Walmart’s Commitment to Customer Value
In sharing its results on August 15, 2024 Walmart exceeded Wall Street expectations, with total revenue climbing 4.8% to $169.34 billion, driven by everyday low pricing (EDLP), a focus on convenience, and a broad assortment of products and brands.
CEO Doug McMillon highlighted Walmart’s dedication to customer value during the earnings call, stating:
“Our financial results this quarter demonstrate what Walmart is capable of. I’m proud of how the team has been able to provide a value proposition for our customers and members that now extends beyond great prices into convenience, assortment, and experience, while at the same time, transforming our business model for the future.”
But More Work Remains
Despite its strong showing, Walmart continues to face challenges. According to the American Customer Satisfaction Index (ACSI), Walmart’s score in 2023 was 70, behind key competitors like Target (74) and Amazon (84), respectively. The line graph below shows the ACSI scores for Walmart, Target, and Amazon over the last decade.
The satisfaction gap is a clear and present opportunity for Walmart to increase its performance by focusing on specific drivers of customer value.
The Path Forward – Closing The Satisfaction Gap
To close the gap in customer satisfaction and truly compete with Amazon and Target, Walmart needs to focus on specific areas where improvements can make a significant impact. These are tied to improvements in online shopping and delivery, customer loyalty program, and faster checkout experience:
- Online Shopping and Delivery Speed: Amazon continues to lead with its free same-day or two-hour delivery in many areas through Amazon Prime. Walmart’s two-day shipping for orders over $35 is competitive but needs to be improved further.
- Grocery Services: Walmart has an edge in grocery prices, particularly for household essentials and fresh produce. However, Amazon’s grocery services, especially through Amazon Fresh and Whole Foods, offer superior delivery flexibility, including free two-hour delivery in select cities for Prime members. Walmart’s current model for in-house delivery needs to be further enhanced.
- Faster Checkout Experience: Amazon’s cashierless Amazon Go stores set a new standard for convenience. Walmart has started testing similar technology but still relies heavily on traditional checkout systems. Expanding contactless shopping experiences could improve customer satisfaction in Walmart stores.
- Customer Loyalty Programs: Amazon Prime offers a broader range of benefits beyond shopping, including access to streaming services, eBooks, and exclusive sales like Prime Day. Walmart+ provides excellent value for grocery delivery and in-store perks like “Scan & Go” but may need to expand its offerings to compete more directly with Amazon’s comprehensive ecosystem. With Walmart’s acquisition of Fandango’s online streaming service, this can be an option for the future.
Walmart’s Path Forward – Double Down on Customer Value
Walmart’s strong quarterly results demonstrate the power of its customer-focused strategy, but the company must not become complacent. Walmart needs to further sharpen its focus on driving customer value by addressing three specific areas outlined here. By closing the satisfaction gap, Walmart can continue its leadership in the retail sector.
References:
- “Walmart Beats Wall Street Expectations, Raises Outlook as It Offers More Grocery Discounts.” Fox Business, August 15, 2024. https://www.foxbusiness.com/markets/walmart-beats-wall-street-expectations-raises-outlook
- “Walmart Releases Q2 FY25 Earnings.” Walmart Corporate, August 15, 2024. https://corporate.walmart.com/newsroom/2024/08/15/walmart-releases-q2-fy25-earnings
- “Walmart vs. Amazon: What to Know Before Shopping the Retailers 2024.” Taste of Home, August 2024. https://www.tasteofhome.com/article/walmart-vs-amazon-shopping-2024/
- “Walmart vs. Amazon in Online Groceries: Who Has the Edge?” Knowledge at Wharton, August 2024. https://knowledge.wharton.upenn.edu/article/walmart-vs-amazon-online-groceries-edge/
- “Walmart Vs. Amazon In 2023 (Price, Delivery, Products + More).” 33rd Square, October 20, 2023. https://www.33rdsquare.com/walmart-vs-amazon-price-delivery-2023/