Walmart becomes a pandemic lifeline, online sales surge 74 per cent

NEW YORK (AP) – Walmart emerged as one of the few lifelines to millions of people as the coronavirus spread, leading to surging profit and sales for the world’s largest retailer.

Online sales in the United States (US) jumped 74 per cent for its fiscal first quarter that ended April 30, which captured the brunt of the pandemic’s outbreak. Same-store sales rose 10 per cent at US Walmart stores on strong sales of food, health and wellness goods.

At a time when a huge swath of stores that sell non-essential merchandise temporarily shut down, Walmart has the natural advantage of carrying the very items that consumers need during a pandemic.

But unlike its online rivals like Amazon, Walmart enjoys an extensive network of nearly 5,000 physical stores and a variety of delivery and pick-up options that it ramped up to meet crushing demand for essential items, from paper towels to canned food. Walmart’s reputation for low prices also helped as the unemployment rate has spiralled to the high level since the Great Depression.

“Having a wide range of fulfillment options, including delivery to home, collection from store — and by using stores for fulfillment — allowed Walmart to ramp up capacity in a way that many other players struggled to do,” said Managing Director at GlobalData Retail Neil Saunders. “We also believe that by using stores effectively, Walmart mitigated some of the higher costs associated with the online channel.”

A woman pulls groceries from a cart to her vehicle outside a Walmart store in Pearl, Mississippi. PHOTO: AP

Walmart shoppers did not limit their purchases to just essential items, using their federal stimulus checks to buy clothing, TVs and video games, which helped boost sales in April. Walmart also said it’s seeing gains in new customers from across all income brackets.

At the same time, company, which is based in Bentonville, Arkansa, had trouble keeping its shelves stocked and its inventory fell 6.1 per cent. Costs soared as well, to the tune of USD900 million — all of it related to the pandemic.

Cash bonuses were issued to all hourly workers and Walmart upped pay by USD2 per hour at its warehouses. It rolled out an emergency leave policy and spent money on shields at check-out lines. Still, it reported a higher operating profit.

Walmart pulled its guidance for the year, citing the chaos of the pandemic. It also pulled the plug on Jet.com, an online start-up that it bought for more than USD3 billion in 2016 as it sought to ramp up online operations to compete with Amazon.

Before the pandemic, there was already a broadening gap between big box stores and mall-based chains that had struggled to follow customers online. The crisis has accelerated that trend, pushing clothing chains further into peril.

J Crew, JC Penney, Neiman Marcus and Stage Stores have all sought Chapter 11 bankruptcy protection this month. Pier 1 Imports, Inc, which filed for Chapter 11 in February, said on Tuesday that it’s winding down its business after stores are able to reopen and it can conduct liquidation sales.