The pandemic resulted in a widespread and continuing impact on the global economy. But in FY21, Walmart recorded revenues of $560 billion, a rise of over $35 billion in a year. The company also recorded operating cash flow of $36 billion. How difficult was it to rev up operations for a company as large as yours after the initial shock?
Well, as with everyone, it was a real challenge. We operate in 24 different countries, employing 2.2 million people. When the first stage started to hit us. We figured out fairly quickly that we had five priorities: keep employees as well as shoppers safe; keep the supply chain moving; help others; manage the business during a crisis and not run into issues with inventory or cash flow; and then the fifth priority was to make progress on our plan, our strategy.
We had a strategy when the year started before 2020 got interrupted. And it turned out that the tailwinds that were associated with retail furthered our strategy. We have become more digital. Our delivery business has grown globally, and our pickup business in some countries has really grown. Many of the things we had already started just really accelerated.
Walmart is known for its large, landmark stores. But in India, it’s known for its online business, Flipkart. How difficult was the transition to digital given your cultural roots, and that too, in a short timeframe?
A transition is still underway for us – and it’s an exciting one. We’ve made a lot of progress in becoming more of a digital company and being powered by technology in differenways. Historically, there were parts of our business where we really leaned on technology, our supply chain, and communication with our associates.
But in recent times, there’s a holistic digital transformation of the company that starts with our data. It relates to how we’ve connected our systems with software and started to put ML (machine learning) and AI (artificial intelligence) to work. It has a front-end that looks like ecommerce in the form of an app or a site today. In the future, increasingly, AR (augmented reality), someday, VR (virtual reality), voice – all these things will be built on a tech stack.
Western economies have been witnessing persistent inflation for some time now, and a key reason for that has been supply chain disruption. Given the scale and reach of your supply chain operations, do you see supply chain issues easing?
We see some easing, but I think this is going to take a while. This story starts with really strong demand. The economy changed. People were staying at home more around the world, so their demand for goods went up and their demand for some services, like travel, lodging, and entertainment, went down.
As that corrects, we would expect, over time, the supply chain issues to improve. And beyond the things that operationally we are doing to improve the supply chain, the economy itself will have an impact on that, which ultimately will lead to lower levels of inflation.
But we think this is going to take time and we are not yet seeing inflation in the US subside and turn and go the other way. As we talk to our suppliers and look forward, we are optimistic that the peak of inflation in the US will happen at some point during the course of this year. But inflation is not a stranger around the world. And we do business in South America in places like Argentina and Brazil, historically in Mexico and other places, so we’re very familiar with what inflation can do. We try and work against the impact of inflation as it relates to what it causes for our customers.
What’s the sense you are getting about the global economic recovery and the impacts of inflation? What are the signals you are picking up from your global operations?
Choppy, inconsistent, volatile… I think this is going to take time. And we need to make sure that we can bring everybody along, not just middle-income and higher-income levels, around the world, because everyone needs to participate in these economies in an inclusive way.
We try to provide a service as it relates to that, our purpose as a company is to save people money and help them live better lives. Whether the economies are growing at a faster clip or slower than planned, our role is to help people have access to the things they need at an affordable price – and that’s what we focus on.
Given the Ukraine-Russia conflict, growing friction between the US and China, and rising geopolitical risks around the world, how does a company of Walmart’s scale and size manage its vast and complex global supply chain? Is 30 years of globalisation and economic integration coming to an end?
The supply chain is definitely global and I think it will remain that way and should remain that way to a degree. In the US, two-thirds of what we sell is bought from within the US, it’s either made or grown here in the United States. The other third comes from China, India, Canada, Mexico, and a list of other countries. Around the world, that two-thirds number is actually higher, like we buy a larger percentage of the goods we sell in India. And that’s true of every other country that we operate in beyond the US, primarily because we’re selling in those countries – with the exception of India – food items, so that drives that number up. You buy a lot more locally.
In light of how things are changing, our goal is to buy locally as much as possible. We would like to buy more goods in the United States to sell in the United States. We’d like to buy more goods in India to sell in India. And then, for those items where we need a global supply chain, we’ll buy goods from China, India, and other countries. In India in particular, we set a goal to purchase at least $10 billion annually for outside of India for export by 2027. We made that a public goal recently, and we’re excited about working with businesses in India, to not only sell things in India, but to export them to the United States and other countries around the world. We think that would help us create value for customers, help us with our supply chain diversification, and also send another signal to the people of India that we want people in that country to prosper.
Walmart has been providing related services – healthcare, advertising and financial services. Where are you on that journey?
The digital transformation unlocks a whole host of opportunities. And in many of our countries, we’ve got an opportunity to help with healthcare. As I travel around the world, I don’t find very many people who are satisfied with their healthcare services. In the US, we get a tremendous opportunity to give people access to quality care at a more affordable price at the Walmart store. And we’ve also purchased a telehealth company. And we’re building a financial services business around the world. We have PhonePe in India, which we’re very excited about. But we’re also building a financial services business in Mexico, in the US and other places.
There’s a strategic flywheel that we’re building that starts with selling products, moves to services, including healthcare and financial services, which lets our customers have a more holistic relationship with our company, to access the value of products and services in a broader fashion.
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