Wal-Mart and Kroger expand e-grocery services
April 14, 2016 01:25 PM
Consumers in eight additional U.S. markets will be able to order groceries online and pick them up curbside at local Wal-Mart stores by the end of this month. This will bring the total number of U.S. markets where Wal-Mart Stores Inc. offers Walmart Grocery to 30, more than double from a year ago.
The new e-grocery markets are Kansas City, Mo.; Boise, Idaho; Richmond, Va.; Virginia Beach, Va.; Austin, Texas; Provo, Utah; Daphne, Ala.; and Charleston, S.C.
Wal-Mart also will double the number of store locations where Walmart Grocery is already available in Atlanta, Houston and Dallas, the retailer says. A spokesman says more than 200 Wal-Mart stores nationwide now have curbside pickup of online orders, and consumers can expect “a steady cadence of more expansion throughout the year.”
Houston and Dallas were part of Wal-Mart’s last big Walmart Grocery expansion in October, when it added nine U.S. markets. A similar service called Grocery PickUp is available at Wal-Mart stores in the Toronto and Ottawa areas in Canada.
The Dallas and Houston markets in particular are poised for a boomlet in e-grocery services. The Kroger Co. will roll out its buy online, pickup curbside e-grocery offering ClickList to 20 stores in Dallas and Houston this summer, according to a recent report in the Dallas Morning News. Kroger did not immediately respond to an inquiry about the expansion. Last month, Kroger chairman and CEO W. Rodney McMullen said ClickList is available in seven metro areas, up from one a year earlier.
Wal-Mart and Kroger are the No. 1 and No. 2 grocers in the United States by market share. 67% of Wal-Mart’s U.S. revenue in its fiscal 2016 came from the sale of groceries and other consumables, according to research firm Kantar Retail. Kroger operates 2,778 food stores under a collection of store banners including Harris Teeter, King Soopers, Ralphs and Fry’s. It also owns vitamin and supplement e-retailer Vitacost.com, which Kroger acquired for approximately $280 million in 2014 and then used Vitacost systems to expand its e-commerce options.
Wal-Mart is the fourth-largest e-retailer based in North America measured by its total web sales (across all product categories), according to the newly published Internet Retailer 2016 Top 500 Guide. Kroger is No. 83.
Instacart, a service that offers delivery of groceries purchased from area stores in as little as an hour, already operates in Houston, and tells Internet Retailer it plans to add service in Dallas within the next year.
Amazon.com Inc., the No. 1 e-retailer in North America, has offered same-day delivery in Dallas since 2014, and added Prime Now delivery, which offers delivery of about 25,000 SKUs in as little as an hour, last spring. Amazon added Prime Now service to Houston in October. Many everyday grocery items are available through Prime Now.
In addition to curbside pickup of groceries ordered online, Kroger is experimenting with the online ordering of goods for delivery to shoppers’ homes. The capability, sometimes referred to as “endless aisle,” is available in some Kroger-operated stores in Denver. Kroger also is incorporating e-commerce into a recently opened supermarket called Main & Vine in Gig Harbor, Wash.
Sources estimate U.S. consumers spent $18-$24 billion buying groceries online in 2014, or 3%-4% of their total spend. But e-grocery sales are expected to increase 21.1% annually through 2018, according to BI Intelligence research, compared to 3.1% for physical supermarkets. For more on the strategies e-retailers and retail chains are using to sell groceries online, read the story “The e-grocery explosion” from Internet Retailer magazine.