Over the past year, the global supply chain for the consumer markets has been severely strained by the ongoing COVID-19 pandemic, a fact that Walmart U.S. president and CEO John Furner acknowledged during the NRF Retail Converge conference.
“We all recognize the restraints put on the supply chain around the world — and that can be everything from a manufacturer that had to close or a raw material that wasn’t available to even as recent as things like port delays,” Furner said during a virtual conversation with Matthew Shay, president and CEO of the National Retail Federation.
The head of the retail giant’s U.S. division noted that Walmart is making major investments to strengthen its operations over the next few years to ensure it can meet customer expectations and deliver goods in a timely manner.
“We’re investing not only in the physical supply chain, but we’re also thinking about how our supply chain can be more dynamic,” Furner said, noting that customers increasingly expect to receive goods where and how they want. “We’ve got to be able to handle the complexity of the supply chain in the background. So I think over the next few years, you’ll see supply chains become more dynamic. And I think you’ll see that the timeline from idea to delivery speed up.”
To keep pace with that rapid timeline, Furner pointed to Walmart’s recent investment in U.S. manufacturing. In March, the company announced it would make a 10-year, $350 million commitment to purchase items that are made, grown or assembled in the U.S. Its six priority categories are plastics; textiles; small electrical appliances; food processing; pharmaceutical and medical supplies; and “goods not for resale.”
This marks an increase from Walmart’s $250 million investment in U.S. goods in 2013.
During his NRF talk, Furner explained, “[Focusing on] these products that are grown, made or assembled in the US will help us with being more dynamic and and get to customers in a more flexible way.”
Domestically-produced goods also will be a key component in Walmart’s distribution and fulfillment strategy going forward due to the rapid changes in consumer behavior brought on by the pandemic.
“We probably skipped about four years worth of change, evolution, transformation, growth — whatever you’d like to call it — in the e-commerce space,” said Furner. “In the first quarter of this year, we were up 37% on top of I think 77% last year. … I think the underlying trend is what the trend would have been — that there’s been a steady shift from from a combination of in-store shopping to in-store shopping and pickup and in-store shopping and delivery to home. So what we try to think about is how we’re positioned to be able to do anything a customer needs to at any time.”
He pointed to Walmart’s store-fulfillment service as one of its major assets in meeting the rapidly growing consumer appetite for product. “Stores are now acting not only as a store, but as a fulfillment center because we’re able to pick orders for pickup, for delivery and home for Walmart+ members, but also we’re able to pick orders and stores for e-commerce,” said Furner.
And while the CEO said it is too early to say which consumer behaviors will be permanent, he did offer one big of core wisdom: “The thing I know about customers that have learned over the years is that they will continue to change based on the experiences they have, and customer expectations continually rise. For those that meet customer expectations and change with customers, they’ll be successful. And when you don’t meet customers expectations or don’t change with them, you tend to be unsuccessful.”