Walmart Ups the Digital Game to Boost WMT Stock

WMT stockWalmart Stock Will Gain from These Technology Investments

Wal-Mart Stores Inc (NYSE:WMT) stock made good moves after the fiscal fourth-quarter results were announced last week. The retail behemoth has been investing heavily in its online presence and it seems to be doing pretty well.

The acquisition of Jet.com seems to be paying off well for Walmart Stores and the company has now done something that further proves its commitment to be a strong player in the changing retail landscape.

On Tuesday, Walmart announced new capabilities in the “Walmart” app that would help build a more convenient experience for customers using the Pharmacy and Money Services at Walmart stores. Along with these enhanced app features, the company will also create a new store experience that would let customers use the “express lanes” in these areas and skip the traditional lines. (Source: “Walmart App Upgrades + New Store “Express Lanes” = Faster, Easier Shopping,” Wal-Mart Stores Inc, February 28, 2017.)

Moreover, these new digital updates will start to roll out to Walmart customers this month and are expected to be available in almost all of Walmart’s 4,700 stores by this fall.

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“These capabilities are the latest example of how we’re bringing together all of the conveniences of Walmart – great stores, convenient pickup, easy checkout and a top-notch app – to deliver one seamless shopping experience for customers,” said Daniel Eckert, senior vice president, “Walmart Services.” (Source: Ibid.)

By making these high-demand services faster and easier, Walmart expects to save its customers’ time and money, which would result in a better buying experience for them and could bode well for Walmart stock.

The new pharmacy updates will make buying a super-easy experience for customers. After a quick, one-time setup, customers can quickly refill prescriptions, track the order status, and view pricing and pickup details using their Walmart app. After placing the order, customers can use new “express lanes” for hassle-free pickup. The payment is processed through “Walmart Pay” and an e-receipt is sent to the app that can be viewed any time by the customer.

With the Money Services” update, Walmart is helping customers get rid of the paperwork. Customers availing of this service enter information securely in the Walmart app from the comfort of their homes. After that, they can move onto the store, where they can be in the “express lane” and move ahead in the line. Customers can also visit the Customer Service desk in stores that do not have a Money Services desk.

The addition to the new capabilities is another indication that Walmart is committed to transforming its business through technology investments. Earlier, the company had expanded its online grocery pickup service and offered free two-day shipping on millions of items without charging a membership fee.

Below is the WMT stock chart that shows the stock movement over the last three months. It also shows how Walmart stock made a strong comeback over the last month. Although it has underperformed the benchmark indexes, the stock is likely to pick up steam as its new investments start bearing fruit.

WMT stock chart

Chart courtesy of StockCharts.com

It is clear that these two capabilities take advantage of the company’s biggest strength, which is its massive network of stores. This is not the case with Amazon.com, Inc. (NASDAQ:AMZN), which is still testing its various new-format stores. At present, Walmart runs over 11,500 retail units under 63 banners in 28 countries. This is a huge asset for the company and, if the strategy is executed well, will prove to be a game changer for the company as well as Walmart stock.

WMT stock had rallied strongly following the fourth-quarter results announcement last week. Although profits declined year-over-year, the top line expanded. And the best part was the rise in e-commerce sales by 30% on account of the acquisition of Jet.com.

As I wrote earlier, the retail giant’s e-commerce push will make it a strong contender to Amazon.com, Inc. And with the acquisition of Jet.com, Walmart will make big strides in online sales. The fourth-quarter results have already proved that.

Walmart is also way ahead of the other major retailer, Target Corporation (NYSE:TGT), which saw its stock price plunge by 12% on Tuesday as the company posted extremely disappointing numbers for fiscal Q4. Target’s management team also emphasized how heavy investments were required to be made in a network of physical and digital assets. This is something that Walmart has already started working on, and Walmart stock has been looking up on the future potential of this strategy.

Walmart is ahead of Target and better prepared to take on Amazon. It is adjusting well to the seismic shifts taking place in the retail industry. It will be the optimal integration between physical and digital presence that would help retain customers and Walmart is in a great position to do that. This is what makes the bullish case for WMT stock.