![Walmart CEO Doug McMillon on inflation and the holiday shopping season](https://image.cnbcfm.com/api/v1/image/107166545-P-DOUG_MCMILLON_INTV_HOLLAND_121322.jpg?v=1671117900&w=750&h=422&vtcrop=y)
Retail sales fell on Thursday, at the same time as the most recent consumer price data from earlier this week pointed to a cooling down. Walmart CEO Doug McMillon says the retail giant is coping with inflation and a slowdown in consumer demand extending into 2023, with economic conditions shifting as shoppers will see on the shelves of the country’s largest retailer.
Grocery sales, accounting for 56% of Walmart’s revenue, are a key inflation reading for McMillon and the corporate.
“We’re managing this text by item, category by category,” McMillon said in an exclusive interview with CNBC on Global Hope Forum in Atlanta earlier this week. “We have now a plan and have adjusted our inventory to be ready for next 12 months.”
McMillon’s comment got here after November’s CPI report showed consumer prices rose 7.1% year-on-year, which was below estimates but ahead of a fall in retail sales released on Thursday.
Food prices remained high, rising by 10.5% 12 months on 12 months. Grocery sales require more regular deliveries than general goods, and trucking prices are also higher, about 35% higher because the start of the 12 months, according to Evercore ISI.
“We see that if we have in mind fresh food categories, commodities, things like proteins, things start to change. Chicken is costlier now but beef is happening. Fruit and vegetables are in pretty good condition,” said McMilon. “But dry groceries, consumer goods is where we see probably the most stubborn and chronic inflation, mid-double-digit inflation. And we’re not hearing from our suppliers expecting it to drop soon,” he said.
According to McMillon, general goods categories have began to adjust as demand has subsided, but he added: “We expect we’re going to have inflation occurring for some time, for medicines, groceries and consumables.”
McMillon said Walmart continues to explore recent technologies to maintain inventory and increase the speed of its e-commerce business. This features a commitment to purchase hundreds of business vehicles from General Motors subsidiary BrightDrop and Canoo; the opening of next-generation logistics centers that use automation and artificial intelligence; and the acquisition of robotic start-up Alert Innovation.
“Today, technology enables a lot, whether it’s the way in which we use data, the way in which we use smarter algorithms to work, or the way in which we implement automation in our supply chain. Lots of changes await in distribution centers, success centers. last mile with EVs (electric vehicles) and delivery,” said McMillon.
Hope Global Forum is an annual event for Operation Hope, one in all the most important non-profit organizations within the country, specializing in financial literacy. Walmart can be a founding member Financial literacy for everybodyan initiative led by Operation Hope that also includes Disney, Bank of America, Walgreens, Delta Air Lines, Ares Management, and others.