Wal-Mart’s stock jumped almost 10% on Thursday, hitting a new all-time high, after the giant retailer said its US sales grew at their fastest rate since 2009. Look out Amazon!
What does this mean?
Wal-Mart’s newfound sales growth was driven partly by ecommerce, which jumped 50% versus a year ago: Wal-Mart has spent billions of dollars in recent years acquiring ecommerce firms (notably Jet.com) as part of a plan to drastically expand its online presence. But it also experienced higher footfall in its stores. Crucially, Wal-Mart revamped its in-store experience by refurbishing stores and paying employees more (which has helped improve customer service). Wal-Mart’s good fortune stands in sharp contrast to the many US retailers which have reported disappointing financial results in recent weeks.
Why should I care?
The bigger picture: Sometimes, attack is the best form of defense.
A common strategy for many companies facing falling sales is to cut costs in order to boost profits – but that’s not a sustainable strategy. Wal-Mart, on the other hand, effectively said to itself back in 2015: we’re getting our butt kicked out here – what can we do differently? It devised a plan, spent money on it and is executing it well. The job isn’t finished – it never really is in a fast-changing industry. For one, Amazon is moving into groceries, Wal-Mart’s biggest revenue driver. But after years of investing, Wal-Mart’s efforts at hitting back against the ecommerce behemoth are paying off: its stock is up almost 75% over the past two years (while most other retailers have seen their stock prices decline sharply).
For you personally: Skate to where the puck is going, not to where it’s been (h/t Wayne Gretzky).
Fighting against technological innovation in your own professional life is likely to be about as fruitful as Blockbuster’s attempt to fend off Netflix (spoiler alert: Blockbuster went bankrupt). Invest today in the capabilities you’re likely to need in the future – or face declining (economic) relevancy.
Originally posted as part of the Finimize daily email.
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