How Walmart plans to transform the way we buy groceries - The Washington Post
Business
Business
With its pickup service, Walmart is testing whether its best weapon in the fight for online grocery shoppers is its most old-school — and hardest to replicate — asset: a network of more than 4,600 stores. (Luke Sharrett/Bloomberg News)
FRANKLIN, Tenn. — On a sweaty September morning in the Nashville suburbs, Anna Brummel pulls her white SUV into a Walmart 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 Walmart workers load up her car with the goods they picked and packed for her.
Walmart 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. Instacart, along with tech titans Google and Amazon.com, have put their muscle behind doorstep grocery-delivery models that are similar to what Peapod has offered for decades.
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 percent or less of total U.S. grocery sales.
With the pickup model, Walmart 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 time-starved 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.
Kroger and Giant are also touting pickup services, and even Amazon isreportedly considering opening bricks-and-mortar locations with grocery pickup capabilities. Pickup programs, not delivery, were the main driver of growth in habitual online grocery shopping in the past year, according to Tabs Analytics, a firm that studies the consumer-products industry.
While Walmart does not disclose sales figures for online grocery pickup, it has taken the program from five markets to more than 80 nationally in the past year.
“We see a huge opportunity through pickup, particularly in grocery,” Doug McMillon, Walmart’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 Walmart, making up 56 percent of its U.S. sales last year.
Walmart executives say pickup 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 pint-size 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.”
Walmart will have hurdles to clear as it aims to build the free service into a bigger business: For one, shoppers have often been reticent to buy groceries online because they are worried about the quality of the fresh meat and produce. This will be a consumer-psychology challenge for any company trying to get in the game, but it may be a particularly acute one for Walmart.
“They’ve historically gotten mediocre marks from consumers for produce and meat,” said Jim Hertel, senior vice president at Willard Bishop, a consultancy that studies the grocery business.
And Walmart has been outgunned online before. The retailer notched $13.7 billion in online sales last year, a far cry from the $99 billion posted by Amazon. (Jeffrey P. Bezos, the chief executive of Amazon, owns The Washington Post.)
Yet, if the pickup format keeps gaining customer affection, Walmart could be especially well-suited to ride the wave. About 90 percent of Americans live within 10 miles of a Walmart store.
April Styers, a personal shopper for the Walmart pickup program, selects fresh produce for customers' orders. (Sarah Halzack/The Washington Post)
Ashley Green, 31, talks to a Walmart personal shopper as she retrieves her online grocery-pickup order. (Sarah Halzack/The Washington Post)
‘The trust fall’
At the Walmart store in Franklin, as at other locations offering pickup, the company has added personal shoppers who handle only these online orders. James Gilmore, who leads e-commerce pickup for Walmart in the Mid-Atlantic and Southeast, said stores typically have four to nine staffers on the team.
Personal shoppers get in-depth training on how to evaluate produce and meat for quality and freshness. As Gilmore walks down an aisle of fruits and vegetables, he reaches for a jicama.
“We teach them how to tell the firmness — this one actually feels really good,” Gilmore says, noting that the root vegetable’s brown skin is smooth to the touch. Workers are taught to look for signs that a particular item is past its peak freshness.
Walmart holds produce tastings for team members so they know what they’re selecting for customers.
There’s a reason that the instruction focuses so heavily on getting fresh foods right: Gilmore says that, for shoppers, letting Walmart pick out their fruit, vegetables and meat is “the trust fall,” the moment when they count on a stranger to understand what they want.
Of shoppers who have never bought groceries online, 67 percent say it’s because “I like to select fresh products for myself,” according to research by Morgan Stanley.
This is why the personal shoppers show customers items such as produce and eggs before packing them into the car. The idea is that if someone saw an avocado that wasn’t quite ripe or an egg that was cracked, a substitution could be made on the spot.
And also, personal shoppers are supposed to get to know the preferences of repeat customers, so they might learn, for example, if someone likes their bananas a little on the green side. They might also slip your dog a biscuit or your child a lollipop.
Personal shopper April Styers gathers the orders, making her way through the store pushing a wheeled cart outfitted with four rows of blue bins that allow her to keep each order separate. As she stops in front of the Honeycrisp apples, she spins each one in her hand and gives it a gentle squeeze before bagging it and placing it in the cart.
“If I’m not going to eat it,” Styers said, “then I’m not going to give it to anybody else.”
Walmart has allocated parking spaces for online grocery-pickup customers so that they may get in and out of the lot quickly. (Sarah Halzack/The Washington Post)
The value of the store
In Walmart’s version of pickup, which is not yet available in the greater Washington area, shoppers have about 30,000 items to choose from — mostly groceries, but also general merchandise such as pet products or printer cartridges, all priced the same as in-store merchandise. To fill the orders, the personal shoppers make their way through the store’s grocery aisles, guided by a handheld device that takes them on the most efficient route to collect all the items.
Workers have a variety of ways of knowing when a customer has arrived: They have a backroom camera pointed at the designated parking spots. Shoppers can also phone in or, in some markets, use a mobile check-in feature on the Walmart Grocery app.
It’s a pretty straightforward process, and it helps illuminate why Walmart, in some ways, might have an advantage relative to other comers in the online grocery space. Doorstep-delivery models come with some difficult logistical hurdles: How do you transport milk to a customer’s front door and have it stay fresh? How do you reimagine a system built for selling durable goods such as books into one that works for perishables?
For pickup, Walmart doesn’t have to reinvent its supply chain — it is already getting these goods to its stores.
“That is the opportunity. They’re redeploying an asset they already have,” said Laura Kennedy, a principal analyst at Kantar Retail.
Pure-play delivery services have another challenge: The grocery world is known for its razor-thin profit margins. Add in shipping costs, and it’s extraordinarily hard to make a healthy business. The pickup model, though, eschews that cost.
“The consumer is essentially subsidizing their supply chain by their willingness to travel to the groceries and pick them up themselves,” said Kurt Jetta, chief executive of Tabs Analytics.
The logistical differences might help explain why Walmart can offer pickup free, while delivery options typically come at a cost: AmazonFresh is only available to those who pay a membership fee, and Google Express requires a membership fee or per-delivery fee.
Because of the popularity of Amazon Prime, it is often assumed that doorstep delivery is what shoppers think of as the ultimate convenience. But, Hertel said that for families with kids, “being at home at a given time is somewhere between really, really tough and impossible.”
At the Franklin store, Ashley Green was among the millennial moms who have turned to the pickup program because it fits into their schedule.
“I have two little ones in the back,” said Green, 31, gesturing to her 4- and 1-year-old daughters. “To just pick up my groceries and go, instead of getting out of the car, it takes five minutes instead of an hour.”
Economy & Business Alerts
Breaking news about economic and business issues.
Sign up
The early results of the pickup program are tantalizing for the big-box chain: Executives say users tend to be more affluent than the typical Walmart customer, and that they are often people who weren’t buying groceries there before.
In its San Bruno, Calif., office, Walmart has a team of techies working to find ways to shave even more time off the pickup process. To keep on top of potential customer pain points, these Silicon Valley customer-experience specialists spend one or two days a month working in a Walmart store.
“That gives them the opportunity to see their product in action with real customers,” said Michal Russ, director of customer experience for the online grocery program.
Then they go back and tweak the app to try to cater to shoppers like Trudy Mishev, 41, who swings by the Franklin store almost every week for items such as orange juice, half-and-half and salt-and-vinegar chips.
“Right now, I have a dryer going, a puppy waiting to be walked — I have a thousand things to do. And look at this, I’m on my way,” Mishev said.
FRANKLIN, Tenn. — On a sweaty September morning in the Nashville suburbs, Anna Brummel pulls her white SUV into a Walmart 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 Walmart workers load up her car with the goods they picked and packed for her.
Walmart 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. Instacart, along with tech titans Google and Amazon.com, have put their muscle behind doorstep grocery-delivery models that are similar to what Peapod has offered for decades.
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 percent or less of total U.S. grocery sales.
With the pickup model, Walmart 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 time-starved 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.
Kroger and Giant are also touting pickup services, and even Amazon isreportedly considering opening bricks-and-mortar locations with grocery pickup capabilities. Pickup programs, not delivery, were the main driver of growth in habitual online grocery shopping in the past year, according to Tabs Analytics, a firm that studies the consumer-products industry.
While Walmart does not disclose sales figures for online grocery pickup, it has taken the program from five markets to more than 80 nationally in the past year.
“We see a huge opportunity through pickup, particularly in grocery,” Doug McMillon, Walmart’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 Walmart, making up 56 percent of its U.S. sales last year.
Walmart executives say pickup 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 pint-size 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.”
Walmart will have hurdles to clear as it aims to build the free service into a bigger business: For one, shoppers have often been reticent to buy groceries online because they are worried about the quality of the fresh meat and produce. This will be a consumer-psychology challenge for any company trying to get in the game, but it may be a particularly acute one for Walmart.
“They’ve historically gotten mediocre marks from consumers for produce and meat,” said Jim Hertel, senior vice president at Willard Bishop, a consultancy that studies the grocery business.
And Walmart has been outgunned online before. The retailer notched $13.7 billion in online sales last year, a far cry from the $99 billion posted by Amazon. (Jeffrey P. Bezos, the chief executive of Amazon, owns The Washington Post.)
Yet, if the pickup format keeps gaining customer affection, Walmart could be especially well-suited to ride the wave. About 90 percent of Americans live within 10 miles of a Walmart store.
April Styers, a personal shopper for the Walmart pickup program, selects fresh produce for customers' orders. (Sarah Halzack/The Washington Post)Ashley Green, 31, talks to a Walmart personal shopper as she retrieves her online grocery-pickup order. (Sarah Halzack/The Washington Post)‘The trust fall’
At the Walmart store in Franklin, as at other locations offering pickup, the company has added personal shoppers who handle only these online orders. James Gilmore, who leads e-commerce pickup for Walmart in the Mid-Atlantic and Southeast, said stores typically have four to nine staffers on the team.
Personal shoppers get in-depth training on how to evaluate produce and meat for quality and freshness. As Gilmore walks down an aisle of fruits and vegetables, he reaches for a jicama.
“We teach them how to tell the firmness — this one actually feels really good,” Gilmore says, noting that the root vegetable’s brown skin is smooth to the touch. Workers are taught to look for signs that a particular item is past its peak freshness.
Walmart holds produce tastings for team members so they know what they’re selecting for customers.
There’s a reason that the instruction focuses so heavily on getting fresh foods right: Gilmore says that, for shoppers, letting Walmart pick out their fruit, vegetables and meat is “the trust fall,” the moment when they count on a stranger to understand what they want.
Of shoppers who have never bought groceries online, 67 percent say it’s because “I like to select fresh products for myself,” according to research by Morgan Stanley.
This is why the personal shoppers show customers items such as produce and eggs before packing them into the car. The idea is that if someone saw an avocado that wasn’t quite ripe or an egg that was cracked, a substitution could be made on the spot.
And also, personal shoppers are supposed to get to know the preferences of repeat customers, so they might learn, for example, if someone likes their bananas a little on the green side. They might also slip your dog a biscuit or your child a lollipop.
Personal shopper April Styers gathers the orders, making her way through the store pushing a wheeled cart outfitted with four rows of blue bins that allow her to keep each order separate. As she stops in front of the Honeycrisp apples, she spins each one in her hand and gives it a gentle squeeze before bagging it and placing it in the cart.
“If I’m not going to eat it,” Styers said, “then I’m not going to give it to anybody else.”
Walmart has allocated parking spaces for online grocery-pickup customers so that they may get in and out of the lot quickly. (Sarah Halzack/The Washington Post)
The value of the store
In Walmart’s version of pickup, which is not yet available in the greater Washington area, shoppers have about 30,000 items to choose from — mostly groceries, but also general merchandise such as pet products or printer cartridges, all priced the same as in-store merchandise. To fill the orders, the personal shoppers make their way through the store’s grocery aisles, guided by a handheld device that takes them on the most efficient route to collect all the items.
Workers have a variety of ways of knowing when a customer has arrived: They have a backroom camera pointed at the designated parking spots. Shoppers can also phone in or, in some markets, use a mobile check-in feature on the Walmart Grocery app.
It’s a pretty straightforward process, and it helps illuminate why Walmart, in some ways, might have an advantage relative to other comers in the online grocery space. Doorstep-delivery models come with some difficult logistical hurdles: How do you transport milk to a customer’s front door and have it stay fresh? How do you reimagine a system built for selling durable goods such as books into one that works for perishables?
For pickup, Walmart doesn’t have to reinvent its supply chain — it is already getting these goods to its stores.
“That is the opportunity. They’re redeploying an asset they already have,” said Laura Kennedy, a principal analyst at Kantar Retail.
Pure-play delivery services have another challenge: The grocery world is known for its razor-thin profit margins. Add in shipping costs, and it’s extraordinarily hard to make a healthy business. The pickup model, though, eschews that cost.
“The consumer is essentially subsidizing their supply chain by their willingness to travel to the groceries and pick them up themselves,” said Kurt Jetta, chief executive of Tabs Analytics.
The logistical differences might help explain why Walmart can offer pickup free, while delivery options typically come at a cost: AmazonFresh is only available to those who pay a membership fee, and Google Express requires a membership fee or per-delivery fee.
Because of the popularity of Amazon Prime, it is often assumed that doorstep delivery is what shoppers think of as the ultimate convenience. But, Hertel said that for families with kids, “being at home at a given time is somewhere between really, really tough and impossible.”
At the Franklin store, Ashley Green was among the millennial moms who have turned to the pickup program because it fits into their schedule.
“I have two little ones in the back,” said Green, 31, gesturing to her 4- and 1-year-old daughters. “To just pick up my groceries and go, instead of getting out of the car, it takes five minutes instead of an hour.”
Economy & Business Alerts
Breaking news about economic and business issues.
Sign up
The early results of the pickup program are tantalizing for the big-box chain: Executives say users tend to be more affluent than the typical Walmart customer, and that they are often people who weren’t buying groceries there before.
In its San Bruno, Calif., office, Walmart has a team of techies working to find ways to shave even more time off the pickup process. To keep on top of potential customer pain points, these Silicon Valley customer-experience specialists spend one or two days a month working in a Walmart store.
“That gives them the opportunity to see their product in action with real customers,” said Michal Russ, director of customer experience for the online grocery program.
Then they go back and tweak the app to try to cater to shoppers like Trudy Mishev, 41, who swings by the Franklin store almost every week for items such as orange juice, half-and-half and salt-and-vinegar chips.
“Right now, I have a dryer going, a puppy waiting to be walked — I have a thousand things to do. And look at this, I’m on my way,” Mishev said.
Kantar Ibope Media Colombia presenta la Ola combinada del primer semestre 2016 de su estudio Target Group Index, TGI que permite conocer los hábitos de consumo.
