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Where Will Walmart Be in 5 Years?

By James Brumley – Sep 12, 2020 at 8:45AM

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The mega-retailer is slowly but surely turning into a solutions provider that consumers are happy to let handle life's hassles.

On the surface, the Walmart (WMT -0.65%) of today looks more or less like the Walmart of 2015. It's still the world's biggest brick-and-mortar retailer, and still sells a little of everything. Its restocking issues have been addressed and pay raises appear to have improved morale. But it's still just a store.

That may not be the case five years from now, however. Walmart is slowly turning into a lifestyle company that will solidify and stabilize its future revenue stream. The job could be complete by 2025.

Borrowing a page from Amazon's playbook

It's not a term that's been tossed around as frequently as phrases like "the Internet of Things" or "Big Data." But the evolution of consumer-facing organizations into lifestyle companies is a real thing nonetheless. Simply put, lifestyle companies capitalize on how people live their lives by pre-solving problems and eliminating hassles, allowing individuals to do more of what they want to do and less of what they have to do.

Man using binoculars to look into the distance

Image source: Getty Images.

E-commerce behemoth Amazon (AMZN -2.72%) is a lifestyle company, even if it didn't mean to become one. Free one-day shipping trained its Prime customers to skip a trip to the store and wait for that product to show up on their doorstep. Amazon.com also melds hardware like Fire TV sticks and Kindle tablets that facilitate subscriptions to digital media, including media not sold directly by Amazon. Millions of people have even invited Amazon into their living rooms by purchasing an Alexa-powered Echo device, bringing the entire world to users with just a simple verbalized request. It all makes Amazon the top-of-mind choice when it comes time to buy something.

The key to Amazon's success? Using these tools is not only easy, it's seamless -- you just need an Amazon account.

Walmart has always been a well-grounded company. But it was never a one-stop solutions provider/problem-solver that consumers sought out without a second thought. That's changing, though, one baby step at a time.

Not yesteryear's Walmart

One of those steps, of course, is the development of its subscription service called Walmart+, which goes live this month. At a cost of $12.95 per month or $98 per year, customers will enjoy unlimited free delivery from nearby stores, use of the Scan-and-Go app in-store, fuel discounts, and more.

Walmart+ isn't a revenue machine in and of itself; it may even lose money. But Walmart+ will make it easier for consumers to choose Walmart over other retailers when it comes time to make a purchase.

Another lifestyle enhancement to look for from Walmart is a deeper dive into clinical healthcare. The company has already established a handful of first-line physician's offices that not only treat cuts and colds, but can perform X-rays, fill cavities, check your vision, and offer diagnostic services. They're just the first wave of a larger planned network of healthcare supercenters that will complement the company's existing pharmacies found at most of its stores. This network of health clinics will also dovetail into Walmart's plans to enter the health insurance business. As was the case with Walmart+, the priority of this venture isn't necessarily profits. The key purpose may simply be to get people into Walmart's ecosystem, where they won't give a second thought to making another purchase.

Other initiatives that suggest the brick-and-mortar retailer is thinking outside its conventional retailing box are confirmed interest in a co-acquisition of ByteDance's social media platform TikTok, expanding its e-commerce platform to more, smaller Shopify (SHOP -8.45%) merchants, converting parking lots at some of its stores to drive-in theaters, and efforts to reduce its carbon footprint by using sustainably sourced paper and encouraging an end to unrecycled plastic bags. It's even opened a sushi restaurant and craft beer bar at on Arkansas store.

Some of these efforts are an opportunity to directly drive additional revenue. Others will do so indirectly. Still, others won't add revenue at all but will appeal to a large subset of consumers who support what the retailer stands for. Few of these initiatives, however, would have been expected just a few years back. Walmart is evolving into more than just a place to buy groceries, home goods, toys, electronics, and basic supplies. Eventually, the retailer will be the default solutions provider for many consumers.

Five years from now

The philosophical changes underway aren't easy to see. That's partly because of their slow pace, and perhaps partly because the company isn't making a point of calling them part of a campaign to become a lifestyle company. Walmart may not even realize all these initiatives position the company in a way that lets consumers delegate many of life's hassles to the organization.

Nevertheless, it's happening, and happening pretty quickly. By 2025, don't be surprised if Walmart is in many ways the sort of go-to solutions provider Amazon is now, with its customers not giving a second thought to the fact that Walmart didn't use to sell health insurance, make deliveries, or sell so many niche products online.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. James Brumley has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and Shopify and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Walmart Stock Quote
Walmart
WMT
$132.25 (-0.65%) $0.86
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$114.80 (-2.72%) $-3.21
Shopify Inc. Stock Quote
Shopify Inc.
SHOP
$26.77 (-8.45%) $-2.47

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