Good morning. Walmart is making big moves towards automation, AI, and exploring new revenue streams to propel the company into a technology-driven future. During the company’s fiscal third-quarter earnings call, Walmart CFO John David Rainey shared that over 50% of Walmart’s fulfillment center volume is now automated, which is double the amount from the previous year. This automation has resulted in a significant decrease in the per-unit cost of delivery, leading to a 40% reduction in U.S. net delivery costs per order for the third consecutive quarter. Customer satisfaction scores for delivery have also reached all-time highs.
While there is concern among employees about automation potentially replacing jobs, Rainey reassured that the implementation of technology like AI can actually create new job opportunities and career pathways for Walmart associates. By evolving physically demanding roles into positions that involve operating and maintaining high-tech systems, Walmart is providing its employees with new skills and more enjoyable work experiences. The company is redesigning roles, such as automation equipment operators, and equipping associates with the necessary skills to transition into these in-demand positions.
To support this transition, Walmart is transforming its 42 regional distribution centers into advanced facilities that utilize robotics and technology to increase efficiency and speed in sending merchandise to stores. This initiative aims to offer employees opportunities to learn new skills and adapt to the changing landscape of the retail industry.
In terms of financial performance, Walmart reported a 5.5% increase in revenue for the three-month period ending Oct. 31, surpassing Wall Street estimates. U.S. same-store sales grew by 5.3%, while global e-commerce saw a 27% increase, with a 22% growth specifically in the U.S. Global advertising revenue also grew by 28%, and membership income was up by 22%. E-commerce now accounts for 18% of Walmart’s overall business, reflecting the company’s long-term investment in this sector.
CEO Doug McMillon highlighted that Walmart’s profitability is expected to grow faster than sales, with e-commerce playing a significant role in this growth. The company’s omnichannel strategy, supported by advanced technology, is key to driving profitability. Walmart has developed proprietary generative AI platforms like Wallaby, which uses decades of Walmart data to enhance customer experiences.
Despite Walmart’s reputation for offering low prices, households with annual incomes exceeding $100,000 were responsible for 75% of the company’s gains in Q3. Looking ahead, Walmart plans to maintain its competitive pricing while navigating potential challenges like tariff increases in the coming years.
Overall, Walmart’s strategic investments in automation, AI, and new revenue streams are positioning the retail giant for sustainable growth and profitability in the evolving retail landscape.
For more information, you can contact Sheryl Estrada at sheryl.estrada@fortune.com.
