Talking about a revolution
How Wal-Mart plans to transform the way we buy groceries
Franklin, Tenn. — On a sweaty September morning in the Nashville suburbs, Anna Brummel pulls her white SUV into a Wal-Mart parking lot to stock up on groceries.
But she never sets foot in the store.
The mother of three had tapped out her order on her smartphone earlier while lying in bed. And now, she parks in a designated spot during a time slot she selected, and Wal-Mart workers load up her car with the goods they picked and packed for her.
Wal-Mart is America’s largest grocer, and its aggressive expansion of pickup services has turned its parking lots into a laboratory for the future of online grocery shopping — one of the trickiest puzzles in all of retail.
Plenty of companies have tried to carve out a market for this. Instacart, along with tech titans Google and Amazon.com, have put their muscle behind doorstep grocery-delivery models that are similar to what Peapod has offered for decades.
And yet, despite an e-commerce stampede that has upended sales of items such as books, electronics and clothes, researchers estimate that online shopping accounts for 2 percent or less of total U.S. grocery sales.
With the pickup model, Wal-Mart is testing whether its best weapon in this digital fight is its most oldschool — and hardest to replicate — asset: a network of more than 4,600 stores.
It is counting on a different idea of convenience, one that caters to time-starved suburbanites who spend hours each day in their cars. Maybe for them swinging into a parking lot for a few minutes makes more sense than waiting around the house for a delivery.
Kroger and Giant are also touting pickup services, and even Amazon is reportedly considering opening bricks-and-mortar locations with grocery pickup capabilities. Pickup programs, not delivery, were the main driver of growth in habitual online grocery shopping in the past year, according to Tabs Analytics, a firm that studies the consumer-products industry.
While Wal-Mart does not disclose sales figures for online grocery pickup, it has taken the program from five markets to more than 80 nationally in the past year.
“We see a huge opportunity through pickup, particularly in grocery,” Doug McMillon, Wal-Mart’s chief executive, told investors last year. “The combination of digital relationship and stores is a winner.”
And the grocery business overall is an extremely important one for Wal-Mart, making up 56 percent of its U.S. sales last year.
Wal-Mart executives say pickup has had particular appeal with a demographic many retailers are eager to court: millennial moms like Brummel. As her 1- and 3-year-old sons babble in their car seats, Brummel explains that they are the pintsize reasons she does her weekly shopping this way.
“I physically have no room in the cart,” said Brummel, 33. “It was a nuisance before. I would have to get
a baby sitter, or wait till my husband was home and shop at night, and then things are kind of picked over.”
Wal-Mart will have hurdles to clear as it aims to build the free service into a bigger business: For one, shoppers have often been reticent to buy groceries online because they are worried about the quality of the fresh meat and produce. This will be a consumer-psychology challenge for any company trying to get in the game, but it may be a particularly acute one for Wal-Mart.
“They’ve historically gotten mediocre marks from consumers for produce and meat,” said Jim Hertel, senior vice president at Willard Bishop, a consultancy that studies the grocery business.
And Wal-Mart has been outgunned online before. The retailer notched $13.7 billion in online sales last year, a far cry from the $99 billion posted by Amazon. (Jeffrey P. Bezos, the chief executive of Amazon, owns The Washington Post.)
Yet, if the pickup format keeps gaining customer affection, Wal-Mart could be especially well-suited to ride the wave. About 90 percent of Americans live within 10 miles of a Wal-Mart store.
Personal shoppers
At the Wal-Mart store in Franklin, as at other locations offering pickup, the company has added personal shoppers who handle only these online orders. James Gilmore, who leads e-commerce pickup for Wal-Mart in the Mid-Atlantic and Southeast, said stores typically have four to nine staffers on the team.
Personal shoppers get indepth training on how to evaluate produce and meat for quality and freshness. As Gilmore walks down an aisle of fruits and vegetables, he reaches for a jicama.
“We teach them how to tell the firmness — this one actually feels really good,” Gilmore says, noting that the root vegetable’s brown skin is smooth to the touch. Workers are taught to look for signs that a particular item is past its peak freshness.
Wal-Mart holds produce tastings for team members so they know what they’re selecting for customers.
There’s a reason that the instruction focuses so heavily on getting fresh foods right: Gilmore says that, for shoppers, letting Wal-Mart pick out their fruit, vegetables and meat is “the trust fall,” the moment when they count on a stranger to understand what they want.
Of shoppers who have never bought groceries online, 67 percent say it’s because “I like to select fresh products for myself,” according to research by Morgan Stanley.
This is why the personal shoppers show customers items such as produce and eggs before packing them into the car. The idea is that if someone saw an avocado that wasn’t quite ripe or an egg that was cracked, a substitution could be made on the spot.
And also, personal shoppers are supposed to get to know the preferences of repeat customers, so they might learn, for example, if someone likes their bananas a little on the green side. They might also slip your dog a biscuit or your child a lollipop.
30,000 items to choose from
In Wal-Mart’s version of pickup, shoppers have about 30,000 items to choose from — mostly groceries, but also general merchandise such as pet products or printer cartridges, all priced the same as in-store merchandise. To fill the orders, the personal shoppers make their way through the store’s grocery aisles, guided by a handheld device that takes them on the most efficient route to collect all the items.
Workers have a variety of ways of knowing when a customer has arrived: They have a backroom camera pointed at the designated parking spots. Shoppers can also phone in or, in some markets, use a mobile check-in feature on the WalMart Grocery app.
It’s a pretty straightforward process, and it helps illuminate why Wal-Mart, in some ways, might have an advantage relative to other comers in the online grocery space. Doorstep-delivery models come with some difficult logistical hurdles: How do you transport milk to a customer’s front door and have it stay fresh? How do you reimagine a system built for selling durable goods such as books into one that works for perishables?
For pickup, Wal-Mart doesn’t have to reinvent its supply chain — it is already getting these goods to its stores.
“That is the opportunity. They’re redeploying an asset they already have,” said Laura Kennedy, a principal analyst at Kantar Retail.