Groceryshop 2022: Walmart CEO Talks Inflation, Supply Chain
At Groceryshop 2022, held Sept.19-22 in Las Vegas, NV, Walmart president and CEO John Furner discussed how the retail giant is handling inflation and supply chain issues while continuing to offer value to customers through affordable prices.
Interviewed by CNBC retail and consumer reporter Melissa Repko, Furner detailed how the current inflationary period differs from those in the past, and what the retailer has noticed.
“These changes in consumer behavior really became noticeable and acute early this year. In February, we saw quite a few shifts happen at a pace we haven’t seen,” said Furner, who has led Walmart since late 2019. “Certainly in the last few quarters, we’ve seen switching to smaller pack sizes, switching within protein categories, switching from things like wet dog food to dry dog food. In the last few weeks It seems we are seeing some slight improvement… We have some categories now that are disinflated vs. last year, things like beef and in some cases poultry. It’s of course too early to tell how long this is going to continue… but there are some signs that some categories have adjusted some."
Furner also spoke about how Walmart is attracting and retaining new, higher-income customers, and how the retailer’s Walmart+ membership program is benefiting customers. Studies have pointed towards price being the most important factor when customers plan to shop for gatherings this holiday season.
“The majority of our share gains have been with customers who earn over $1000,000 per year, so when we take a step back and look, what we’re trying to do is ensure that a family, whether you’re time-starved or budget-starved… we’re able to serve you in the way you’d like to be served,” said Furner. “The flexibility that the organization has put together over the last few years [through its delivery options] I think helps us with positioning over the long run. Frequency of delivery and density of delivery are really important.”
When asked about the state of Walmart’s supply chain, Furner said that things have improved in the past year, but are not quite back to normal.
“Things have balanced out a bit more, but we still see some unpredictability,” he said. “There’s still some tightness at the ports, so some of the things you’re seeing in stores now are certainly earlier than we expected. For the most part we’ve been able to balance out some of the risks and uncertainties… there are certain commodities that may just be too early to tell yet what’s going to happen.”
Solutions to the supply chain challenges for the retailer include a few creative strategies, Furner said. Last month, Walmart opened a new high-tech consolidation center in Lebanon, Pa., which services all 42 Walmart distribution centers in the U.S.
“In the last 12-18 months… we’ve become much more flexible with the way we move inventory,” he said. “The backups that we saw early this year cause you to think differently.”
Furner also discussed Walmart’s recent investments in Plenty, a vertical farming company, and Sustainable Beef, a rancher-owned beef company.
“In both of these cases we’re excited about the opportunities and investments,” he said. “And we think that over the long term, things like vertical farming or sustainable beef will be important not only for availability for customers, but ultimately we have a responsibility to help with sustainable products, and make sure our supply chains are running smoothly in the future."