Clear aisles, full carts… Walmart stock rose yesterday after America’s largest retailer reported expectation-beating sales growth for the holiday quarter (ecomm revenue alone surpassed $100B). US same-store sales grew 4% as shoppers flocked to the grocery go-to. But profit fell 12% as folks pulled back on discretionary splurges like air fryers and laptops. Groceries make up over half of Walmart’s sales, but peas and carrots are low-margin items.
Confirmed: Walmart also announced plans to buy smart TV maker Vizio for $2.3B in cash, hoping to turn viewership into ad dollars. Vizio stock surged 16% yesterday.
Stream on: Vizio TVs offer free ad-supported channels and have racked up 18M+ accounts. Walmart hopes those eyeballs will boost its own $2.7B/year ad biz, which saw sales jump 22% last quarter.
The prime effect… Walmart’s Vizio deal could be an attempt to compete with Amazon, which earned a whopping ~$47B from ads last year (more than YouTube’s annual ad biz revenue). Retailers are turning to smart TVs (which, fyi, can collect viewing data) to grow their targeted ad businesses: last month, Amazon partnered with Panasonic on a new line of smart TVs equipped with its ad-based Fire TV. In April, Instacart teamed up with dongle icon Roku to see if customers bought a product after viewing a TV ad for it. Kroger used its grocery shopping data to test targeted ads on Disney’s Hulu (picture: Pepsi promos for frequent soda buyers).
Low-margin businesses seek profitable bets… Grocery giants aren’t known for thick profit margins. What they do have: a treasure trove of customer shopping data, like your gluten-free tortilla habit. Now, they’re using those insights to get into the high-margin ad biz. Retailers have a leg up over ad giants like Meta and Google since people come to them with the intention of shopping. That’s why advertisers are moving billions in spending to retailers.