Walmart held its annual investor meeting today where the company said that by the end of fiscal year 2026, it aims to have 65% of its stores be serviced by automation, approximately 55% of the fulfillment center volume to move through automated facilities, and as a result, unit cost averages could improve by roughly 20%.
CFO John David Rainey weighed in on the plans, saying automation will improve “how merchandise arrives at stores.” As far as the impact on the top line, he said, “Our targeted 4% compounded growth implies that over the next five years we’ll add more than $130 billion of sales on top of our $600 billion base today.”
I’ve stated since 2010 that the future of retail is robotics and automation; this is especially true for grocery retailers. Walmart generates 56% of its annual revenue from selling groceries. Walmart acquired Alert Innovation in 2022 with the intent of leveraging the technology to automate online grocery fulfillment.
Walmart is also investing in its supply chain and logistics. Why? To enable growth. Walmart’s logistics network is a competitive advantage.
What Walmart didn’t talk about at its investor meeting was TikTok. ByteDance founder, Zhang Yiming, recently met with Walmart’s CEO Doug McMillon, and the rumor mill is running wild. Many people were expecting some sort of announcement by McMillon regarding TikTok.
Several members of the press called me today and asked me if I thought Walmart was going to acquire TikTok. Why call me? Because in July 2019, I recommended during a conference and in a post on LinkedIn, that Walmart should partner with Microsoft to acquire TikTok. I was heavily criticized for the recommendation. However, one year later on August 27, 2020, Walmart announced that they were teaming up with Microsoft, in a bid for TikTok. An acquisition didn’t materialize primarily due to politics.
Walmart sources have told me that Walmart and ByteDance have had discussions since the Fall of 2020. The U.S. government is threatening to ban TikTok, and this has resulted in more discussions. On the record: No one from Walmart has told me that the company is acquiring TikTok, but it could happen. However, should Walmart acquire TikTok? Only if Walmart gets the blessing of government officials from China and the U.S.
I believe Doug McMillon is a future candidate for the U.S. Senate as early as 2028, and a candidate for President of the United States in 2032. CEO and future Candidate McMillon understands that acquiring TikTok is a risk to Walmart. Doug will have to weigh the potential political fallout from acquiring TikTok.
Walmart has other acquisition options they can consider. For example, merge with The Home Depot or acquire FedEx. Acquiring ESPN, or launching an NFL team and building a stadium, ‘Walmart Field,’ is a possibility.
Acquiring TikTok offers risk and reward to Walmart. There are many reasons for and against an acquisition.
