The Walmart logo appears above a trading post on the floor of the New York Stock Exchange on Thursday. (Richard Drew/AP)
The world’s largest retailer continues to get larger — especially online, where it’s spending billions to compete with Amazon.com.
Walmart on Thursday said online sales grew 33 percent in its first quarter as the company expands its website to include more premium products. The discount retailer, known for its rock-bottom prices, has tried in recent years to attract more-affluent customers by buying up niche brands and expanding its lineup of merchandise.
But analysts say attracting higher-end customers — and retaining them — will be a continuing challenge.
“Walmart is not a natural destination for higher-priced items, especially in apparel,” Neil Saunders, managing director of GlobalData Retail, wrote in a note to clients. “There is much more work to be done to shift perceptions.”
Walmart’s website — which updated its look last week with new colors, fonts and layouts — now sells 75 million items, including higher-end products such as Bose sound systems (which cost as much as $699), Tommy Bahama area rugs (up to $2,599) and wooden dinghies ($9,155). The retail giant is also partnering with department store chain Lord & Taylor to create an upscale site with brands such as H Halston, Lucky Brand and Effy.
The number of visitors to Walmart’s website has grown 34 percent in the past year, double the 17 percent growth rate at Amazon, according to data from ComScore. But Walmart is coming from far behind: Amazon had an online audience of nearly 183 million visitors in April, compared with Walmart’s 101 million. (Jeffrey P. Bezos, the founder and chief executive of Amazon, owns The Washington Post.)
Analysts say much of Walmart’s business remains centered around lower- and middle-income shoppers who frequent its 4,700 U.S. stores. (More than 96 percent of Walmart’s sales continue to come from its stores.)
Walmart and Amazon have been locked in a tight battle to win over customers, in stores and online. Walmart spent $3.3 billion buying up Jet.com in 2016 and last week announced its biggest deal to date — a $16 billion investment in Indian e-commerce giant Flipkart. It also purchased a number of niche labels last year, including Bonobos, ModCloth, Moosejaw and ShoeBuy.
Amazon, meanwhile, spent $13.7 billion on Whole Foods Market last year, giving it a foothold in the U.S. grocery business, where Walmart remains the largest player.
“There is increasing overlap between Amazon and Walmart shoppers, but for the most part, the rift remains: Walmart is for mainstream shoppers, while Amazon is for higher-income families,” said Krista Garcia, an analyst for eMarketer, a market research firm.
That separation may be exacerbated in coming months, she said, as Amazon raises the price of its Prime membership 20 percent to $119 a year.
“We’ll likely see lower-income Prime members saying, ‘You know what, I don’t want to pay this much anymore,’ ” Garcia said. “But I don’t think higher-income shoppers are going to defect to Walmart in any big way.”
Overall, Walmart’s revenue grew 4.4 percent to $122.7 billion in the most recent quarter. Same-store sales — a closely watched industry metric that measures sales at stores open at least one year — grew 2.1 percent in the United States. Profits, however, fell about 30 percent to $2.13 billion, or 72 cents per share, as the company beefed up its investments. The company does not break out online revenue.
“We’re encouraged by the progress made across the business,” Doug McMillon, Walmart’s chief executive, said in a statement. “Customers are responding well to the refreshed [online] experience.”
He added that the company plans to expand its online grocery pickup service to 1,000 more U.S. stores this year. Walmart customers who shop online and in the company’s stores typically spend double the amount spent by those who do only one or the other, McMillon said.