Walmart Just Getting Started on Disrupting Grocery
With the rate of inflation in the United States at a 40-year high of 7.5%, and geopolitical strife threatening to take prices even higher, there are only a handful of grocery retailers in a unique position to leverage these crises into drivers of business. At the top of that list of food retailers is Walmart.
An Omni Flywheel
Another big competitive advantage for Walmart has been its investments in omnichannel innovation, many of which allowed the retailer to leverage technology, talent and product assortment in stores and on walmart.com during the pandemic.
The retailer now offers its popular Grocery Pickup service in 4,600 locations and same-day grocery delivery from 3,500 stores, an increase in pickup/delivery capacity last year of 20%. Walmart expects to increase that capacity by another 35% this year. The company today offers a dizzying array of additional omni-grocery services such as Express Delivery via DoorDash (now available from more than 3,400 of Walmart’s 4,700 U.S. stores for an additional $10 fee), Instacart delivery, and curbside pharmacy pickup.
According to Walmart, the number of customers using grocery delivery has increased six-fold compared with pre-pandemic, although the company’s e-commerce sales growth has slowed recently as shoppers increasingly return to physical stores.
“Walmart provides several ways to shop to make getting … groceries easier than ever, whether it be in person, online or from our app,” Redfield says. “We have leveraged new omnichannel touchpoints, innovative tools and partnerships to connect customers with trusted brands. Last year, we brought our grocery and general merchandise apps together into one. This significant omnichannel transformation brought our store and online back-end systems together and provided customers with a simpler, unified app experience.”
Walmart plans to scale its InHome grocery delivery service (which costs $148 a year) from being available to 6 million U.S. households to 30 million U.S. households by the end of 2022. To support the expansion, Walmart plans to hire more than 3,000 associate delivery drivers this year, as well as build out a fleet of 100% all-electric delivery vans.
Last year, the company launched a $98-a-year membership program called Walmart+, offering free shipping with no order minimum, unlimited delivery from stores, fuel discounts, and mobile Scan & Go for a streamlined in-store shopping experience.
“Convenience continues to be an area of focus where we must set the pace amongst our competition — and we have, with Walmart+,” Redfield asserts. “Walmart+ brings together a comprehensive set of benefits to make life easier for our customers and bring them solutions at an unprecedented value.”
The company is also expanding efforts to generate alternative revenue streams with initiatives such as Walmart GoLocal, which leverages the retailer’s investments in pickup/delivery into third-party sales opportunities.
“We’re expanding our other revenue streams, including our white-label delivery service, Walmart GoLocal,” Redfield says. “With clients such as The Home Depot, Chico’s FAS and Cognetry Labs, Walmart is leveraging its capacity and capabilities to help businesses of all sizes deliver products to customers across the country at an affordable price.”
And Walmart’s omni flywheel is also accelerating with initiatives related to sustainability, workforce, diversity, micro fulfillment, contract delivery, autonomous trucks, retail health, social shopping, digital advertising and many more areas.
In its fourth-quarter earnings report, the retailer listed its global advertising business revenue for the first time: $2.1 billion. In the United States, customers using Walmart’s advertising business, Walmart Connect, increased 136%. That business is expected to continue to scale over the next few years and could become a top-10 ad business soon.
Walmart has also partnered with Facebook to launch a first-to-market augmented-reality lens retail experience, which allows customers to use interactivity to browse holiday gift ideas.
“Most importantly for food, we introduced shoppable recipes to amplify mouthwatering food ideas across social platforms,” Redfield notes. “On Pinterest, we co-created innovative shoppable experiences for the first large-scale launch of shoppable recipes with supplier partners like General Mills, Kraft and PepsiCo. The initiative encouraged our customers to try new, delicious cooking and baking recipes … while providing them with the ability to seamlessly add ingredients to their Walmart cart and purchase in just a few clicks.”