Wal-Mart adds 2 cities to Uber trial

Wal-Mart Stores Inc. has introduced its grocery delivery service in two additional markets, expanding a pilot program that began last year as it explores ways to provide convenience for customers and compete with retailers such as Amazon.com.

The test gives Wal-Mart shoppers in Dallas and Orlando, Fla., the opportunity to order groceries online and have them delivered by Uber. Eight stores in the Dallas market will participate in the program, while four stores will take part in Orlando.

The Bentonville retailer's grocery delivery experiment with the ride-sharing service began in Phoenix last summer and was quietly extended to include Tampa, Fla., earlier this year. In addition, Wal-Mart has been using its own trucks to deliver groceries to customers in Denver and San Jose, Calif.

"We're working hard to find a way to get you fresh, quality groceries all while keeping a little more time on your calendar," Mike Turner, Wal-Mart's vice president of e-commerce operations, said in a blog post on the company's website.

Retailers like Wal-Mart are exploring convenience options such as grocery delivery to cater to consumer demands as online shopping for food and consumables gains importance.

Earlier this year, a Food Marketing Institute and Nielsen study projected that online grocery spending between 2016-2025 would grow from about 4.3 percent of annual U.S. consumer sales to about 20 percent, or $100 billion.

Wal-Mart believes it has developed one successful tool with its curbside grocery pickup service, where customers order products online, drive to the store and have them brought to their cars by employees. The service is available at about 900 U.S. stores and will be offered in about 1,100 by the end of the year.

The company also is testing a grocery pickup kiosk, which is located in the parking lot of the Wal-Mart Supercenter in Warr Acres, Okla. The service operates 24 hours a day and allows customers to place grocery orders online and quickly collect them at the kiosk.

Those grocery-specific initiatives are in addition to other click-and-collect or delivery tests. The retailer recently introduced automated pickup towers that dispense general merchandise ordered online to more than 100 stores. Wal-Mart also is using employees to deliver packages on their way home from work at three stores, including one in Northwest Arkansas.

"We've got a good strategy," Wal-Mart U.S. Chief Executive Officer Greg Foran said last week. "I'm comfortable that we're doing this with speed and with excellence. At this point, we'll stick with that plan and get on with it, but obviously keep our eyes on what a strong competitor does in the marketplace."

Amazon, which has been delivering groceries for some time through its Amazon Fresh business, is expected to play a bigger role in the grocery industry after its recent $13.7 billion acquisition of Whole Foods. Amazon shareholders are expected to approve the acquisition later this week.

Aldi took its first step in online grocery last week by announcing a partnership with Instacart to conduct a delivery test in Dallas, Los Angeles and Atlanta with the potential of future expansion.

Grocers in the Little Rock area have also partnered with Instacart, which announced last week it would begin offering grocery delivery service through stores like Kroger, Whole Foods and Natural Grocers.

"We as consumers have changed our behavior," said Annibal Sodero, an associate professor at the Sam M. Walton College of Business at the University of Arkansas, Fayetteville. "We want whatever, whenever we want -- at our convenience. So if we are already conditioned and used to receiving our stuff, whatever, whenever we want, why not our groceries?"

Grocery sales -- in any form -- are vital to Wal-Mart, which reported that same-store sales in the U.S. increased 1.8 percent during the second quarter of the fiscal year while traffic grew 1.3 percent.

Roughly 56 percent of the company's revenue comes from the grocery business. Brian Yarbrough, a retail analyst with Edward Jones, said the retailer has taken a proactive approach to defending its turf over the past few years by cleaning up its stores, improving its assortment and lowering prices.

The efforts appear to be working after Wal-Mart said last week that its food categories delivered the strongest quarterly comparable sales performance in five years.

"That's important for several reasons," Yarbrough said. "It's a big part of their business and it's a regular traffic driver. People don't go to Wal-Mart every week to buy motor oil and bikes and games and apparel. But they go multiple times a week to buy groceries."

Wal-Mart's grocery delivery test gives shoppers in Dallas and Orlando who prefer to avoid the store altogether the opportunity to have those goods taken to them.

Customers using the service can select groceries online and set a time for delivery.

Wal-Mart's personal shoppers will prepare the order and request an Uber driver. The driver will pick up the order and take it directly to a customer's home. The delivery cost is $9.95.

"It looks like they have been successful in this phase," Sodero said about Wal-Mart's decision to expand the pilot program. "It is interesting they're planning to extend their services to where Amazon is making money doing their own deliveries. It is a market that has been tested and has proven to be trusted by Amazon. So Wal-Mart wants to take a slice of that pie."

Business on 08/22/2017

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