Walmart is trying to tell a new story beyond Sam's.
As of April 30, in the latest fiscal quarter, Walmart's global net sales reached $165.6 billion, a year-on-year increase of 2.5%; operating profit was $7.14 billion, a year-on-year increase of 4.3%.
As one of the most watched high-growth areas for Walmart outside its domestic market, the Chinese market achieved net sales of $6.7 billion in the first quarter, a year-on-year increase of 22.5%.
The comparable sales growth rate for offline stores was 16.8%, 4.3 percentage points higher than the same period last year.
In recent years, Walmart's hypermarket business in China has continued to shrink, while membership stores centered around Sam's and e-commerce businesses are thriving.
At the end of the first quarter, Walmart China had only 280 hypermarkets left, a nearly 30% decline compared to five years ago.
However, with the emergence of a new generation of hypermarkets and community stores, Walmart's new image is increasingly appearing before people.
In the current accelerated retail transformation, the actions of traditional leaders are bringing more expectations.
<h2>Sam's Upward</h2>
Sam's Club supports Walmart China's performance.
Sam's Club maintains a rapid expansion rate of 5-6 stores per year in China, gradually penetrating into economically developed &#34;top 100 counties&#34; such as Zhangjiagang, Jinjiang, and Kunshan from core first-tier cities.
Industry estimates suggest that Sam's China sales may exceed 100 billion yuan in 2024, reaching 70% of Walmart China's performance.
Even so, the booming demand is still not satisfied, even giving rise to the &#34;thousands of yuan monthly income&#34; business of Sam's purchasing agents.
Benefiting from the gradual expansion of its membership base, Sam's Club in China saw a membership revenue increase of over 40% in the first quarter.
In the current fiercely competitive retail environment, Sam's expansion speed has reached new heights, with the number of new stores expected to exceed 7 in 2025.
Faster than the store expansion is the layout of the front warehouses around the parent store.
Among the approximately 4,000 SKUs in Sam's offline stores, 1,000 high-repurchase and delivery-suitable SKUs have been selected. These are flexibly and densely deployed in cities in the form of front warehouses, supplementing the coverage of existing stores.
As efficient small fulfillment centers, front warehouses are located in areas with high concentrations of members and potential members, with the parent store serving as the central hub responsible for management and supply.
Each Sam's Club manages about 8 to 15 front warehouses, with each front warehouse covering a business circle with a radius of 2-3 kilometers, and over 80% of orders can be delivered within an hour.
The cost challenges commonly faced by front warehouse players have not caused much trouble for Sam's.
Sam's front warehouses inherit the strong product power of membership stores and a highly loyal member group, with an average transaction value exceeding 200 yuan, making it easier to cover high fulfillment costs.
To date, the number of Sam's front warehouses nationwide has exceeded 500, with daily orders exceeding 1,000, becoming the undisputed leader in the sector.
As Sam's &#34;second growth curve,&#34; e-commerce businesses represented by cloud warehouses have improved metrics such as store efficiency and repurchase rates for existing stores.
Currently, online sales at Sam's China account for over 50%, which Walmart China's President and CEO, Zhu Xiaojing, describes as &#34;doubling the value of store assets.&#34;
She stated that by the end of 2025, the number of Sam's Club stores in China with annual sales exceeding $500 million will increase from 2 stores in 2023 to 8 stores.
<h2>Hypermarket Transformation</h2>
While Sam's Club is making great strides, Walmart has not given up on the transformation and innovative exploration of the hypermarket format.
While creating differentiation and experience in offline retail, it strengthens product competitiveness.
Walmart views high-quality, convenient meal solutions for three meals a day, exclusive products at low prices from big brands, and unique surprise treasure products as the three major directions for product transformation.
The new generation of stores debuting in Yunnan by the end of 2024 will be significantly different from traditional hypermarkets in product selection planning and display layout.
The main aisle display has been removed, and lower open shelves have been adopted; products are not strictly categorized but are cross-displayed based on the relevance of usage scenarios, with stain-removing rollers possibly appearing in the hot pot ingredient area.
The selection logic of &#34;private label products&#34; + &#34;big brand exclusive selections&#34; is similar to Sam's, but offers more small packaging options, clearly focusing on cost-effective &#34;middle-class small families.&#34;
Experiments with smaller community retail formats are also underway.
Recently, Walmart has restarted its small store model, opening a 500-square-meter community store in Shenzhen. The core categories include baked goods, pre-packaged fresh produce, and ready-to-eat processed products, which are quite similar to Hema NB and Aldi.
There have been reports that the new small store model may draw inspiration from and mimic the Sam's Cloud Warehouse format, relying on Walmart's large stores to select items and expand online business through a front warehouse model.
Some users have found that products ordered from the community store &#34;Nanshan Xinde Garden Store&#34; are delivered by the &#34;Shekou Walmart Store.&#34; The two are likely sharing product lines and coordinating on inventory and supply chains.
Therefore, there is speculation that the integration of cloud stores and warehouses may be replicated and coordinated in Walmart's KA stores, Sam's Club, and Walmart community small stores.
Using the warehouse-store model to seize the instant retail trend has become the mainstream option for physical supermarkets' omnichannel transformation.
Walmart has already made significant investments in this area.
In December last year, Walmart China reached a strategic cooperation with Meituan, and all stores nationwide will fully launch on Meituan and connect to Meituan's delivery services. The cooperation also includes warehouse-store models and upgrades to fulfillment and delivery services.
Walmart has also lowered delivery thresholds, offering free shipping for fresh food over 29 yuan, and further upgraded fulfillment efficiency and scope.
For example, the &#34;Express Delivery&#34; service has been upgraded from the original one-hour delivery to &#34;fastest delivery in 30 minutes,&#34; with an increased number of &#34;on-time delivery&#34; stations, expanding customer service coverage to 5-15 kilometers from stores, with delivery times of 2-3 hours.
<h2>Trade Headwinds</h2>
Omnichannel exploration is also underway in Walmart's North American headquarters.
Through drone delivery, the GoLocal local logistics network, and the construction of automated logistics centers, the U.S. market is striving to replicate China's &#34;one-hour delivery&#34; scenario.
In the first quarter, Walmart's U.S. e-commerce sales grew by 21%, achieving double-digit growth for the 12th consecutive quarter. Sam's Club's e-commerce sales increased by 27% year-on-year, with its share rising to 17%
In the United States, over 90% of households can enjoy ultra-fast delivery services within 3 hours, with e-commerce contributing 3.5 percentage points to comparable sales, reaching a new high in over a year.
Walmart's e-commerce business in the U.S. is not limited to sales revenue directly related to physical stores, such as in-store pickup and store delivery, but also includes innovative businesses like online advertising (Walmart Connect).
In the global market, Walmart's e-commerce is continuously strengthening its platform attributes, with e-commerce and advertising jointly becoming the growth engines for this traditional retail enterprise.
Referring to Amazon's Prime membership program, Walmart launched Walmart+. By providing members with faster delivery services and a richer market selection, Walmart is continuously attracting more active users to order online.
In the first quarter, Walmart+ membership revenue achieved double-digit growth. The increase in active users has driven Walmart Connect's advertising business to grow by 31%.
The market expects the diversified development of e-commerce and advertising to grant this traditional retailer stronger profitability.
However, this expectation is being impacted by the &#34;strong headwinds&#34; brought about by tariff policies.
Unlike Sam's Club's consumption upgrade strategy in China, Walmart has implemented a low-price essentials strategy in North America in recent years, attracting middle-class consumers who are downgrading their consumption due to inflation.
As about one-third of the products sold in the U.S. are imported goods, Walmart's low-price policy is being shaken by the instability of tariff policies.
Walmart stated in its earnings call that it will do its utmost to maintain low prices, but &#34;considering the reality of thin retail margins, we cannot absorb all the pressure.&#34;
&#34;If something has a 30% tariff, you are likely to see double-digit price increases,&#34; Walmart's CFO stated, indicating that price adjustments are likely to take effect by the end of May, with prices expected to &#34;rise significantly&#34; in June.
Uncertainty still looms over this retail giant.
Walmart expects net sales in the second fiscal quarter to grow by 3.5% to 4.5%, but did not provide expectations for earnings per share or operating income growth

- Walmart reported global net sales of $165.6 billion for the latest fiscal quarter, a 2.5% increase year-over-year, with operating profit rising 4.3% to $7.14 billion.  
- In China, Walmart's net sales reached $6.7 billion, growing 22.5%, while Sam's Club continues to expand rapidly, with projections indicating sales could exceed $10 billion in 2024.  
- Despite challenges from tariffs affecting pricing strategies in North America, Walmart aims to maintain low prices while adapting to evolving market conditions and consumer demands.

Wallstreetcn

Sam's expansion, store adjustments - Walmart's "transformation" in progress