So, good morning, everyone. I want to thank you for joining our sixth annual Evercore Retail and Consumer Conference, doing it the first time in our global headquarters here in New York, and it's my great pleasure to have with me Seth Dallaire, who is the Chief Growth Officer of Walmart. Just stepped into that role, so I guess, Seth, you are the Chief Growth Officer. What does that mean? What do you actually do?

That's a great question. I get it frequently. Thank you for inviting me. What it means is that I look after a set of businesses that complement what we do in the more traditional retail world and I'll explain what those are. So first it starts with our third-party marketplace seller business. So that business is one where we work with sellers to bring more assortment to our e-com business and stores so that customers and members can find it and be introduced to general merchandise categories, fashion, beauty products, things that maybe who knew Walmart had. That's an important part of our business in terms of building assortment for customers and helping our customers shop Omni with us, introducing them to our digital and e-commerce businesses. So that's one part of the business, and that extends over the Walmart enterprise. So each segment will work internationally with the marketplace sellers. And then the retail media businesses, Walmart Connect, Sam's Map, other advertising that sits within different countries where we have e-commerce offerings, that also now comes into the growth organization. The data ventures businesses which create the data product called Scintilla that perhaps some of you are familiar with, our suppliers subscribe to that information. That also is coming through the growth business but now extending into Canada and Mexico and other international businesses the the membership businesses Walmart Plus expanding those offers through not just the US but we made an announcement that we'll be rebranding the Canadian membership offers to Walmart Plus last week we'll be looking to do more of that type of work in the future And then lastly, the Vizio business, which is a television manufacturing business that we completed the acquisition of last year, a year and a half ago. And that business sits adjacent to the advertising businesses that we run. So I'm often asked, like, well, why would Walmart buy a television company? And the reality is that we sell a lot of TVs at Walmart. And the television business is no longer the domain of the sort of buy it for wholesale, sell it for retail and keep the margin. The real television business is now post-sale and it's driven by technology and the operating systems that sit behind the glass on these devices. So that is an area of advertising, connected TV advertising that complements what we do with advertising products in our e-com businesses and stores. and we're excited about that.

I'd love to double click on that. So advertising was about a $6 billion business for you guys, just to frame it. Take us through the evolution of getting into advertising and how Vizio is now complementing that and accelerating it.

I've been at Walmart for just over four and a half years, and I would say that when I joined, The investments in the advertising space, we were making them, but there were certain technological features and capabilities that relative to other platforms that I had built were not the same, were underdeveloped. And so when I came, I worked with the team to really define the opportunity and why advertising is so important and complementary to a retail business. That was the first sort of task. And then in doing so, once you get an agreement that, hey, this is an area we want to invest in, it's actually advertisements are good for our customers. They're good for our seller community. They help avail customers and members to new products or things that they didn't know were available for sale at Walmart. And they have a different margin profile than the traditional retail business. Everyone wins in that respect. We focused on building a platform that could grow that business and scale as the investments we were making in e-commerce were taking hold. So we're very tightly coupled with the e-com business. That business has been growing healthily. We've been making investments there. as that business grows and more customers and members come in and shop they want to find more assortment through the marketplace those marketplace sellers want to advertise their products that creates opportunity for us to serve customers and drive operating income similarly the large advertisers some of whom we've had on stage earlier today they want to capture as much demand at the point of sale with our customers and members as possible so they buy the products as well so that discussion once once we sort of got over that line with the the leadership teams has been a huge accelerant for the business and and the the leadership team on the whole now will say well this advertising business and retail media is a critical component to to how we serve customers and members and also to the P&L how do you make sure that that experience for of the customer doesn't get cluttered or overloaded, right?

You're going to grow in 40% and Walmart connect. How do you drive the organization so that it doesn't get loaded up on the customer?

Well, we have an experimentation orientation in terms of that business where we will constantly run A-B tests to understand what is the tolerance level for advertising or different types of ads or formats of ads. And the way that you respond to those ads or may be different than the way that I do. The different categories, some shopping for beauty category, you may be much more tolerant of advertising and perhaps video advertising than you would be of a category like produce, for instance. So we have to experiment in order to understand customer response and we can do that in a digital environment. You know, running those tests, the different A-B tests, I don't want to say that it's cheap cheap, but it's easier for us to run one of those tests and get stat sig on a test and a result and give us confidence to then extend that experiment out to the entirety of our store than it is to do that same type of test in a physical environment. You can imagine where if we were setting up mods and features in different ways, it takes time, it takes a lot of labor costs to do it, and then doing it across 4,600 stores is a challenge. So the digital and e-commerce environment allows us to do a lot of experimentation to understand just what that threshold or boundary might be before you say, it's too many ads, I'm going to abandon my cart. In fact, what we find is that ads are accretive to the experience because it creates the opportunity for new brands or challenger brands to get time or attention from you while you're shopping in the category. And our customers enjoy the sort of serendipitous nature of finding new product. and we've been talking quite a bit about about advertising or about you know even around how agents or new you know new surfaces that customers use to begin a shopping journey how they impact or provide utility and if you're going to continue to be served the same thing the same shopping list the same products that you've always bought in the past you know that shopping experience might be pretty boring so I like to be exposed to new products I like to understand even in categories that I shop frequently that there may be new

offers and new brands and new products or new price points and advertising plays a critical role in that in fact it's it's very similar to merchandising yes so actually maybe we'll pivot to another part of the growth there is membership so walmart plus been very successful sam's with its own membership model to start uh i guess that's where the headlines are but if we bring it in um how do i mean i think you're probably a third of walmart's global ebit is under your mandate uh so what what do we do to really bring that home into the part of the membership so that what they're learning the data and understanding that customer flows through to more loyalty more traffic more tie-in with those customers

Yeah, it's an important part of our business for all the reasons that you just mentioned. But it's also complementary to, for instance, the marketplace business. If you're a new e-commerce customer for Walmart, and maybe you're buying something that we're shipping to you from one of our fulfillment centers, you have to pay for the delivery, most likely, depending on the cost of the item. And if you do that once or twice, then you don't want to pay for the, continue to pay that delivery fee. So you may then decide, okay, if I'm finding the assortment that I want from Walmart, I want to have these items delivered, I love that convenience, then I'll try the membership. And we know that once you're in trial, if we can deliver those items to you and meet your expectation around delivery speed, the likelihood that you become a paid member is high. when you become a paid member we we see this like it's predictable the amount of spend and wallet share that you give to us increases and as you use more benefits within the membership program your renewal rates or the likelihood that you will renew increases as well and so as we you know we have cohorts of customers who only shop with us in store we'll encourage them to try shopping with us in an omnichannel way bring them into the e-commerce business as they come into the e-commerce business we'll encourage them to become members as they become members we then encourage them and we see that their their visit frequency purchase frequency and the average order value of those baskets increases in a way that looks very different than the buy-in-store-only customer so that's that membership piece is often you know it has many benefits to our pnl but we also get to serve these customers and members in a different way too and the assortment that we bring is really a critical component of that and that's where the marketplace is it's so strategically important for us i want to get to the marketplace but i want to double click

on the membership for a second so is membership is the connective tissue it seems to me to put these things together is it a standalone pnl driver in its own right when you factor in all all the costs of delivery and to serve that member? Or is it really just about connecting all these things together?

Well, we try to look at all of these components of the growth business as a, you know, it's complimentary to other parts of Walmart. If we ran them as purely independent types of businesses, then, you know, it minimizes the sort of impact or complimentary nature that we have across other parts of our business you know that we need a strong e-com business in order to have a really compelling membership offer we need to have a really strong e-com business to complement and meet our customers desire to shop however they want to shop in store or on their phones and my the businesses in the growth the growth team membership marketplace advertising they all benefit from that those investments both the experiences we bring to our

customers and members in the stores and clubs as well as in the app so I wouldn't say that any one is that we look at independently of one another they all complement and and depend on one another that's looked at now to get it to the marketplace so double click on that a little bit so we've Walmart data ventures there's 3p I guess sort of frame where that is now in terms of the growth drivers that you're you're looking at uh and then you know what's the real proof point to see if that works with uh companies that are looking to be on 3p or if you've got vendors how do you actually win in 3p i guess well um it's early innings for our marketplace business

for sure um and we're excited about the the signal that we're getting for that business and and um we hear and see it in a couple of different ways. So one, we hear from marketplace sellers who I would argue are some of the most sophisticated digital marketers and e-commerce participants in the industry. We hear from them frequently that they want ease of setup with us. They want access to scale and Walmart customers across any channel in which we're serving them. and so we have we've made big investments in terms of technology to enable a seller to set up bring their product to our product catalog do it in a way that we can build that once and scale it globally that's really been John Furner's mantra is to build once scale a platform once and then scale it globally we're taking that same approach with the marketplace business that the output or measure where we would determine whether that's successful or not is are we seeing the actual assortment come into our product catalog we are okay do we hear when we when we do outreach with sellers across the globe are we hearing that they're they're finding our customers and selling more stuff we hear that as well so there's a lot of enthusiasm from that community because they see that we're serving a group of customers and members that our competition has not, or we're able to do it in a way that is different than how they've done it. Or perhaps we're bringing something unique like physical point of sale to the equation. So across each one of those different dimensions, those sellers have told us, yes, keep going, give us more capability. We want more access to your customers so we can sell more stuff. We know they're in there and that they wanna buy our products.

How important is fulfillment by Walmart to sort of compliment that growth in 3P marketplace? It's, I mean, it's critically important.

The, we see a causal relationship between delivery speed and conversion. So that's why you'll see so much emphasis in our marketing materials and across the execution of our business around delivery speed. We have a unique position where our stores sit close to, you know, over 90% of U.S. households. We can get products to people quickly and like really fast. And you'll hear my peers like Walmart U.S. CEO Dave Gugina and John Furner talk about delivery speed being a critical part of our offer for customers and members. We know that as you bring items closer to the customer and you shrink the amount of time it takes to deliver those items, that the conversion rates on those items and the purchase frequency increase. So when we talk with a seller about bringing their product catalog into our store, it's not just about getting the catalog and making it available and shipping it to you in two weeks. That wouldn't be good enough. That item might sit. When we bring that item into one of our fulfillment centers and we're delivering it to you same day or next day, we see the conversion rates go up. Our customers love that. So from a supply chain standpoint and just sort of how we're bringing fulfillment to the table, speed is what our customers want. And that fast fuels the frequency.

Interesting. So that's actually a great transition, I think, to the next thing I want to talk about, which is Walmart's talking a lot about global platforms. And under John's leadership and you taking this role, I guess what I would say is how can, you create value for Walmart by taking this global view of these platforms and really you know how do they work together what sort of findings and learnings do you get and integrate through the business that's a great question we're so I'll talk about data ventures as a starting point you know we built that business a couple years ago from scratch and building it from scratch affords you some flexibility in terms of you know you don't have a lot of technical debt behind the product.

So we were successful bringing that forward. And we heard from our suppliers who are subscribing to that product that there was nothing like it in the other countries that they were working with us in. And when we're addressing a global enterprise on the supplier side, news travels about data quality. If there's something, there's a piece of data here that they're getting from the US business, how do we get that for Mexico? How do we get it for Canada? And so when that, you know, request starts to come through to our teams for building a new product, we have a lot of freedom to go in there and set it up the same way. So same principle of building this product once and then scaling globally. We've done that now in Canada and Mexico with that data ventures with the Sintilla product. And we see a lot of runway for us to do that in other countries that we serve. Similarly with advertising, now that all of the advertising businesses are rolling up through a single organization in the growth org, all of the capability that we've worked so hard to build for Walmart Connect, we can now start to bring similar capability to the SAM's business for advertising. And the reason why that's important is that we may be working with the Procter and Gamble's of the world, for instance, in our U.S. stores for Walmart. And the types of outputs or data signal and capability that we bring to them for advertising in the U.S. for Walmart may look different historically than what Sam's is offering because they built it on a different platform. and so now we're looking at things and saying okay how do we provide the same attribution windows how do we provide the same definitions of sales outcomes to procter and gamble so that they can look across the walmart connect business and the sam's map business and say okay i'm no longer having to rationalize or compare two different you know apples and oranges in terms of these data definitions so again the same principle of building once scaling globally applies there in a way that will ultimately help our suppliers who are investing in these ad products too.

I mean, those are some great examples of, I guess you mentioned Canada bringing Walmart Plus there. What learnings have you found from around the world that you want to either import back to the U.S. or move into different markets?

Yeah, it's not one-way traffic. We're looking out into the international markets and trying to understand, okay are there things that are happening there that our u.s businesses might benefit from are there things that are happening in sam's that would benefit the walmart u.s business where we do to start using them um so that i'm going pretty deep on that now with um with my peer chris nicholas who's the walmart international ceo um so one one observation our customers, some of our customers who live in Mexico want to shop the U.S. catalog. Or some of our customers who live in the U.S. want to shop the Mexico assortment. They want products that are local. So how do we enable that cross-border shopping? And that, so we're building that capability now where we're going to enable those customers that sit in those different markets to buy a cross-border. That's a big learning for us where I think even six months ago we may have sat here and said Canada just wants Canada and Mexico just wants Mexico when in reality there are many communities here in the states that want to shop those Mexico products and vice versa and we're going to enable that. Fascinating.

Yeah. I'll bring up a whole other tariff discussion probably so I won't even go there because I want to make sure we have time in this. I can't believe we've gotten through you know probably 15 minutes and haven't brought up AI yet okay so let's talk about a little bit we've had we've heard people say that it's going to disremediate retail uh it could take away you know the retail media business and advertising that i guess advertise whether it's for amazon or even yourselves so i guess as your teams uh leverage ai to grow and scale your businesses uh how important is it for you to scale fast versus scale well as you implement AI?

Well, you want to do both. But I think scaling well, given my prioritization, would be the first thing we would do before scaling fast. If you scale fast but poorly, there's a whole bunch of tech debt you may assume or things you may have to unwind that in the interest of speed might not be helpful. Now, you may want to run experiments that would allow you to move quickly and then give you signal quickly that you could decide thumbs up, thumbs down. But that to me is the part about doing it well. You need that to have some point of comparison or have a thesis about why you would want to move so quickly to begin with. If you're just moving for the sake of moving, then that might not be the best use of your energy or resources. How that's applying to our approach with working with AI, We are leaning in to engagements with most of the big names in terms of the hyperscalers. And the reason why that we're leaning in is because we need to be where our customers are. This is an important point for us in the sort of commercial behavior to understand how customers are going to use these different tools. So there's a lot to learn. and it's our belief that we're going to learn more and learn better by being involved as opposed to sitting on the sidelines and waiting. That's been our approach and we are learning a lot and much of that application of the learning we can use in the environments of those agents. We've been public about how we've been partnering with some of those companies. Then also we get a lot of learning that we can apply to the building of our own agentic tools like sparky and some of those like the way that in observations that we have about our customers who are using those agentic tools within our own walls is is very interesting we've talked publicly about some of those things recently on the earnings call we shared you know some some different usage benchmarks but the I would say one of the most interesting things to me is the types of prompts that we get from customers in those agentic environments are quite different than what maybe historically we've seen. And that the language, there's a natural language, a query string of questions that may take on almost a research type of tone to them. An example that I gave earlier this morning, we may see a prompt around I'm looking for a detergent for my child who has sensitive skin can you recommend something that's fragrance free now we can talk that here that's not historically how people have searched for fragrance free detergent if if that type of query string is now happening in in a commercial environment, we need to be aware of that. If that's how our customers are coming to us to shop and they're looking for a retrieval or an answer to that prompt that has value for them and that's correct, then we need to orient ourselves around that. That's very different than fragrance-free detergent.

Well, no, it's fascinating. I guess as you're involved in that conversation very early with the consumer, what does this mean to the retail media network part of the flywheel? I mean, if the agents are filtering product choices, does that end up cannibalizing the opportunity in retail media?

We are, in our own agentic tools, we've introduced some advertising placements there. It's something that we'll continue to experiment with. I would say that I have, at my core, belief that advertising is very similar to merchandising in the e-com space. and that advertisements contextually in a retail environment provide a lot of value for customers because they introduce you to new products, they introduce you to new brands, they introduce you to new price points. And without that type of introduction, in an environment where you're just looking at your phone, you're not standing in front of a line and ladder or shelf of items that are designed to attract your attention, I think that's a shopping experience that's just not as interesting. So we'll be careful to watch customers and how they're using these tools. But I would expect that the advertising and retail media will have a role to play because it helps customers shop. It's not an interruptive experience. It's contextually relevant.

Where do you see AI, agentic AI, creating the most leverage for the business? And where do you see human oversight as most needed to sort of make sure we don't go off the rails on this?

Well, in my business, there's a couple places where the sort of human component or oversight is really important. We describe our business as being people-led, tech-powered. and that that holds true with how we're approaching some of these agentic capabilities. An example for you in marketplace you know we could automate a ton of behaviors and we have in capabilities to allow sellers to give us more information about their products and ingest them into our product catalog but we need to have some human moderation over that ingestion so that we understand these are the types of things that we actually want in our product catalog. These are the types of products or pieces of information that maybe you didn't include that are important for us in terms of providing and making a great shopping experience for customers and members. So that's a side-by-side where they're better together than if we just allowed an agent to operate on that independently without any moderation, it may take us someplace that's suboptimal for the retail experience.

I'd have to step back, given your long experience in the business. Which of your either competitors or partners do you think are doing the most interesting things with AI right now? Besides Walmart? Besides Walmart. That's where I'm forcing this on you.

I mean, there's so much going on, and there are very distinct different strategies for engagement even across the retail space. So that to me is fascinating. Like why is one company behaving this way and another company is behaving another way? I certainly have my own theories about it, but I would say that one thing I do think critically about is the approach that we bring or I would bring to Walmart and the team and how we're interacting and culture here is important Walmart is a people-led business but people are a feature of our business not a bug and when we show up in stores our customers show up in stores we are often this far away from them we might be asking you about your day you you may be asking me for help to find an item. Those are experiences that I imagine, I'm highly confident they will continue in the future and the need for that type of human interaction and the experience that you have in the store as a customer or a member will be heavily influenced by that interaction. And that's a different approach in my, I'll speak for myself, in my experience where before joining Walmart, I had worked exclusively at technology companies. some of which people, I would argue, are a bug, not a feature. And if you move towards that orientation so heavily, I think you have very different outcomes and experiences that you provide for a customer. The great privilege of mine is being able to be on the ground, in super centers, in clubs, regardless of country, to see just how our associates interact with the communities that they serve. it's it's been a huge eye-opener for someone who's worked at companies where the interaction with the customer is behind glass and you don't maybe ever see that person right and i take a great amount of pride in the experience our associates put in front of our customers every day but i believe that the technology that's being developed right now agentic or otherwise can only make that experience better. It won't eliminate it.

So with AI building baskets and actually becomes more properly agentic in shopping, I guess, where does Walmart need to sit? Do you need to be the customer-facing agent or more, if you will, agnostic, the infrastructure behind everyone else's agents or basically all of the above? That was easy. Yeah.

I mean, there's a couple different ways that we engage with customers. And we talked about why we would work with third parties and we need to be where our customers are. So there will be one way of engaging with a third party that may require us to work with them on product catalog ingestion. It may require us to work with them on payment mechanisms or baskets that might be a very different approach that we would take to how we would use agentic tools in our supply chain or things the rails of the business that sits behind the super center or behind the club or behind the e-com business we have to be ready to work on all of those dimensions if we ignore one of them for the sake of the other then I just think we'll get out of growth can be expensive we know that and we're a bunch of shareholders in the room here and it's a retail consumer conference so

ultimately people look for growth and returns so i guess as chief growth officer you know how do you look at your role in driving that four percent plus top line translated into hopefully eight percent operating income growth over time well the businesses that the growth organization managers have obviously a very different profit profile than the traditional retail business.

The advertising business, data subscriptions, the technology of televisions, membership, marketplace, they all offer a different profile than the more traditional P&L that you would see in a super center or a club and all of them add to the customer experience so if a high degree of confidence that any investments or dials that we turn to make those businesses bigger and better are in service of the customer and member experience they make them better but the fun thing about it is that we can grow really quickly as we make those investments because we still have a lot of room to run with our econ business for instance. You had mentioned like at what point do you have too many ads or not enough ads. We look at those measures across competitors and across our own experimentation and I have a lot of belief that we we can do more and so it's fun to watch the progress there and the amount of growth that each one of these teams has been delivering but it's it's very tightly coupled with other parts of the business we then have the optionality you know my teams exist to bring the optionality of investment of those funds across the rest of the business so you know advertising operating income membership income all those things are then we have the optionality to apply them across other parts of the business could be investing in more super centers could be in remodels could be in price investment there's a whole bunch of ways that we can use the outputs and the success of the growth businesses to make the experience better for our customers and that's in line with EDLP EDLC principles that the business has been built on so I I'm very excited about the work that I get to do I love the remit that I have now to sit across horizontally across these segments and international geographies to bring all the successful things that we've had in the u.s to bear there and then reciprocally learn from all the things that have been happening in these markets that could help improve our business here

in the u.s so to keep it simple 100 billion dollar digital business at walmart u.s with a double digit variable margin it's probably given 40 bips of tailwind uh to profitability how do you see the opportunity to do that sort of thing now as around the business now as chief growth officer Well, I think one of the reasons why I was, the role for the growth organization was elevated across the segments was because there's recognition that we could make more investments in other parts of the business.

So, the opportunities and things that we're building in the U.S., it could be a new advertising feature. It could be the TV business. How do you apply those things or what opportunity do you see across these other companies or the companies that are in our portfolio and the different countries in which they operate? And that to me is exciting. And I would say that we're, again, it's early innings for us in that respect. So I look at those things with a sense of urgency to say, let's go.

There's so much here that we can do. let's just start doing it and that's that's what gets me up in the morning but from a return standpoint it doesn't sound like you know with the hyperscale there's like Amazon doing 200 billion of capex like you don't need that in fact you almost wouldn't want it I don't want to put words in your mouth but like do you worry that like they're spending so many more multiples than you guys are on capex which I think is around 30 billion well I would tell you that my orientation is around how we serve customers I'm not following a competitor in terms of how we might orient our business that way I mean that's my answer to that okay I don't I mean what's the right answer is like how do we serve the customer the best way what number is that I don't know I'm just focused on making sure that we make the customer and member experience better that's what my teams are designed to do that's where I'd like to go I guess last is that part of walmart's mission is always delivering value for money so people can save money and live better that's right um you mentioned um you're democratizing fashion we saw that in the recent quarterly results some acceleration there uh and now the visio that you mentioned before are having some pretty shocking price points that are quite low uh maybe you know how do you what's the vision of how what you're doing chief growth officers can really drive the walmart

mission forward the marketplace is important here because the when you look at our e-commerce business i would and i can say this i have an informed opinion about this we do a great job with groceries like that stock up trip that fill-in trip i mean these are complex orders to serve 20 items in a basket high order value uh value perishable items that we're bringing out of the store to our customers homes that's very difficult to do we do it really well and you see our business as being you know the numbers that are on the scoreboard reflect that as well as our membership business numbers as well but there's a whole part of business uh in general merchandise You mentioned fashion, consumer electronics like TVs, there's home decor. There are areas of investment that our merchants have made on the one-piece side to elevate those brand experiences, both in Sam's Club and at Walmart, that are starting to show up. And then additionally, the marketplace allows us to bring assortment that we haven't had in the store, or maybe the Walmart customer who's been shopping with us didn't know that we had. who knew that you had these items the marketplace assortment allows us to expand and bring brands and products to them that maybe they hadn't shopped with us before when they try it they maybe they buy a home decor item that they they shop that's a new category for them with our business that's important for us and it does drive then okay a bigger relationship with the customer. And the margin structure of that general merchandise business is quite different than the, you know, a grocery stock up trip. So there are many benefits for us on the consumer side of availing them to a whole host of different products in categories that maybe they haven't shopped with us before, like general merchandise, home decor, fashion. But then the margin structure that's different, because it's marketplace, it then we come into all of the seller services that we provide and the impact on the P&L there. So that's a big crank of the flywheel that, again, serves our customers and members well, but then also supports the investment thesis we put forward.

Well, Seth, I could keep going on forever, but that's a great way to end it. Really appreciate you coming and look forward to the next few... Yeah, thanks for the time today. I appreciate it, yeah. Great, yeah.