Wal-Mart wants a bigger cart in the online grocery aisle

September 29, 2015 11:38 AM

(Bloomberg)—Wal-Mart Stores Inc. is expanding its pickup service for online grocery orders, pushing deeper into a market where Inc., Target Corp. and Google Inc. are scrambling for customers.

Starting next month, certain Wal-Mart stores in Atlanta, Salt Lake City and six other U.S. cities will add the free grocery pickup option, the retailer said Tuesday. That means customers will be able to order items online, select a time to pick them up, and have an employee deliver the food to their car when they arrive. Wal-Mart is currently offering the service in five other markets, part of a test that began in 2011.

The move puts Wal-Mart, No. 3 in the Internet Retailer 2015 Top 500 Guide, in closer competition with companies tackling the online grocery market, an area seen as an elusive prize ever since the original dot-com boom in the 1990s. Target (No. 16), has said it plans to aggressively go after grocery delivery and announced this month that it would begin testing a same-day grocery delivery service with Instacart Inc. in Minneapolis. Amazon (No. 1), meanwhile, offers a $299-a-year service called AmazonFresh in certain markets. Google announced plans this month to begin testing a delivery service for groceries and fresh food later this year in San Francisco and one other city.

Americans live close to Wal-Marts

Wal-Mart, the largest seller of groceries in the U.S., wants to use its massive brick-and-mortar chain as an advantage. The retailer says 70% of Americans live within 5 miles of a Wal-Mart, making the option of store pickup an attractive alternative to delivery.

The service lets customers pick up their Wal-Mart orders on the same day they order them, if the transaction is completed by 10 a.m. Wal-Mart also has been testing grocery delivery to customers’ homes, but for now it’s only expanding the pickup option.

Grocery makes up more than half of Wal-Mart’s revenue, though it’s been struggling to keep the business growing. The retail giant has been losing share to supermarkets that might not always have a lower price but provide a more pleasant shopping experience with better customer service, according to Wayne Hood, a BMO Capital Markets analyst. Wal-Mart’s customers have also complained about the quality and freshness of its food.

The latest pickup expansion will add 30 to 35 stores to the program, including locations in Charlotte, N.C.; Nashville, Tenn.; Tucson, Ariz.; and Colorado Springs, Colo. It was previously offered in about 50 or 60 stores, the company said.




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