Walmart's Digital Growth in 2025: From Price Leader to Profit Leader

“Our team finished the year with another quarter of strong results. We’re gaining market share, our top line is healthy, and we’re in great shape with inventory.” — Doug McMillon, CEO

Those words signal the arrival of a digital-first Walmart: The chain transforming into a digital-first retailer, combining its traditional discount-grocery model with speed, advertising, and automation, while still maintaining its Every-Day-Low-Price (EDLP) commitment.

This strategic shift is evident in its growing U.S. e-commerce penetration, now at 18% of sales, and its annual retail-media revenue exceeding $4.4 billion.

With full-year revenue at $681 B and retail-media sales topping $4.4 B, Walmart straddles two worlds: the razor-thin competitiveness of discount groceries and the plush margins of ad-tech. For wholesale-minded rivals, that dual identity is the new benchmark.

Price × Speed: Reinventing Discount

Two years ago Walmart could reach 76% of American households the same day; today it hits 93% and will extend to 95% by December 2025 .That reach is possible because every one of the chain’s 4600 U.S. superstores doubles as a forward-deployed fulfillment node.

CFO John Rainey distilled the math: "delivering to five houses on a street instead of one “spreads cost over more volume.” 

Density contributes to cost reduction; Walmart subsequently monetizes urgency by offering "Express" delivery windows of less than three hours, which account for 30% of customer-paid deliveries. Following a shopper's initial Express order, basket sizes double, and after the fourth order, they triple, thereby initiating a self-funded margin flywheel.‍

Retail-Media Margin: Fueling the Innovation Engine 

Walmart Connect delivered 31% ad growth in Q1 FY 2026 (ex-VIZIO). That’s software-level topline in a category where 20 bps of gross-margin swing usually makes headlines. Wholesale retailers who still view ads as “other income” will watch Walmart finance the next FC build-out with CPM dollars.

Ads convert store traffic and shopper data into EBIT:

Line of business

FY 25 U.S. YoY growth‍

Walmart Connect on-site & off-site ads

24% Q4 FY 25

Same post-VIZIO inventory

31% Q1 FY 26

Rainey calls advertising one of the “number of things, and they’re all pretty equal” in achieving e-commerce profitability. Incisiv’s State of Digital Grocery: Evolve to Improve Profitability projected that advertisements would emerge as the most significant determinant of grocery margins by 2025, a prediction now substantiated by current data.

State of Digital Grocery: Evolve to Improve Profitability

Discover essential strategies for grocers to boost profitability through digital-first approaches, optimized fulfillment, and personalized customer engagement.

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Automation & Micro-Fulfillment Pipeline

Four new U.S. fulfillment centers have doubled storage capacity and daily output, while also reducing handling costs per unit by approximately 20%. Management expects these benefits to more than double once automated processes handle over half of the volume.

Incisiv’s 2024 forecast is that micro-fulfillment would handle 3.6% of online grocery orders by 2025. Walmart’s current trajectory, with half of its fulfillment center volume automated, suggests that the forecast understated the speed of its transformation.

Omnichannel: The Higher Margin Flywheel

Grocery Doppio’s State of Digital Grocery: Evolve to Improve Profitability found that omnichannel shoppers, only 19 percent of the base, spend an average $1,044 a month at a 25.6 percent margin making them the most valuable cohort. Walmart’s own data echoes that power: its omni-shopper now buys three times more often and adds 13 percent more items per order than a single-channel customer. By folding digital into every store visit, QR shelf codes, in-app aisle maps, real-time Auto Care updates the retailer has pushed site traffic up 30 percent over two years and lifted conversion by 81 basis points. The result is a customer who balances digital costs with deeper engagement, turning a former margin drag into Walmart’s most profitable segment.

Strategic Roadmap 2025 - 27

McMillon’s guidance is clear: “We’ll stay focused on growth, improving operating margins, and strengthening ROI as we invest to serve customers and members even better.”

‍Why U.S. Grocers Must Respond

To emulate Walmart's strategy, U.S. grocers ought to rapidly address five key areas: 

• Enhance Route Density by restricting same-day delivery commitments to ZIP codes 
• Enabling Drivers to complete a minimum of three deliveries per hour
• Retrofitting the Top 20 highest-volume stores with micro-fulfillment center modules within one year
• Capitalize on Delivery Speed by immediately implementing a $5–$7 rush-delivery option
• Introducing Dynamic Pricing by being aware of store traffic over the subsequent 12 months
• Transform Retail Media into Profit by promptly launching sponsored-search advertisements and piloting CTV or in-app audio spots that leverage first-party data
• Initiate Automation on a small scale through goods-to-person picking in a single distribution center before expanding to a high-speed shuttle network connecting regional hubs
• Unlock Data Monetization by integrating supplier dashboards with existing trade programs and, in the long term, offering predictive-inventory APIs to CPG partners. 

Collectively, these actions will replicate Walmart's Density-Plus-Margin Flywheel, providing regional chains a clear, phased approach from immediate successes to sustained structural profit improvements. 

Every lever maps to pain points Incisiv surfaced in prior research: 89% of grocers saw Fulfillment Optimization as their biggest profit gap (2023), 77% blamed Legacy Technology for a lack of agility, and 68% cited limited Data Access. 

Walmart solved each in sequence, and black ink followed.

Takeaway

Walmart's growth potential in 2025 lies not just in bigger baskets, but in selling the same digital shelf space twice — first to shoppers, then to brands.

Do you need a custom profitability blueprint or benchmarking session? For research briefs, benchmarking workshops, or press inquiries, email insights@grocerydoppio.com or get in touch with us and we'll get back to you.

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