Day two wrapped up for media covering Walmart (WMT) Thursday in Arkansas and it was no cakewalk. We were up at the crack of dawn to start touring a Sam's Club store, a Neighborhood Market store and a supercenter. The tour ended with visit to Walmart's new culinary innovation center, which included a guest appearance by celebrity chef Robert Irvine. While the info from execs has been incredibly helpful, even my energetic self has to admit to being drained.
But I have certainly been game-on at the event in trying to collect as much insight as possible from stores that I don't have in my neck of the woods and from execs that are often only heard on earnings calls. Rather than structure something, I am just going to do a brain dump. Pay attention to TheStreet's homepage today as I will be live blogging the annual meeting.
Walmart is not joking when it said it wants to sell more private-label products. I have been blown away by the commitment to private-label products under brands such as Great Value and Sam's Choice labels. The products in new test stores are receiving prime shelf space and you can easily tell the stores are stuffed with the private-label offerings. Even the new culinary innovation center is designed to test new private-label offerings (company will be launching frozen chicken fried waffles soon, for real). If am Big Food -- names such as General Mills (GIS), PepsiCo (PEP) and Kellogg's (K) -- I would be concerned with how Walmart is about to push its cheaper private labels on consumers. The products I tested aren't junk -- it's actually pretty quality offerings.
Sam's Club is getting one of the biggest private-label pushes I have ever seen in retail.
Not all areas of Walmart international are operating up to snuff. Interestingly, Walmart readily admitted to reporters that it's willing to dump more businesses that may not be performing well. The company's head of international told me the struggling U.K. business is not being evaluated for disposal. But, as a former analyst, I admit to being giddy hearing that Walmart may improve the bottom line of international through potential asset disposals. Walmart doesn't normally openly talk of future actions of any kind in this manner.
Walmart CEO Doug McMillon has not been part of the two days of tours, but that doesn't mean his presence hasn't been felt. Execs have seemed to all fall in line with the former Walmart store associate in a big way, which is great to see if you are a long-term Walmart shareholder. I asked one source if McMillon was the second coming of Sam Walton. He didn't say yes, but did acknowledge that McMillon was perhaps the first true "associate's CEO" since Mr. Sam (as he is known by employees). I like hearing that.
Walmart has zero plans to become a dollar store. In a tour of what I deemed its store of the future, I didn't see any designated dollar store areas. And I think that's OK seeing as Walmart is making it very noticeable to consumers it's in the process of lowering prices across the store. The stores just feel more affordable on key traffic driving items in the consumables department.
Has Walmart fully converged digital shopping with bricks and mortar? No, not necessarily. But from what I am seeing from several new techie things here it's much further along in leveraging its store asset base than Wall Street thinks. For example, the company's new scan-and-go program -- scan items in an app while picking them in a store and then checking out by simply scanning a barcode -- is a nice productivity-driving tool. Stores are being outfitted for kiosks to confirm online placed orders and in the early days it's helping to lift the store's sales. Online grocery, which is now live in 40 markets, is likely to be expanded sizably by year end (think hundreds of markets). I am leaving this meeting under the impression that Walmart is moving quicker on digital than rival Target (TGT), which comes as a surprise to this fella.
And yes, I think the company is looking to tech to try and reduce labor costs.
Reporters love trying to make viral headlines and so it hasn't been a shocker Walmart has been pumped with questions about its war with Amazon (AMZN). Walmart hasn't been too specific on the battle, except to say it's continuing to expand the number of online offerings (almost forever was my sense) and is working toward fixing problems that are slowing digital performance overseas. I truly don't know if Walmart will ever close the gap with Amazon -- the latter is moving so quickly. But I do leave here optimistic the company is at least trying aggressively to use its store network to its advantage because Amazon is basically a company with distribution centers and a website.
If I was a grocery store operator such as Kroger (KR) and Safeway, I would be shaking in my boots at Walmart's new prototype Neighborhood Market here in Arkansas. The store opened a few days ago and was a hit on the store tours. The fresh section is laid out great, the store is filled with private label, it's brighter, it's easy to navigate. There is a helpful new self-checkout process. Walmart will open about 85 to 90 of these formats this year (which are producing high-single-digit comps) and I suspect it could double that number of offerings starting in 2017 based on exec confidence in the new prototype.
Those that have called for the spinoff of Sam's Club may want to listen to this statement carefully: it's unlikely to happen ever. The warehouse club is very integrated into Walmart's logistics platform and overall mindset of doing things. Extracting Sam's Club almost seems impossible. The company will be making a big push with the brand in China very soon.