When Walmart CEO, Doug McMillon, needs a bottle of wine, he doesn’t have to wait long, thanks to a fleet of drones serving his neighborhood in Bentonville, Arkansas.Speaking at yesterday’s Morgan Stanley Global Consumer & Retail conference in New York, McMillon told the story of when his wife was recently cooking chicken marsala and realized they didn’t have the right wine. “We had a drone delivery in less than 15 minutes,” he said. “Where I live now, I can get Walmart in home delivery into the refrigerator in our garage,” he said.“Walmart raises my garage door, puts it in there, and lowers it.”Though Walmart recently shuttered drone delivery in a number of states, citing high delivery costs, McMillon, still views hyper-local, super-personal services—including by drone—as part of Walmart’s bigger-picture strategy that he described as “price assortment.”“Our future looks like big baskets moving slowly at a value and urgent deliveries happening in a really fast time in a variety of ways,” said McMillon.He added that Walmart’s newly launched membership program—along the lines of Amazon Prime—which includes the aforementioned in-home delivery for an extra $7 a month, will play an increasing role in the company’s strategy. Walmart currently offers traditional delivery for between $8 and $10 and drone delivery can cost as much as $30.Bentonville-based Walmart launched drone delivery to four million Americans in December 2022. This January, the retailer expanded drone service to 1.8 million homes in the Dallas-Fort Worth metro area via a partnership with Google-backed Wing and Zipline. Last quarter the world’s largest retailer, and a veteran Fortune 500 lister, reported consolidated revenue of $169.6 billion, up 5.5% over the same quarter last year with adjusted earnings per share up 14% to $0.58.Though the overall drone delivery market is expected to hit $65 billion by 2032, Walmart competitor Amazon has a head start, last month receiving approval from the FAA to test new quieter drones. Further complicating things, just seven months after the Dallas expansion, Walmart partner DroneUp reportedly cut delivery to 15 Walmart locations, citing price issues delivering smaller packages.Such delays aren’t hurting Walmart much. Though Morgan Stanley last month raised its price target for Walmart to $89, the stock has blown past expectations, reaching $93 today, and increasing 75% this year. Over the same period the S&P 500 is up 27%.As drone delivery prices come down and stabilize, McMillon expects the ability to charge more for drones delivering the most important packages will change the face of retail. As he put it to the Morgan Stanley crowd: “The experience gets kind of blown up as all these things come together to work.”How many degrees of separation are you from the globe's most powerful business leaders? Explore who made our brand-new list of the 100 Most Powerful People in Business. Plus, learn about the metrics we used to make it.
