SOTS+ Walmart CEO Doug McMillon 12/6/23

SPEAKER_1 (0:00)

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Sara Eisen (0:30)

Doug, thank you so much for having me here today.

Doug McMillon (0:32)

Thanks, Sarah.

Sara Eisen (0:32)

So we're here in the holiday section. What is new about your strategy this year for holiday?

Doug McMillon (0:38)

Yeah, thanks for coming to the store.

Sara Eisen (0:39)

Thank you for having me.

Doug McMillon (0:40)

We're an Omni retailer, so we've got things going on e-commerce-wise, stores-wise, marketing-wise, and we just had a chance to walk around and show you a little bit about what's happening with our remodels here. We've got quite a few stores that have been refreshed, and that's exciting as we head into this Christmas season.

Sara Eisen (0:55)

How is it going so far? How is the Black Friday, Cyber Monday, Thanksgiving period?

Doug McMillon (1:00)

Yeah, we released our third quarter results early in November, and we talked about the fact that we saw some softness at the end of October, but that November had started off well.

What we said at that time is that we expect that Black Friday will go well, and that things may be a little soft until you get closer to Christmas, because customers, generally speaking, are really price-sensitive right now. They're prioritizing their orders, and they know that there's a chance that the prices might be lower right before Christmas or right after Christmas with clearance, and so that's what we expect to happen.

Sara Eisen (1:31)

What are you seeing in terms of traffic around this important holiday period?

Doug McMillon (1:36)

Yeah, we're continuing to see traffic growth in-store, plus even more transaction growth for pickup, curbside and delivery. As a company, our in-store business is continuing to grow, but we expect that this trend of faster growth for curbside and delivery will continue. And we're happy to serve people however they want to be served.

Customers these days shop in kind of an all-the-above way. They use stores, they use pickup, they use delivery. It's fun to come in here and pick up what you needed for Thanksgiving and also look at what was available for Black Friday, and that's the behavior we're seeing.

Sara Eisen (2:10)

What about by income level? Because it does feel like it's been bifurcated.

Doug McMillon (2:15)

Everybody's price sensitive. We went through this period of inflation, which has now changed. We're starting to see some deflation, which we're happy to see.

But as that price sensitivity went up, everybody was looking for value, and we did really well and continue to with higher income.

Sara Eisen (2:31)

Higher income trading down, is that still happening?

Doug McMillon (2:33)

We don't like to think of it as trading down to come shop at Walmart. It would be more like people are looking for value. But as we've shown you, like in our apparel category, we've got better brands, we've got some great values, even though they're at higher price points than what we might have had in the past. So Walmart has appealed to everybody for some categories forever. Like we sell a lot of bicycles and flat panel televisions. But these days, we're focused on offering customers what they want in apparel and home and some other categories that have more of a fashion component so that we can serve everybody better.

And then bring along services like Walmart Plus so that you can get free delivery and hopefully retain those customers that have been coming to us in recent times.

Sara Eisen (3:12)

You mentioned some of the general merchandise categories, which have been weaker compared to staples like food. Is that reversing?

Doug McMillon (3:21)

Not in dollars, but in units we're seeing GM start to come back. And we've done well in GM through the year. Like back to school was pretty good. Things were better in the second quarter than the first quarter. It's going to be interesting to watch what happens in the general merchandise categories in the year ahead because prices are so much lower. We're down in pricing in the general merchandise categories, meaning non-food categories by about 5% now. And we're seeing the food categories basically about where they were a year ago. So today, if you're a customer shopping our app or walking through the store, you see a lot of rollbacks, prices that were lower than before. Our toy department's got 25 items below $25, and there are items that are easy to find there under $10.