Wal-Mart plans to change the way we buy groceries
Pickup service allows customers to grocery shop from their smartphones
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. 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 per cent 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 old-school —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 timestarved 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. While Wal-Mart does not disclose sales figures for online grocery pick-up, it has taken the program from five markets to more than 80 in the U.S. in the past year. “We see a huge opportunity through pick-up, 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 per cent of its U.S. sales last year.
Wal-Mart executives say pick-up 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 babysitter, 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. Yet, if the pick- up format keeps gaining customer affection, Wal-Mart could be especially well-suited to ride the wave. About 90 per cent of Americans live within 16 km of a Wal-Mart store.