Walmart Conference: E-Commerce, AI and Fast Delivery Fuel Market Share Push

Walmart is pursuing market-share growth through price investments, broader assortment, faster fulfillment and a focus on value and convenience. The company expects inflation to remain similar to first-half levels. E-commerce grew 24% for its 10th consecutive quarter above 20%, while same-day-or-faster deliveries reached about 70% of home deliveries. Walmart’s e-commerce business has also remained profitable for six straight quarters. AI, Marketplace and advertising are expanding Walmart’s digital ecosystem: Marketplace sales rose 52%, Walmart Connect advertising revenue increased more than 40%, and engagement with AI assistant Sparky climbed over 60% quarter over quarter. Pharmacy faces continued pressure from Maximum Fair Pricing, though the health and wellness segment remains profitable and attracts high-spending customers.

Walmart NASDAQ: WMT said it is maintaining a focus on price investments, faster fulfillment and expanding digital services as it seeks to build market share, while managing continued inflation and regulatory pressure in pharmacy. During a discussion with Goldman Sachs analyst Kate McShane, a Walmart executive said the company’s price gaps remain strong, supported by investments intended to reinforce its Every Day Low Price strategy. The retailer is working with suppliers to translate negotiated rollbacks into lower prices for customers during the second half of the year.

Inflation in the first half was approximately 1.4%, with food inflation near 1% and general merchandise inflation near 2%, the executive said. The inflation rate fell below 1% in the third quarter as price investments took effect. Walmart expects inflation in the back half of the year to resemble the first-half level.

Walmart’s health and wellness business represents about 10% of its U.S. business, with pharmaceuticals accounting for the majority of that segment. The executive said Maximum Fair Pricing, or MFP, was applied to roughly 10 high-volume drugs. About eight of those drugs either became generic or extended prices beyond Medicaid to consumers more broadly, creating a top-line headwind. That pressure is expected to continue next year after 15 additional drugs were announced for MFP treatment. Still, Walmart said its core health and wellness business remains strong, with prescription growth increasing year over year in the second quarter and profitability improving by double digits. The retailer also highlighted the spending behavior of health and wellness customers. Customers who engage with health and wellness spend roughly three times more than the average Walmart customer, while pharmacy-delivery customers spend nearly six times more, according to the company. Walmart said it can deliver pharmaceuticals to 96% of the U.S. population within three hours or less and to 60% within 30 minutes or less.

Walmart reported 24% e-commerce growth during the latest quarter, marking its 10th consecutive quarter of growth above 20%. The executive attributed the performance to assortment, price and customer experience, including broader Marketplace offerings, digital access to services such as pharmacy and vision, and faster delivery. About 70% of Walmart’s deliveries to homes are now delivered the same day or faster, the company said. It also reported a doubling in deliveries completed within 30 minute...