Speaking at a media briefing at Walmart‘s annual shareholders meeting this week in Bentonville, Arkansas, Chief Marketing Officer Tony Rogers highlighted an image that depicts a stark contrast between the top retailers in 1970 compared with last year.
The list on the left includes names like Sears, J.C. Penney and Kmart. An updated version includes Walmart in the No. 1 position, followed by fierce competitors Kroger, Costco and of course Amazon. None of the companies on the left made it to the right, nearly half a century later.
The fear for Walmart now is falling off the current list within a few decades. The company is testing many new initiatives both in stores and online to compete. Rogers said those retailers that are afraid of change are the ones that end up lagging behind.
CNBC visited a Walmart supercenter in Arkansas this week, where the company has been piloting some new technology that could eventually roll out to additional locations. Below are five things Walmart is working on to improve the shopping experience.
The Walmart robot
Walmart has been testing the Bossa Nova scanner, or its version of a robot, in 50 stores across the U.S. It roams through the aisles roughly three times per day, scanning shelves and finding areas where Walmart needs to stock more inventory. It can also help identify when an item is on the wrong shelf. Walmart says the robot helps save its employees time that can be spent in other areas of a store or helping customers.
A conveyor belt in the back
In a handful of the backrooms at Walmart’s stores today, you will find a conveyor belt mechanism known as the “FAST un-loader.” Trucks full of merchandise can roll up directly to the system, where workers move boxes onto the belt to be scanned and sorted automatically based on their priority and specific department (i.e., dry goods, electronics or apparel) in the store. Walmart says the process of moving boxes from a truck and onto shelves used to take eight employees per shift but now only uses four.
Lauren Thomas | CNBC
Coming soon to your Walmart mobile app: store maps. The company is creating maps unique to each of its more than 4,000 locations to help shoppers better navigate the aisles and find what they need in a pinch. The function will also be tied to shoppers’ lists in the app, guiding them to the milk, bread and eggs and other items they’re seeking. This could be especially helpful in a Walmart supercenter, which can be more than 180,000 square feet.
Mobile express returns
Walmart wants to make one of shoppers’ least favorite tasks — making a return — less of a hassle. The retailer has rolled out “mobile express lanes” in stores. There, a shopper can initiate the return process within the Walmart app, scan a QR code once they get back to the store, and get their refund on demand. In the “services” section at Walmart stores, the lanes are easy to get to and always staffed.
Lauren Thomas | CNBC
A revamped entertainment section
Walmart could soon become a bigger threat to Best Buy. You might soon notice the entertainment section of your local Walmart store looks a little different. The retailer has been opening up the space, putting a bigger emphasis on laptops and its massive wall of flat-screen TVs. The company is also more focused on bringing in top-selling brands at an affordable price, like Lenovo.
The raises are expected to cost the wholesale retail company $110 to $120 million before taxes. But, according to the Seattle Times, Galainti credited being able to give raises to last year’s tax bill, which lowered the corporate tax rate and provided a windfall for large corporations.
The raises are an attempt by retailers to attract employees in a tight job market, the Wall Street Journal notes.
Overall, Costco has a positive reputation for how it treats workers. Forbes and Statista named it America’s best employer in 2017, just ahead of Google, due to providing healthcare benefits for part-time employees and other perks. According to the Seattle Times, the June 11 wage increase is “independent” of the regular wage increases implemented by the company.
On Thursday, the company also reported a third quarter profit of $750 million and diluted share profit of $1.70, up from last year’s $700 million for the quarter and diluted earnings per share of $1.59. The company brought in $32.36 billion in both sales and membership revenue in the quarter that ended on May 13, a slightly over 12% increase from last year.
The Save Mart Cos. has made a foray into online shopping with the debut of a click-and-collect grocery service.
This week, the Modesto, Calif.-based supermarket operator launched ClickCart, which enables customers to buy groceries through its retail banner websites or mobile apps and pick them up the same day. The service is currently available at two locations: the Save Mart store on Pelandale Avenue in Modesto and the Lucky California store on Fallon Road in Dublin, Calif.
“ClickCart allows families with limited free time to order online in the convenience of their own home or on the go and pick up curbside,” Kim Musgrave, director of digital and loyalty marketing at Save Mart Cos., said in a statement. “We may not be the first grocer to offer online shopping, but we took the time to make sure our service reflected our shopper’s needs.”
Personal shoppers at the stores pick the items ordered and hand them to customers. Orders can be picked up two ways. Customers can park in a specially marked pickup spot, call the number on the sign and have their groceries brought out to them, or they can go inside and collect their order at the ClickCart counter in the front of store and have an associate walk out with them and load the groceries in their car. Payment can be made online at the time of the order or at the pickup site.
Save Mart said on its website that there’s a four-hour minimum time window between order placement and pickup. For example, an order placed at 11 a.m. may be ready for pickup by 3 p.m. Each order carries a $5 service fee, but for ClickCart’s launch, Save Mart is waiving the fee for a limited time.
Products available for order via ClickCart include alcoholic beverages; dry, nonperishable groceries; fresh produce, meat and seafood; fresh bakery; service deli items; and hot rotisserie and fried chicken. Customers also can provide instructions online to the personal shopper at the time of the order, such as “ripe bananas.”
Members of the Save Smart and Lucky You loyalty programs also can load in-store and online savings — including coupons, points, rewards and eScrip — to their accounts via the website or app and have them applied to their ClickCart order.
Save Mart said it piloted the ClickCart program earlier this year with employees at the Pelandale Avenue store in Modesto. Plans call for the service to roll out to several more Save Mart and Lucky stores this year.
Overall, Save Mart Cos. operates 214 traditional and price-impact supermarkets under Save Mart, Lucky, FoodMaxx, S-Mart Foods and Maxx Value Foods banners, including 205 in California and nine in Nevada.
Retail giant Walmart has started selling a private label wine collection in about 1,100 of its stores across the country, Food Dive reports.
Winemakers Selection includes 10 private label wines sourced from wineries in California, France and Italy.
The curated collection is made for Walmart by winemakers working directly with the retailer’s buyers, according to Winsight Grocery Business.
Executives say that approach — which is used successfully by competitors like Trader Joe’s, Lidl and Aldi per Winsight — can help build Walmart’s reputation for quality at a value.
“In the past, we would canvass the world and figure out what was available and what we could do quickly at scale,” said Al Dominguez, a Walmart SVP told Winsight. “We took a slightly different approach in working directly with winemakers.”
Most of the wines retail for $11 and drink like a $30 bottle, Dominguez said.
The selection features “highly drinkable wine for any occasion,” according to the Walmart website.
“Each wine in the Winemakers Selection has been carefully curated from the best wine regions of the world to bring you exceptional taste at an affordable price.”
Wine sales are expected to grow by nearly 6 percent a year through 2023, writes Food Dive, pointing to data from Zion Market Research. In addition, Kantar Retail analysts expect private label growth between now and 2022 to outstrip the previous five years.
Because of its size, Walmart making a move into wine, “will likely incite other grocery retailers to try their hand at private label wines, and could even threaten some traditional wineries,” according to Food Dive.
According to the Time Use Institute, the average grocery shopping trip takes 41 minutes. But this varies dramatically based on factors, like the day and time you visit the store and the number of items in your grocery basket. Services like Instacart and Walmart Grocery make it so you can avoid grocery shopping in a brick-and-mortar store by doing your shopping online via an app or website.
Walmart Grocery offers delivery, pickup, or both options, depending on the market where you live. Walmart’s grocery pickup service is free to use, which makes it rather attractive for those looking to save money and time meandering around a crowded grocery store. All you do is drive up to the store, get your groceries loaded by employees, and leave.
We decided to give Walmart’s grocery pickup service a try. Looking at factors like the quality of the groceries when compared to an in-store grocery trip, customer service, cost, and time savings, we aimed to find out if the service is as great as it sounds.
Ordering groceries on the app
Overall rating: good
We used the Walmart Grocery app to place our order, and found it to be, for the most part, user friendly and easy to navigate. To locate an item, you simply type it into the search box, and a variety of selections appear on the screen. It should be noted that some items require more extensive searching than others. For instance, it was more difficult to find specific brands of gluten-free items, even when typing the exact name and brand of the item into the search box. For some items, we had to try a few different searches like “gluten free granola bars,” “Annies gluten free,” and “gluten free Annies” to get the item we were looking for.
Our grocery order was substantial; the total for our order was $547.57, but this got us a lot of groceries (enough to feed a family of six for at least two weeks). We ordered a variety of items, ranging from produce and meats to foods for those with dietary restrictions (gluten free and lactose free). The available food selection was impressive, and ordering groceries via the app was relatively painless. It took us 58 minutes to input our order. However, you could input a smaller order in a few minutes (the app indicated the minimum order amount was $30).
You can reserve your pickup time in one-hour intervals either before or after you make your grocery selections. If you reserve your time beforehand, the app tells you a time period, and you have to check out to keep that time slot. Depending on when you order, there may be time slots available on the same day. There were no available time slots on the same day we were ordering, but there were many the following day and each day after. We selected 2 p.m. to 3 p.m. on the following day.
During checkout, you also indicate whether or not it’s OK for the store to make “substitutions.” This means, if the store is out of an item on your list, they can substitute it for a similar item. We marked no substitutions for our “dietary restriction” foods, but allowed substitutions for the remainder of our items.
Picking up groceries
Overall rating: fair
Our order was ready at approximately 2:15 p.m., which was right on time. An app alerted us and we also received an email that our items were ready. The email and the app instructed us to check in when we were on our way by pressing a button in the email or app notification. We checked in and headed to the store to pick up our order shortly thereafter.
When we arrived, we parked in the designated pickup area on the side of the Walmart store. The app told us it knew we were at the store, but we had to wait 18 minutes for someone to come out and greet us. The staff was friendly, but they didn’t say much to us. Overall, it took 33 minutes from the time we parked to the time we drove away with our groceries. According to the Walmart Grocery website, the associates cannot accept tips for pickup orders.
Overall rating: fair
Upon unloading our order, we found out they had made several substitutions. Some of the substitutions made sense, like swapping different brand names, while others were a bit strange, like giving us fresh cauliflower instead of the fresh broccoli we ordered.
The produce and fresh food looked decent overall. The bananas were not overripe, the potatoes were fresh, and the green peppers weren’t damaged or dented. Two of our items were damaged, though. Our lactose-free milk was dented, and our leaf lettuce was badly wilted. One of our items — split chicken breast — was expiring the following day, but no items were past their expiration date.
Twelve items were missing from our grocery order. When we looked at the receipt, we noticed they did not charge us for two of the items, but they did charge us for the remaining 10 missing items — that’s $31.48 in groceries we were charged for.
Overall rating: poor
We contacted the phone number provided in the email regarding the missing groceries, but getting the problem corrected was very difficult. It took us 10 calls back and forth to the Walmart store where we ordered to correct the issue. The store associates did not argue with us or deny the groceries were missing, but they sounded like they were too busy to handle the problem. We were asked to call back several times, or an associate would ask if they could call us back in five minutes and then 20 minutes would go by with no return call.
The associate hung up on us on two different occasions (we are unsure if this was an accident or not). The additional phone calls back and forth took us a total of 71 minutes from the first time we called to the time we had a resolution. To get the missing groceries, we had to make another trip to the same Walmart store to pick them up. On our second trip, the associate was friendly, but this time it took an additional 20 minutes for associates to bring the missing groceries to the pickup area.
So, is Walmart Grocery Pickup as convenient as it sounds?
When we added up the time it took to place our order, make two separate trips to Walmart, and make phone calls to correct the problems with our order, it took slightly more than three hours to complete the process. That seems like a lot of work, although hopefully not everyone will have to make a second trip to the store for missing goods.
Verdict? If you’re buying a large amount of groceries or you have very specific dietary needs, you may be better off going to a grocery store and purchasing your groceries or using another service.
This is not to say this service isn’t useful. With a few kinks worked out, this service could be valuable. For those with smaller grocery orders, the service may be a time saver. So, is Walmart Grocery Pickup as great as it’s cracked up to be? That depends on what you value. You probably won’t get the same quality of groceries as you would if you were to search for the best dates on meats and the best looking produce when you pick them out yourself. You may not save a ton of time. But, this service does allow you to look in your fridge and pantry while you shop, preventing excess or impulse purchases. It also prevents having to actually grocery shop yourself, and to some people that’s priceless.
In grocery retail, all eyes are on the prize of capturing the online grocery shopper. The Food Marketing Institute estimates online grocery sales will reach some $100 billion by 2025, or about 20% of the grocery retail market, though today only about 2% to 4.3% of industry sales originate online.
Target, Kroger, Vons/Safeway, Ahold-Delhaize (Giant and Stop & Shop), Foodtown, Harris Teeter, Trader Joe’s, H-E-B, Costco, Walmart and Sam’s Club are answering the call, as are services like Instacart, Peapod, FreshDirect, Google Express and Yummy.com.
Of course, Amazon is way out in front with an estimated 18% share of the online grocery market at the end of 2017, with full integration of its Whole Foods arm (acquired end of August 2017) pending. Most recently Amazon introduced free two-hour grocery delivery from Whole Foods for its Prime members in some trial markets and plans to expand to San Francisco, Atlanta and Los Angeles. In the first quarter 2018, One Click Retail estimates Amazon’s grocery sales grew by $200 million, nearly a 50% YoY increase.
Yet while no one disputes that online grocery is a growth market and will take more share away from brick-and-mortar retail, the biggest opportunity today (96-98%) and tomorrow (80%) remains in the physical store.
With everyone working overtime to get the last-mile delivery logistics working, they are overlooking the bigger opportunity right in their store aisles–make the in-store grocery shopping experience better.
Most Americans still like to shop in-store for groceries
In the survey conducted in May 2018 among 2,200 American consumers, Morning Consult found that only one-third had ever purchased food or beverage products online. Early-adopters of online grocery shopping were men (38% have purchased groceries online), millennials (37%), GenXers (39%), urbanites (36%), middle-income ($50,000-$100,000 at 38%) and high-income shoppers ($100,000+ at 45%).
As for the few consumers who have clicked for their groceries, a majority (56%) have only done so a few times per year. Only 16% of those surveyed purchase packaged food or beverage online every week, with men (23%) and consumers aged 45-54 years (28%) more likely to be regular online shoppers.
“Among those consumers who have never purchased food and beverage products online, most (65%) say it’s because of a general preference for in-store shopping, as opposed to something specific like cost, convenience, or options available,” said Morning Consult cofounder Michael Ramlet. He goes on to note that fewer millennials (54%) have a general preference for in-store shopping, but that is still a majority of millennials.
Surprisingly, middle-income shoppers are way out in front of the high-income shoppers in weekly online grocery purchases, 20% to 10% among those with incomes over $100,000. By contrast 74% of affluents shop in physical stores weekly for groceries.
Delving deeper into the affluents’ feelings about online grocery shopping, the study finds that 59% of them have no interest in buying food and beverage products online, as compared with 21% who simply haven’t done so yet and 21% who are holding out until the available options improve. Since the typical affluent household spends about 75% more on food than average, these are the grocery store shoppers who really matter. They remain loyal to shopping in person.
Fish where the fishes are
As much as Amazon, Walmart, Kroger and all the rest hope that they can capture the loyalty of shoppers by providing at-home grocery delivery, the future for growth in the grocery business is and will remain for the foreseeable future in the store.
And just given the differences between the way people shop online versus in-store, grocery stores have a much greater chance to entice shoppers to add more products to their carts that aren’t already on their shopping list. Shoppers spend upwards of $5,400 more annually on impulse purchases, according to study done by Slickdeals.net, with over 70% of consumers saying food is the category they are most likely to splurge on when shopping. Impulse purchases for a sensory-stimulating products like food are much harder to resist in-store than online.
By trying to push more grocery sales online, retailers are depriving themselves of the opportunity to entice shoppers to spend more in-store through attractive displays, strategic merchandising, helpful and friendly personnel and mouth-watering sight, smell and taste experiences that can only be found in-store. Just go to any Wegmans to see how exciting and fun grocery shopping can be. This is where grocery stores can really clean up.
Walmart, Target and Kroger are opening their wallets to fend off Amazon.
They’re raising minimum wages to retain and attract workers. Stores are being remodeled to encourage customers to add a few extra items to their baskets each time they visit — and convince them to return. All three have lowered their prices.
The companies are optimizing stores and warehouses for speedy curbside pickups and grocery deliveries. Walmart is plowing cash into updating its website.
The moves signal how far brick-and-mortar grocers and retailers today are reaching beyond their stores to fight off Amazon and adapt to online shopping.
“They are relying on acquisitions, which are proving to be very expensive, in order to catch up quickly or risk completely being outrun,” said Tom Gehani, director of client strategy and research at consulting firm Gartner L2.
Spending a ton of cash to ramp up digital operations, while slashing prices, has cut into profit margins at Walmart, Target and Kroger.
“Managing margins for an online business is very difficult,” said Cowen analyst Oliver Chen. “It’s a journey.”
Walmart is down 16% this year and Kroger has lost 10%. Target is up 9%, but shares fell sharply after it missed profit expectations.
Playing the long game
Despite Wall Street’s hesitancy about the companies’ near-term prospects, Walmart, Target and Kroger are plowing ahead, determined to stem the tide of fleeing customers by adapting to the digital age and changing consumer habits.
For example, Target CEO Brian Cornell said last year that the company would embark on a three-year, $7 billion effort to reposition it for the future. The strategy includes opening smaller stores in urban markets and rolling out more private label brands.
“We’re investing in our business with a long-term view of years and decades, not months and quarters,” he said.
Walmart is also rapidly searching for new growth opportunities.
The company admitted that Jet has failed to resonate with shoppers in the middle of the country, but it has acquired niche brands such as Bonobos, Modcloth. Walmart paid $16 billion last month for India’s Flipkart, its largest deal ever.
Kroger hopes the Ocado deal “will allow [it] to react to how the customer may want to change their shopping habits over time in a big way,” chief financial officer John Schlotman said at a conference last week. Many Kroger customers have defected to Whole Foods after Amazon lowered prices at Whole Foods.
Pick up or delivery?
All three companies hope to use their massive network of physical stores to their advantage in their battle against Amazon. They are all focusing efforts on so-called click-and-collect, where shoppers order items off their computers or phones and then drive to pick them up outside stores.
Walmart believes that its 4,760 US stores within 10 miles of 90% of Americans will allow the retailer to transition its real estate into shopping centers that can easily fulfill online orders, too.
It will have 2,100 pickup locations by the end of the year. Target plans to have 1,000 pickup spots by the end of 2018 for clothes, home appliances and groceries. And Kroger said in March that it has more than 1,000 collection sites. Expanding pickup can help these companies keep down expensive shipping costs.
“They need to use their core assets to drive relevance and connection with shoppers,” said Laura Kennedy, vice president of retail insights at Kantar Consulting. “Whether you are an apparel retailer, Walmart, or Kroger, Amazon has changed shoppers’ perception of convenience and speed.”
For customers who don’t want to pick up items at stores, the companies are ramping up their effort to deliver items quickly from stores to customers’ doors — despite the limited profitability shipping goods to your home.
Walmart will have grocery delivery available at around 800 stores by the end of the year, and Target will have same-day delivery for its stuff at close to all of its 1,822 US locations by then.
Investing in groceries is crucial for Walmart and Kroger to stay ahead, but they’re fighting to keep control of an already low-margin business. “Amazon has caused them to chase the wrong end of the profit spectrum,” Gehani said.
Walmart and Target have shown they’re capable of making the shift to digital. Walmart’s online sales grew 33% and Target’s jumped 28% last quarter from a year prior. Store upgrades are also helping: Same-store sales grew 2.1% at Walmart and 3% at Target last quarter.
“I like what Target’s doing,” Cowen analyst Chen said. “It takes a little time.”
After an annual meeting held by the retail giant in Arkansas, Walmart has publicly announced their intention to start a premium text-message-based personal shopping service, Forbes reports. Targeting a more upscale consumer who, in the words of the parent company, are “time-strapped urban parents” – Jetblack is the solution on offer.
For a prospective price of $50 per month, Jetblack members have the ability to text items they would like to purchase to working agents who would courier the item, delivering it the same day. Customers looking for more general advice on, say, birthday or anniversary presents would be eligible to receive free suggestions and follow-up delivery from personal shopping specialists.
Notable items that Jetblack has gone on-record as not being eligible for delivery are alcohol products and groceries, feasibly for legal reasons, as well as for reasons of direct competition when it comes to grocery delivery.
Jetblack was honed to a precision point in focus testing at Walmart’s in-house incubator, Store No. 8, as CNN Money reports. Led by Rent the Runway co-founder Jenny Fleiss, the new texting service will likely be supported nationwide after rolling out to smaller test markets. The focus will be on a more harried, time-sensitive customer who wants high-quality goods delivered to their home or office on the double.
“With Jetblack, we have created an entirely new concept that enables consumers to get exactly what they need through the convenience of text messaging and the freedom of a nearly unlimited product catalogue,” Fleiss said in a prepared statement. Her experience with Rent the Runway, a successful service offering rental of haute couture designer dresses, apparel, and accessories, lends itself seemingly well to the curation of a personal shopping set-list.
Revolutionizing retail seems to be the battlecry du jour in an uncertain sector facing massive competition to traditional strongholds embodied by large malls and enormous supercenters. Brick and mortar sales are struggling across the board with thousands of store closures over the past few years coinciding with titanic bankruptcies having been filed by the likes of Toys R’ Us, and Sears Canada, as reported by CNN. Sears Holding Corp., the American side of the business and parent to many other divisions, could be liquidated as early as this year, according to The Street.
Should Jetblack succeed, it will be the first among many services looking to give extremely personalized, customized, and individualized delivery to customers, according to Martech Today. No longer content with idly browsing store shelves looking for a generic, catch-all product, today’s consumers demand more choice. Walmart has not been resting on their laurels in this regard, having recently acquired indie-clothing favourites ModCloth, as Forbes reported, online-based outdoor equippers Moosejaw, as reported by the Detroit Free Press, and menswear brand Bonobos, as the New York Times reported.
Adding these stars to a constellation reinforced by the absolutely enormous acquisition of the massive Indian online-retailer Flipkart for about $16 billion, as CNN recently reported, the sky certainly does look very bright indeed for Walmart and their most recent experiment in the form of Jetblack.
Walmart’s store will stock more than 8,000 items ranging from stir-fried clams to fresh fruit, 90 percent of which will also be available online.
Items shopped can be delivered to customers within a 2 kilometer radius from JD.com as quickly as 29 minutes, said Walmart in a statement.
Walmart also said that customers at the new supermarket will be able to use a mini program on WeChat as they shop to bypass traditional checkout counters by paying via their mobile device.
As the war between Amazon and Walmart heats up and both companies make heavy investments in technology and experiment with new store formats, it is critical for traditional grocers to up their game as well. Today Amazon leads Walmart in online food sales by double, however its important to note that those who shop Walmart online are doing a full grocery shop including fresh, frozen and refrigerated, while Amazon shoppers do not. Yet.
We are starting to see where German discount grocer Aldi will be opening up shop around the Valley.
ABC 15 and theArizona Republic have both published lists of where Aldi could be opening stores, based off permits and building plans filed with the individual cities. Between the time ABC 15 and the Arizona Republic published their stories, more Aldi permits were filed.
The Phoenix Business Journal reached out to Aldi this week seeking confirmation on any of these reported locations. A company spokeswoman said there was nothing to share yet, and earlier this year, Aldi told the PBJ that it would not share any information on expansion areas or potential store location until plans were solidified.
In a recent report published by commercial real estate services company CBRE Group Inc. Aldi finalized three new locations during the first quarter of 2018. The CBRE report shows that Aldi purchased buildings in Tempe and Glendale and executed a lease in Chandler. Aldi could start opening stores in Phoenix in 2019, according to CBRE.
The Maricopa County Assessor’s website shows that Aldi (Arizona) LLC has purchased these three buildings in metro Phoenix.:
1715 E Southern Ave. in Tempe
16880 N 59Th Ave. in Glendale,
1401 E Bell Road in Phoenix
Based off these reports and public records, there are 11 known future Aldi locations going up in the Valley and the previously reported regional distribution center that is being built in Goodyear.
Some expect Aldi could open as many as 40 stores in metro Phoenix. The company, which also owns specialty grocer Trader Joe’s, is in the middle of a $3.4 billion expansion, trying to have 2,500 stores across the U.S. by the end of 2022.
“We pioneered a grocery model built around value, convenience, quality and selection and now Aldi is one of America’s favorite and fastest-growing retailers,” Aldi CEO Jason Hart said in a statement. “We’re growing at a time when other retailers are struggling.”
Obviously, Aldi sees itself as a disruptor in the supermarket industry. With Phoenix already being one of the most competitive grocery markets in the country, adding a new store into the mix could really throw traditional players like Fry’s, Safeway and Bashas’ for a loop and add further competition in the cutthroat market.