- Walmart is touting its operational cost cutting just as the company cut its profit forecast ahead of its next earnings release in three weeks time.
- The retailer saved $200 million simply by changing the type of floor wax it uses and $20 million by converting to LED light bulbs, Yahoo Finance reported last week.
- The company is moving into a new phase said CEO Doug McMillon at last week's investor conference: "I want to challenge your thinking of Walmart."
After challenging investors to rethink the world's largest retailer, McMillon ticked off a list of major tech initiatives the company has launched to automate mundane tasks, boost employee training and retention and reduce its energy costs and footprint — all investments that indicate the company is headed into a growth stage where it may better resemble a tech company than a discount retailer, say analysts and observers.
In a new era of growth, Walmart will need to push its supply chain even harder to preserve margins and profitability. And small tweaks such as floor wax and light bulbs, along with bag and receipt sizes, indeed add up.
Tens and even hundreds of millions of dollars from simple tweaks may seem to present easy levers for the company to pull when it needs to boost profitability.
What may look like massive cost savings look slightly different in the shadow of the investments the company is making, including last year's purchase of Jet.com for $3 billion and most recently a $16 billion acquisition of Indian e-commerce site Flipkart, as well as the cost of the major tech upgrades at Walmart's newest grocery warehouse.
Operational streamlining has always been a major tool in Walmart's belt since the company's primary competitive advantage was price. Now, when it wants to win on price and at e-commerce consumer experience (read: expanded two-day shipping) on a global scale, retail analyst Oliver Chen of Cowen and Company called the result a recent note to investors "persistent gross-margin headwinds.”