Dive Brief:

• Coronavirus case growth at the local level drives demand for essential supplies in nearby Walmart stores, executives said on an earnings call Tuesday — an indication that analyzing this data could help the retailer prioritize replenishment orders and stay in stock on key supplies.
• "It really does have everything to do with what's happening with [COVID-19] cases in any particular community," said Walmart CEO Doug McMillon, referring to demand. In the COVID-19-stressed areas, shoppers are stocking up on paper products, cleanings supplies and dry grocery items, he said.
• Some segments of Walmart suppliers have returned to close-to-normal in-stock levels, according to Walmart U.S. CEO John Furner. Hand sanitizer and fresh meat are in much more dependable supply. But dry grocery goods and products that rely on aluminum packaging are still struggling.

Dive Insight:

Retailers have been grasping for data that can help forecast demand, since the pandemic made historical data virtually irrelevant. As COVID-19 cases rise in most of the U.S., McMillon said the difference between areas with rapidly increasing cases and those with a slower rise is visible within Walmart's store network.

"I was in stores last week and I saw a variance from one state to the other — one location to the other. It just depends on how people are feeling in that moment. What the action is, is the same as what we saw before. They're just stocking up on paper goods, cleaning supplies and dry grocery should they need them," McMillon said on the call.

Executives predicted the retailer would respond better to this wave of cases than the first, given the benefit of experience.

"We'll manage through these curves. They'll be localized," McMillon said, without going into details about how Walmart would adjust stock levels based on store-level demand. Executives also acknowledged supply chain stressors remain.

The retailer is currently developing a stack of technologies in a few test stores to further unite store and online operations. The goal is to replenish stores more quickly while speeding up in-store picking for omnichannel orders, which could boost in-stocks.

Comparable store inventory in the U.S. was up 3.6% YoY in Q3, 5.5% for the company as a whole, which executives said was driven by pre-buying for the holidays and improvement of in-stock levels.

Fine-tuning of omnichannel offerings throughout the pandemic has brought fulfillment cost per unit down, said Furner, though the retailer's e-commerce side continues to operate at a loss.

Walmart continues to fulfill e-commerce orders from 2,500 of its stores and may flex that number up in the coming weeks depending on holiday volume, executives said. E-commerce net sales for Walmart U.S. grew 79% YoY in Q3.