How Walmart’s businesses outside the U.S. help fuel its growth globally

While she said each country has a different brand associated with Walmart as a company, she cautioned against thinking of Walmart International as a “portfolio” of businesses. They have more things in common than not, all embracing the company’s “save money, live better” mantra in unique ways.

“I used to see it as complex and exotic, and now I see it as vibrant,” McLay said. “There is so much richness in the international portfolio, and it is such a growth engine for the organization.”

McLay said Walmart’s international business includes high-growth markets like India, Mexico and China; other regions like Africa where it expects future growth; and markets like Canada that are more similar to the U.S. The company did slim down recently, divesting from Asda in the U.K. in 2021 and offloading its stake in Japanese supermarket chain Seiyu this year.

“Each of [the markets Walmart exited] has added something to our way of operating business. Asda taught us a lot about pickup and delivery,” McLay said. “As we’ve had markets that we’ve ended up divesting from, each of them has taught us something, and it’s the richness of those learnings that have made the current portfolio so strong.”

While Walmart has had some success in China, Mexico and Canada, international business is often difficult for retailers, said Mickey Chadha, a retail analyst and vp of corporate finance for Moody’s. Target, for example, had to shut down its business in Canada in 2015 as it struggled to achieve profitability.

“You’ll see a lot of retailers actually go to international markets in terms of either joint ventures or partnerships with local retailers and not go in completely,” Chadha said. “Consumers are different. It’s very hard for U.S. retailers to know exactly what consumers like and what exactly they should be doing in these countries. … You need local knowledge, local management and local expertise, and that’s what Walmart has done pretty well.”

Walmart, according to McLay, expects the international business to reach $200 billion in gross merchandise value by 2028. (She did not say where this number sits currently.) She said the international division isn’t profitable yet, but some markets or sales channels within it are. That includes China’s stores and e-commerce — even without a digital ads business yet — as well as Flipkart’s electronics and apparel categories in India.

“We’ve also talked about doubling our profit, we’ve talked about increasing the e-comm penetration — so some really big, lofty goals that are well within our grasp,” McLay said. “And on top of that, we see ourselves as being accretive to both the top and bottom line. And, as we do all of that, we’re improving our margins and our return on investment.”

Walmart’s businesses outside of the U.S. also help the company understand how to bring new e-commerce capabilities from one market to another.

For example, in India, quick commerce — delivery in less than 30 minutes — has emerged as a trend, and Walmart’s Flipkart has 250 fulfillment centers that promise to deliver in 15 minutes or even as quickly as three minutes. Walmart acquired Flipkart in 2018 to strengthen its presence in the country.

To accomplish that kind of speed, McLay said Flipkart looked to Sam’s Club in China, where the company uses dedicated fulfillment centers called “clouds” that surround the clubs to accomplish quick delivery in less than an hour, available with about 1,000 items. In India, they iterated on that model to make 6,000 items deliverable in less than 15 minutes.

“They will keep refining on that model, and then they will pass those learnings back to China, but also to other markets,” McLay said. This model wouldn’t work exactly the same in the U.S., as it works because of China’s and India’s higher population densities.

Another technology Walmart is experimenting with in India is generative AI. Flipkart’s fashion platform, Myntra, has an AI-powered shopping feature that can take a query like, “I’m going to a wedding in Kerala with 20-year-olds, during the summer, and it’s overly formal,” to generate several different outfits with accessories and makeup color palettes, tailored around the shopper’s transaction history, according to McLay. “They are really beginning to showcase, in many ways, how to build that hyper-personalization into the offering for the customer,” she said.

Additionally, McLay said Walmart in Mexico wants to explore livestreaming, which the company’s Chinese arm has done to sell products in partnership with creators.

“There is such a learning window with international, because you have the opportunity to be in these different markets,” McLay said. “They do evolve at a different pace, and the fierceness of competition in some of those markets means that sometimes you see the future of what’s happening in retail, and then you can bring that back to another market.”

Plus, in addition to technology and operations, Walmart’s global business can also serve as an incubator for suppliers.

“I got to meet with some local, very small businesses that were starting off as sellers on our marketplace in Chile,” McLay said. “That gives them the opportunity to start to build out their capability to then become a seller on our marketplace globally. And also, as they build out their manufacturing runs and build out their capabilities, we can then onboard them as a sourcing partner to our bricks and mortar — both within that country, and then also, if it’s a really good item, across other markets as well.”