Walmart plans to introduce automation at nearly two-thirds of its stores and aims to have approximately 55% of its fulfillment center volume move through automated facilities by the end of fiscal 2026. The move could help unit cost averages improve by approximately 20%, and Walmart expects to maintain or even grow its associate count through the creation of new roles.
The news was released at the retail giant’s 2023 Investment Community meeting, where Walmart leadership is sharing how the company plans to strengthen its business through next-generation supply chain, store and digital initiatives.
“We are in a unique position to serve our customers and members however they want to shop, which will fuel continued growth,” said Doug McMillon, President and CEO of Walmart in a statement. “As we grow, we will improve our operating margin through productivity advancements and our category and business mix, and drive returns through operating margin expansion and capital prioritization.”
The event was held at the retailer’s Brooksville, Fla. distribution center, where Walmart showcased a system that uses a combination of software, data and robotics to increase the amount of storage available in the facility. Additionally, the tools enable a more consistent, predictable and higher-quality delivery service to stores and customers and help operations react more quickly to customer demand.
Walmart will reengineer its entire supply chain with similar innovations to help it better fulfill customer needs with a more intelligent and connected omnichannel network. Expected benefits include improvements to in-stock rates, inventory accuracy and flow across stores, pickup services and delivery. Additionally, these systems will require new roles that involve less physical labor than traditional warehouse work but have a higher rate of pay.
“It all starts with our associates,” said McMillon. “We are a people-led, tech-powered omnichannel retailer. As it relates to being people-led, it’s about purpose, values, culture, opportunity and belonging. We serve our associates by creating opportunities, opportunities that turn jobs into careers. We help bring dignity to work by enabling them to see how they’re serving others, as part of a team, and helping them achieve their potential. And as we serve them, they serve our customers and members well. They make the difference.”
Walmart expects these investments to help it achieve its target of 4% annual sales growth over the next three to five years, which could add more than $130 billion of sales on top of its current $600 billion sales base. The company also believes its operating income could grow significantly during this period.
This multi-year outlook assumes all of Walmart’s business segments will contribute to these growth targets. The retailer also will work to strengthen its global omnichannel ecosystem and scale higher-margin value streams, including advertising, data, memberships and marketplace, to help deliver a better customer experience while driving stronger returns.