Order and Pickup: Walmart Fights Amazon By Promoting Speed and Convenience

By marrying online ordering with drive through pickup, Walmart is providing customers with what they want without the hassle, but acknowledging their consumer is more likely to drive than walk.

And it turns the company's stores into more of a competitive asset in the digital era. JL


Michael Corkery reports in the New York Times:

A personal shopper is something you might expect at Bergdorf Goodman or a boutique on Madison Avenue. Not at Walmart.(But) Walmart sees grocery pickup as a way to marry its e-commerce business with its gigantic network of stores. Walmart is betting big on the millions of Americans in suburban and rural areas who drive everywhere. The company is trying to make ordering groceries online and then picking them up in your car as seamless as a fast-food drive-through.

A personal shopper is something you might expect at Bergdorf Goodman or a boutique on Madison Avenue.

Not at the Walmart on Route 42 in Turnersville, N.J.

But that’s where you will find Joann Joseph and a team of Walmart workers each day, filling up shopping carts with boxes of Honeycomb cereal, Cheez-Its and salted peanuts.

The customers select their groceries online, and then the shoppers pick the items off the store shelves and deliver them to people when they arrive in the parking lot. Customers never have to step inside the store.

“It’s about saving people time,” Ms. Joseph said as she helped load groceries into the back of a minivan one morning.

Walmart, which is one of the largest food retailers in the United States, sees grocery pickup as a way to marry its e-commerce business with its gigantic network of stores — a goal that has eluded many other retailers. The company started ramping up the service two years ago, and it is now available in about 1,000 of Walmart’s 4,699 stores across the country.

The initiative is the latest salvo in Walmart’s retail battle with Amazon, and the centerpiece of its strategy to gain the upper hand in the pursuit of consumers looking to streamline their food shopping.

Many retailers are focused on new ways to deliver groceries to people’s homes — particularly in big cities. Walmart is betting big on the millions of Americans in suburban and rural areas who drive everywhere. The company is trying to make ordering groceries online and then picking them up in your car as seamless as a fast-food drive-through.

Groceries have become one of the most fiercely contested areas of retail. Amazon upped the ante in June with its $13.4 billion purchase of Whole Foods, giving it a major foothold in the industry. Lidl, the German supermarket chain, is also making a big push to open stores in the United States.

Grocery delivery companies like Fresh Direct have spawned a contest among traditional grocers and start-ups to offer faster home delivery.

Amid this heated competition, Walmart has been experimenting with different ways to get an edge. In a few cities, it works with Uber to deliver groceries to homes.

And last month, Walmart said it would begin testing a home-delivery service in which a worker loads the food into the refrigerator, even when no one is home. The customer can watch the process remotely from a home security camera and track when the delivery worker enters and leaves the house.

While these initiatives are limited to only a few states, the company’s grocery pickup is widespread. Walmart is betting that a big part of the country (“from Scranton to Sacramento,” one Walmart executive said) is more of a drive-through than delivery culture.

There is a risk that Walmart’s new grocery strategy could undercut its sales of other products. Selling groceries has lower profits, but it brings customers into the store regularly, allowing Walmart to push bigger-ticket items.

“That is the philosophy of the Supercenter: You put all these other categories under one roof,” said Gene German, a professor emeritus of food marketing at Cornell University. “So if the customers don’t go into the stores, that could be a negative.”

But Walmart believes that the “high touch” approach of online grocery ordering is improving people’s opinion of the shopping experience at its stores, making them more likely to purchase general merchandise in addition to food.

“We get feedback and how much they appreciate the time that we take” in fulfilling a grocery order, said Mike Turner, a vice president of Walmart’s e-commerce operations, said in an interview.

Walmart does not disclose its online grocery sales. But when the company reported its second-quarter results in August, it said online sales, including grocery, had increased 60 percent from a year earlier.

The company also indicated that overall food sales growth had been the best in five years.

For decades, Walmart was seen as the world’s foremost innovator in retail. But even as the company has become the world’s largest retailer, it has been overshadowed in many ways by Amazon’s rapid growth and many advancements.

Amazon’s long-term strategy for Whole Foods, however, is not clear. Amazon must figure out how to sync its core online business and warehouse network with more than 460 Whole Foods stores, many of which are in high-priced urban areas and can be costly to operate.

Walmart faces a different set of challenges and opportunities with its online grocery pickup — which were on display at the Supercenter in Turnersville, outside Philadelphia.

The strategy’s promise is that Walmart can uses its thousands of stores as mini-fulfillment centers, while also avoiding the costs of home delivery. But the store does not always function like a warehouse.

One morning, Ms. Joseph walked through the aisles, pushing a cart and scrolling through a hand-held device that listed the order a customer had placed online.

Like GPS services for cars, her device mapped out the most efficient route: She grabbed a box of Honeycomb in one aisle then a box of Lipton Berry Tea in another.

But when Ms. Joseph reached the peanut aisle, she hit a snag. The customer had ordered a five-pack of individual-size servings of salted peanuts.

There were no more individual-size packs. She checked the candy and snack displays at the cash registers, but there were none there, either.

So Ms. Joseph improvised. Borrowing a colleague’s iPhone, she calculated the amount of peanuts in the pack of individual servings, and then she selected a jug of peanuts with comparable volume.

“Your instinct needs to kick in,” Ms Joseph said. “And you go with it.”

Each substitution is supposed to be clearly marked with a sticker so the customer is not surprised.
Customers order their groceries online and then can pick them up at the store, a few hours later during a certain time window.

Walmart is also showering grocery pickup customers with perks — Easter eggs hidden in grocery bags, a “beauty box” for moms at Mother’s Day, dog biscuits and discounts for recruiting new customers.

It’s unclear how the company will be able maintain this kind of dedicated service if a store is inundated with pickup orders, which in many stores are free of charge and require an order of $30 or more.

Walmart said it had hired thousands of workers to staff the new service across its many stores.

“This is something Walmart could get into easily and quickly,” Mr. German said. “And it would send a message to shareholders: We are not going to be passive. We are going to be proactive.”

Customers who order online choose a one-hour window in which they can pick up their groceries. When they arrive at the Walmart parking lot, they pull into designated grocery pickup spots, which at some stores resemble a gas station with a canopy overhead. Minutes later, a personal shopper emerges from the store with bags of groceries.

When Laura Rothwein of Clayton, N.J., pulled up in her minivan to the side of the Turnersville store, the personal shoppers greeted her 6-year-old son with a treat from the bakery and a bottle of red Gatorade.

A short time later, Sherri Arrison, a retiree, arrived in her Nissan Murano. One personal shopper loaded groceries into the back, while another held out a bright orange umbrella to shelter the food from the rain.

“This is pretty much the only way I shop now,” Ms. Arrison said. “I don’t have to go into the store and keep walking around.”