won’t become Amazon, but it doesn’t have to,” Clement Thibault, an analyst with Investing.com, wrote in a mid-November note after Walmart reported its latest earnings. “It has to make sure it remains a viable alternative to Amazon,” he added. “The pie is big enough to sustain multiple players.”
Walmart, which has been challenging Amazon by adding products, partners and perks, saw online sales soar in its most recent quarter.
The nation’s biggest retailer reported a 50% increase in U.S. online sales during the three month period that ended Oct. 31. The strong financial performance drove up the company’s stock price by 9%.
Walmart also continued to outpace many of its peers with increased revenue and traffic.
“We have momentum, and it’s encouraging to see customers responding to our store and e-commerce initiatives,” McMillon said in a statement.
The company’s moves to revamp its stores and hone its customer service appear to be paying off as sales at U.S. stores open at least a year — a key industry measure of financial performance — rose 2.7%. Traffic, which has been dipping at many retailers as more consumers shop online, climbed 1.5%.
The retailer has been shaping up as one of the key competitors to Amazon, buying online marketplace Jet, and niche sites like menswear retailer Bonobos, to attract a more affluent, fashion-conscious shopper.
Walmart tripled to more than 70 million the number of items available on its website. Last month it announced that it will partner with upscale retailer Lord & Taylor to feature a branded shop on Walmart.com starting next spring.
In the meantime, Walmart has been making the most of its more than 4,700 U.S. stores. It offers discounts to customers who pick up purchases they’ve made online, and will roll out the ability to retrieve online grocery orders to an additional 1,000 locations next year. Amazon of course purchased Whole Foods earlier this year to expand their product line and tap into the lucrative food distribution industry.
Other moves by Walmart include the launch of a speedier returns process that starts with a few clicks of the Walmart app, and ends with a designated line at a local store. And Walmart is paying some employees extra if they drop off orders on their way home, a service that may eventually expand.
Shoppers may also head to stores because some items are cheaper there than online, a difference that Walmart.com displays by putting the dueling prices side by side.
“There are lots of cases where it’s just cheaper to sell products out of a store,” Marc Lore, president and CEO of Walmart eCommerce U.S., said in a call with media recently. Showing the two prices is a way to be “transparent” he said, and that “there are different ways to get products and there are different costs associated with that.”
Saunders highlighted Walmart’s success with its brick-and-mortar locations at a time when more people are shopping using mobile phones and laptops.
“Although online has been a success story for Walmart, the second reason for its U.S. growth is the performance of stores,” Saunders said in a note. “For a retailer of its size and scale, we believe that Walmart’s ability to keep its stores growing is impressive.”
Walmart’s $1 in adjusted earnings per share was three cents higher than what S&P Global analysts had expected for the company’s third quarter. And total revenue reached $123.2 billion, an increase of $5 billion, or 4.2%, over the the third quarter of 2016.
In the pursuit of a more affluent shopper, company officials say what’s key is the same-day delivery currently available at 20 stores, Jet.com’s focus on urban millennials, and Walmart’s growing grocery offerings.
“I still think that there is an opportunity in front of us in terms of stores,” Walmart U.S. President and CEO Greg Foran said, referring to attracting higher income consumers. “That’s what you’re starting to see in terms of our marketing, and that is clearly one of our objectives.”