Walmart has a big opportunity to help reverse its online sales slump

Walmart
  • Walmart has an opportunity to revitalize its online sales through a key category that other retailers will have more difficulty in: online groceries.
  • The company’s “click & collect” option on its website will not only bring more online traffic, but also more customers off-line and into its stores, Credit Suisse Analyst Seth Sigman said.
  • You can see Walmart’s stock price in real time here.

While some investors and analysts have nearly written off Walmart after it reported a slowdown in online sales growth last quarter, one Credit Suisse analyst believes the retailer can redeem itself through a golden opportunity in online groceries.

Walmart’s peers will likely face significant operational challenges as they try to penetrate the online grocery space, but the $US275 billion retailer is in a unique position to outflank its competition because it can convert online shoppers to in-store traffic, Credit Suisse analyst Seth Sigman wrote in a note to clients.

For this reason, Sigman believes online groceries could contribute roughly 40% to Walmart’s online growth, and deliver an acceleration of comparable sales – a key metric for retailers that compares a retail store’s sales from one period to a similar period in the past – through 2019.

“WMT’s click & collect seems to be resonating, and should continue [to] fuel growth of online while keeping traffic coming to [the] store,” Sigman wrote in a note to investors. The “click and collect” option allows customers to shop online through its website and pick up groceries at Walmart stores.

Sigman’s price target for the company was $US102 per share, around 10% above its current level.

Walmart reported e-commerce sales growth slowed to 23% in the fourth-quarter – down from 50% in the previous quarter. Yet the company’s disappointing quarter was mostly ascribed to fully integrating its $US3.3 billion Jet.com acquisition in 2016.

The retail giant has made investments in other online retailers, expanded its same-day delivery service, and filed a patent to create an online grocery shopping service that functions similarly to the dating app Tinder.

Walmart and other major grocery stores have scrambled to get ahead of Amazon after it acquired Whole Foods last June. In December, Target announced plans to acquire the delivery platform, Shipt, to help it expand same-day deliveries across the US. Albertsons, the second largest grocery chain in the US, agreed to acquire Rite Aid in a cash-and-stock deal, which would help to expand its product offerings, last week.

Walmart’s stock was trading at $US93.20 per share, and was down 5.42% for the year.

Read more about how Walmart can take a page out of Amazon’s book.

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