Walmart Aims To Have 65% Of Its Stores Equipped With Automated Supply Chains By 2026

Walmart Inc. anticipates that almost 65% of its stores will be automated by the end of Fiscal Year 2026, and around 55% of the fulfillment center volume will be directed through automated facilities. Additionally, the company foresees unit cost averages to enhance by roughly 20%.

"Through automation and state-of-the-art technology, the company illustrated how the increased item storage allows the distribution center to provide a more consistent, predictable, and higher-quality delivery service to stores and customers and react more quickly to customer demand," Walmart said in a statement Tuesday.

While reiterating its forecasts for the current year and beyond, Walmart's Chief Financial Officer John David Rainey indicated that this technology-led optimization could generate enhanced operating income that surpasses the preexisting outlook.

"Looking at where we are today, we believe that approximately 4% sales growth and growing operating income at a faster rate are still the appropriate targets for our business over the next 3-5 years. The investments we've made have positioned us well and generated steady and sustained growth at higher margins. Achieving our targeted 4% sales growth over the next five years would add more than $130 billion of sales on top of our roughly $600 billion base today," Rainey said, according to the statement.

The move comes after a surge in prices for essential goods last year resulted in a shift in consumer demand away from non-essential items, such as clothing and electronics, leaving Walmart and other retailers with large quantities of unsold inventory that could only be sold with significant discounting.

Moreover, implementing this strategy can assist the large-scale retail organization in cost reduction while fostering job opportunities within roles that entail less physical exertion and offer better compensation.

Walmart has said that it plans to restructure its supply chain by adopting a more sophisticated and interconnected omnichannel approach, relying on data analysis, advanced software, and automation.

The company further outlined its intention to re-engineer its supply chain by implementing an intelligent and well-connected omnichannel network utilizing data, smart software, and automation to enhance in-stock levels, inventory accuracy, and customer pickup and delivery services.

"We are in a unique position to serve our customers and members however they want to shop, which will fuel continued growth," Walmart president and chief executive officer Doug McMillon said.

During an event held Tuesday, Walmart demonstrated its supply chain innovation at its regional distribution center in Brooksville, Florida. This is part of the company's endeavor to establish a comprehensive system of supply chain capabilities that utilizes advanced technology such as data, software and robotics.

The retail company's long-term growth prospects are reliant on the consistent contribution of all three business segments toward achieving a mid-single-digit increase in sales.

Also, the organization is looking to bolster its global omnichannel ecosystem while expanding higher-margin value streams that cater to customer and business needs. Notably, its forays into advertising, data analytics, memberships, and marketplace operations are expected to significantly enhance the customer and member experience while driving superior returns for the company.

Walmart, the biggest retailer globally, is making efforts to demonstrate its potential for long-term earnings to Wall Street following a surge in capital expenditures to remain competitive with major players such as Amazon.com Inc.

According to Forbes, Walmart's eCommerce sales experienced a more significant growth rate than Amazon's. In the fourth quarter of 2022, Walmart's eCommerce sales demonstrated a remarkable 17% increase, whereas Amazon's sales declined by 2%.

Implementation of this measure will enable the distribution centers to ensure a consistently superior level of delivery services to both retail stores and end customers.