Walmart makes it easier to pick up grocery orders
Retailer to expand number of stores that will offer the online service
As competition in the grocery space heats up, Walmart isn’t ceding any ground to Amazon, saying that shoppers will be able to pick up groceries ordered online at
1,000 more stores in the U.S. starting next year.
Company executives told investors Tuesday that grocery is key to hooking customers who may then go on to purchase the cosmetics, clothing and various other products that fill its shelves.
“If you could offer fresh produce ... with the very best prices, with a really good experience whether it be pick up or delivery, then you have a good chance to build a long-standing relationship that you can then leverage to sell the rest of general merchandise,” Marc Lore, president and CEO of Walmart eCommerce U.S., said at the annual investors meeting in Bentonville, Ark. “I think we have an advantage.’’
Walmart, the world’s biggest retailer, has been in a fierce battle with online giant Amazon, buying up niche e-commerce sites while also touting the advantage of having a fleet of actual stores.
The big box chain is more than three times bigger than Amazon based on revenue and is the largest grocery retailer in the U.S. But Amazon, currently the fifth-biggest player in the U.S. grocery space, bought Whole Foods for
$13.7 billion in August, sparking speculation that it would use the premium supermarket chain’s
468 locations to expand Amazon’s grocery delivery service.
Since then, Walmart has been busy making its grocery offering more convenient.
It announced last month that it is testing a service in northern California in which drivers not only deliver online orders, including groceries, but will put the meat, milk and eggs right in the customer’s refrigerator.
Shoppers who buy produce, poultry and other items online will be able to pick up their orders at 1,100 locations by the end of this year, and that number will nearly double in 2018.
Even as it makes the most of its brick-and-mortar footprint, Walmart is seeing significant success online, saying Tuesday that it predicts it will see a roughly 40% increase in e-commerce sales in the U.S. next year.
Walmart shares surged more than 3.7% to $83.52 in morning trading after the announcements. It closed the day up $3.60 to $84.13.
The big-box retailer explained it will continue to focus on remodeling existing stores and incorporating “digital experiences” in place of building new locations.
Walmart also told investors that it continues to project that adjusted earnings should range between $4.30 and $4.40 per share this fiscal year.
“It is clear that Walmart intends to continue to turn up the heat online, with 40% annual growth an impressive goal, especially on the heels of the 30% outlined at the 2016 investor meeting,” said Charlie O’Shea, the lead retail analyst for Moody’s. “We still believe Amazon’s lead in online retail is insurmountable; however, Walmart continues to widen the gap between itself and all other brick-and-mortar retailers (with) its unmatched physical resources ... and in the process is providing consumers with a compelling online alternative.”