Walmart’s high-tech makeover powers $680 billion turnaround

Doug McMillon, now CEO of Walmart, began at the company as a teen in the 1980s, loading trucks in chaotic warehouses filled with noise and manual labour. Today, Walmart’s newest facilities resemble tech labs—populated by conveyor belts, robotic arms, and AI tools that optimize truck loading and streamline product delivery. This dramatic transformation underlines Walmart’s shift from a traditional retailer to a tech-driven powerhouse, which an insight article by The Economist into the world’s largest company highlights is has been a shift largely guided by McMillon since taking the helm in 2014.

At the time of his appointment, Walmart was struggling. Amazon was rapidly capturing market share with its vast online inventory and doorstep delivery, leaving Walmart’s massive physical stores looking outdated. Sales and profits were in decline. But instead of surrendering to digital disruption, McMillon doubled down on innovation, leveraging Walmart’s physical footprint while pouring profits into technology. The result: a resurgent retail giant with $680 billion in revenue and a workforce of 2.1 million—the largest company in the world by both metrics.

Key to Walmart’s resurgence has been its pivot to e-commerce. Acknowledging that the company missed the early 2000s e-commerce boom, McMillon repositioned Walmart’s 5,000 US stores—90% of Americans live within 10 miles of one—as fulfillment centers. Supercenters became hybrid distribution hubs. Warehouses originally built to stock stores were adapted to handle online orders. Walmart launched a third-party marketplace, expanding its online offerings to rival Amazon's and giving sellers the option to use its logistics network, for which it charges storage, packing, and delivery fees.

This strategy has paid off. Walmart’s US e-commerce unit generated over $100 billion in 2024, with online sales growing 20% annually—twice the rate of Amazon’s. The company has even outpaced Amazon in the complex realm of grocery deliveries, where speed and cold-chain logistics are essential.

According to the article, Walmart has also embraced tech to unlock new revenue streams. Its Walmart+ membership program, akin to Amazon Prime, offers free deliveries and other perks for $8.17 a month. Together with Sam’s Club, Walmart’s membership revenue hit $3.8 billion in 2024—double the figure from five years ago.

Meanwhile, data from online shopping is fuelling a booming advertising business. Walmart can now track ad performance in real time and “close the loop” between ad impressions and purchases. Screens in stores and ads on the Walmart app are now common. With the acquisition of Vizio, a smart TV maker, Walmart can now place ads in living rooms as well. Its ad business brought in $4.4 billion in 2024, up nearly 30% year-over-year. Despite being a small slice of total revenue, the unit contributes significantly to profits due to its high margins—10% of Walmart’s 2024 operating profit came from ads, with expectations to hit 16% by 2027.

This digital transformation hasn’t come cheap. Walmart’s capital expenditure doubled to $24 billion in 2023—two-thirds of its operating cash flow. The company is investing in AI assistants like “Sparky” for customer queries and “Wally” for internal merchandising decisions.

Looking ahead, Walmart is seeking growth in new demographics and markets, the article reports. It’s revamping stores and launching upscale private-label foods under the Bettergoods brand to attract wealthier customers. Luxury resale, like second-hand designer handbags, has also entered its marketplace.

Globally, Walmart tailors strategies by region. In Mexico, it leads the stock market. In China, Sam’s Club signals aspirational living. In India, Walmart owns a majority stake in Flipkart and PhonePe, key players in e-commerce and payments. Since exiting Argentina, the UK, and Japan in 2021, its international business has grown steadily, aiming to double sales and profit by 2028.

Even amid geopolitical turbulence—like Trump’s trade war—Walmart has proved resilient. Though around a third of its US inventory is imported, mostly from China, it has worked to diversify, notably increasing sourcing from India and securing domestic production where needed.

By Nazrin Sadigova