Analyzing long-run success, where the constant is change: Walmart's Advertising

I’ll try to keep this short.

We have a Financial Statement Analysis set of classes at the Texas McCombs School of Business with the label, Analyzing long-run success, where the constant is change. (As a part of dealing with massive stereotypes against accounting , I am trying to get better at my label or sticker game… this used to be called Topic 4.)

The material for this topic was built out of initial coverage of Whole Foods Market and morphed into broader coverage of retail (in some ways, the initial conversations of the Wholefoodsification of grocers became a part of the Amazonification of retail). More on Whole Foods and the history of this content is posted here , including this early slide deck on Whole Foods with some good questions centered on understanding the past and using this understanding to predict the future.

Recent Updates

The class's coverage now includes 亚马逊 , 沃尔玛 , Kroger , 塔吉特百货 , Dollar General , H-E-B (note, not just a grocer, but also a bear not worth poking ), 西尔斯控股 (as a cautionary tale, more here in my first LinkedIn post in 2016, a letter to Sears' CEO ), and my favorite and a business that is massively underrepresented in b-schools, Costco Wholesale . This naturally leads to discussions of related businesses, Uber (via Uber Eats), Instacart , DoorDash , etc. as we discuss how the changes to retail dovetail with changes to advertising.

In this topic, one of the comments we made in the early years (sometime between 2013 and 2014) was: retail and specifically groceries might change more in the next 10-20 years than it did in the past 100:

Changes to product mix, increased service offerings, customers' nearly insatiable demand for convenience, the customer-driven move towards consolidation, etc.; fascinatingly, we’ve been able to witness and discuss this change real time.

We first asked this question in 2022 as Walmart's financial highlights included a new item:

Which of the following financial highlights is the most interesting and worth watching going forward and why?

Its usually overlooked as (1) its not a summary measure that gets b-schools all jazzed up and (2) it's still very small, relative to Walmart, but my answer: Advertising.

?While $1.6B is tiny relative to total revenue of $573B, we discussed the reasons this is important as including the following:

1. Advertising should offer Walmart considerably larger margins as compared to retail and groceries;
2. Advertising is a small base, but should also provide an avenue for high growth potential (of course, off a much smaller base); and
3. This offers some evidence that Walmart can also do some of the things that Amazon excels at (Amazon had advertising revenue of $48B in 2023 up from $37B in 2022).

All of this, including the graphic noted in this post, was recently covered this week by Jon Keegan . Check out Jon’s article here: ?https://sherwood.news/business/walmarts-growing-ad-business-big-margins/

Former student, Madeline Kuenzi , who sent me the article succinctly noted “FSA echo. Believe you hit on all of these points, pretty cool.”

How else can we include content that focused on where the puck is going? Anticipate news coverage and business changes?

Always open to your suggestions, insights and comments.