Voices claiming that e-commerce buries traditional stores seem to get a confirmation from the stock market. As Amazon keeps its ascending trend and shares of Walmart Stores plunge, the real-store retailer appears to be in the ropes.
On Wednesday, Walmart CEO Doug McMillon assured analysts that the network of thousands of stores that he oversees has all it needs to be a strong rival to any online retailer.
While Walmart's sales growth in U.S. is slower than expected, the company has a hefty flow of income. Its net income was $3.47 billion, and its profit margins were 2.89 percent, during the latest quarter. Amazon, on the other hand, produced a net income of $92 million, keeping profit margins to 0.4 percent.
In terms of stock prices, the difference is sizeable. Amazon ended the transaction week at $570.76, while Walmart only scored $58.87 on Friday.
To make up for the difference, Walmart aims to upgrade its online presence while boosting the hospitability of its chain of stores.
McMillon observes that the best clients have mixed consumer habits. They shop both online and offline, and spend around $2500 yearly on Walmart's products. In contrast, online exclusive shoppers load goods in worth of only $200 in webpage carts, while buyers who shop just in brick and store shops shell out around $1400 a year.
In August, Walmart U.S. managers and department managers received mobile devices and tablets so they can do their duty while being in the actual store and helping customers, instead of locked in a backroom between mountains of paperwork. An additional advantage of the mobile gadgets is that they can synchronize with the data base so that out-of-stock items become a problem of the past.
One way Walmart choses to motivate its employees is by raising salaries. That is why the company expects to spend $0.3 billion more next year, raising workforce spending from $1.2 to $1.5 billion. Even if that shakes the account balance a bit, Walmart understands that the investment in people is necessary. If competition with Amazon will be won, it will do so in stores which are managed competently and filled with motivated employees.
"The only way to get sustainable comps [sales growth] is by really running great stores. We need a great experience with our customers, we need strong merchandising," McMillon said.