Walmart faced numerous challenges throughout the past year due to inflation and supply chain issues.
Analysts expect the retailer to work through excess inventory in 2023, but obstacles may arise.
Advertisement
Vast amounts of unwanted inventory choked store aisles. Ambitious e-commerce efforts came up short. A healthcare push faced a major hiccup.
Walmart certainly saw some tribulations in 2022 in the face of rampant inflation and supply chain issues. And in 2023, customers should brace themselves as the retailer tries to capitalize on e-commerce, healthcare and banking plans, among other things – all while facing another potentially unpredictable year, analysts say.
"They're certainly not putting all of their eggs in one basket," said Mari Shor, a research analyst with Columbia Threadneedle Investments.
Here are four major Walmart challenges to watch in 2023.
1. Trying to 'enter the new year clean' without much excess inventory
Supply chain and inflation issues led the retailer to have way more supplies on hand than consumers were buying – leading to unwalkable backrooms packed with full pallets.
Walmart has said since May that it would make a concerted effort to get through excess inventory, and, to its credit, it has kept its word. In its first-quarter earnings call in May, the company reported a 32% year-over-year increase in inventory; in the latest earnings call in November, that increase was only 13%.
"I feel good about their ability to enter the new year clean," Shor said.
The caveat: On the other hand, Walmart's worst-case scenario for 2023 is if any of the unpredictable problems from 2022 arise again, such as supply chain disruptions or changes in consumer behavior caused by a potential recession, according to Michael Rofman, a partner with Mazars: "They could be in a period where they have, again, too much inventory."
2. Continuing e-commerce savings growth while mitigating costs
The best-case scenario for Walmart with its e-commerce plans in 2023 is to have "continued measured growth" in home delivery and curbside pickup sales, according to Zain Akbari, an equity analyst for Morningstar.
The caveat: But according to Shor, the worst case scenario for Walmart in 2023 would be if the retailer struggles to roll out cost-saving initiatives, like its planned automated fulfillment centers, and e-commerce growth continues to dip.
3. Expanding clinic presence is a 'must' to create major healthcare gains
Advertisement
Healthcare remains one of the most lucrative fields that Walmart has hardly touched to date. The retail giant currently only has 32 clinics across five states.
In 2022, Walmart saw competitors like Amazon make major healthcare splashes. 2023 is going to be an uphill battle for Walmart, as Dr. Cheryl Pegus, Walmart's executive vice president for health and wellness, left the company in November for a health venture at JPMorgan.
Walmart "must expand its clinic presence and solve the operational challenges many of its clinics have faced," said Sari Kaganoff, general manager of consulting at Rock Health Advisory.
The caveat: On the other hand, Walmart healthcare's worst case for 2023 would be a scandal either coming from a data hack or through mistreating a patient, according to Natalie Schibell, a research director with Forrester: "An egregious case of medical malpractice or a major data breach would paralyze" Walmart's goals.
Advertisement
4. Rolling out new customer banking services
Of all Walmart's big initiatives for 2023, its foray into banking may just be the most secretive.
The caveat: According to Akbari, One "has a lot of upside" in 2023 and Walmart should focus on helping build out the infrastructure for it: "They tend to just focus on making sure that they have things as close to right as possible and then go forward rather than trying to be overly experimental with how they approach things."
Advertisement
Got a tip about Walmart? Ben Tobin can be reached by email at btobin@insider.com or via the encrypted app Signal or text at (703) 498-9171.
{{}}
NewsletterSIMPLY PUT - where we join the dots to inform and inspire you. Sign up for a weekly brief collating many news items into one untangled thought delivered straight to your mailbox.
A delivery driver's car was stolen with her kids inside — and it reveals the complicated reality of juggling gig work and childcare
This is how Waffle House stays open during storms — including using a natural disaster playbook, emergency teams, and limited menus
I started the Elf on the Shelf with my mom and sister. We self-published a book and took on credit-card debt to turn our family tradition into a business.