Walmart Will Be 'Different Company' in 5 Years, Says Departing CFO
Five years from now, Walmart will be a different company, said outgoing Chief Financial Officer Brett Biggs (see 2111290043) at a Wednesday analyst event, outlining the retailer’s vision to use its “flywheel” to expand advertising, marketplace, healthcare and financial services initiatives. The company grew from a supercenter business with annual revenue of $160 million in 2000 to a $560 million company going “further than the supercenter,” said the executive.
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Walmart hadn’t grown as quickly as it needed to do in e-commerce five years ago, and it had to make investments to play “catch-up,” said Biggs. It doubled its e-commerce business in the past two years to become an “omniretailer,” he said, and he predicted it would double again in another two.
Commenting on the margin drag of the e-commerce business, Biggs said Walmart's e-commerce product mix is changing and evolving, “which is the greatest thing that can happen in the e-commerce business as you start selling more and more home, apparel -- things that have higher margins.”
On the challenge of moving into verticals such as financial services and healthcare outside the core retail business, Biggs said Walmart has brought in professionals with experience in those spaces that “know how to grow big businesses.” Having a mix of Walmart executives who know the culture of the company and outsiders with “new ideas from new industries” is working well, he said: “We’re all learning from each other.”
Healthcare is “changing dramatically,” and Walmart can be a part of that, Biggs said. As a large company, “We know how to deal with regulation” and can deal with that “probably better than most would,” he said. “It’s not saying it’s simple, but we know how to do things like that,” he said. Walmart has already leveraged its stores for clinics and diagnostics labs, he noted. On its vision for the healthcare business, Biggs said there’s nothing the company would rule out, “but it has to be something that can be executed at scale."
Healthcare “fits into what we want to do,” Biggs said, because it meshes with management's strategy of wanting to be part of customers’ lives. “All of us use healthcare. This is one place where you will definitely be involved in people’s lives.” Walmart already has a foot in the door with its existing pharmacy business, which the retailer sees as “permission” from customers to be in the healthcare industry, Biggs said.
Walmart is moving slowly with the Walmart+ membership program, Biggs said. He differentiated the new membership program from its member-only Sam’s Club warehouse club business, calling Walmart+ a “big idea because there are so many things that can be put around it.” It will be “thoughtful” about how quickly it rolls out Walmart+ services, he said.
Five years from now, Biggs sees Walmart “interacting with customers in a much more meaningful way. We’re in their lives more than we were. We’re helping them continue to save money, which we’ll always do, but we’re saving them time,” he said. “You’re still going to recognize Walmart, but it’s going to be a business I think customers will see differently than they see today.”