story by Kim Souza
Wal-Mart is wasting no time in deploying its latest grocery format — a stand alone pick-up center where shoppers can drive up and retrieve their online orders and never leave their car. It’s a new format concept for Walmart U.S. who continues to up the ante for convenience in the highly competitive grocery sector.
The retailer reviewed plans for the first concept depot with Bentonville city officials on Tuesday (April 29.) The proposed development goes to the city planning commission on May 6.
The concept was introduced by Bill Simon, CEO of Walmart U.S., on March 4 during a speech he gave at the Raymond James investors conference in Orlando. He said Wal-Mart has tested drive-through pick-up options for online orders in 11 stores in the Denver area with a 90% approval rating. But, Simon also said the success of the drive-through test prompted the retailer to consider stand-alone depots or modulars that are used as mini fulfillment centers for online grocery orders.
Simon described the concept modular as “Sonic-like,” but he gave no timeline for this launch. The City Wire recently learned that Wal-Mart is ready to test this new concept just as soon as city officials in Bentonville approve the plans.
The Bentonville location slated for the new format is near the J. Street and South Walton Boulevard intersection, behind the Chambers Bank which is located on the southeast corner of the intersection across from Zaxby’s and Firehouse Subs. The 15,000 square-foot facility will house 10,000 fresh and dry grocery products – from cereal, chips and bread to fresh produce, meat and milk, according to Deisha Barnett, corporate spokeswoman for Wal-Mart Stores Inc.
Barnett said the concept will allow consumers to shop online for their grocery items, schedule a pickup time at their convenience then drive up like they would at a Sonic drive-in, call to the associates who then bring their grocery order to car.
“We know at Wal-Mart our customers’ needs are changing. They want and need more shopping options and we have the means to give them low prices, wide assortments along with value and convenience in a seamless shopping experience,” Barnett said.
She said the new concept will offer local consumers a completely new shopping experience and it’s one of several tests the retailer is conducting from storage lockers in metro Washington D.C., Walmart to Go pick-up and home delivery in Denver and San Jose, Calif., and the new convenience store located up the road from this new grocery fulfillment concept facility. Simon has said the concept centers are designed to provide convenience and in no way are meant to replace traditional stock-up trips that its supercenters provide. Those trips are valued annually at $585 billion and remain about 60% of the total grocery spend.
Barnett said Wal-Mart hopes to takes the lessons form innovative concepts it is testing to ensure customers get the services, prices and selections they want and expect.
“We don’t think consumers should have to pay more for convenience which is why we continue to innovate and look for new ways their shopping needs can be met,” she said.
Carol Spieckeman, CEO of NewMarketBuilders, said in the past every new concept or format that retailers launched was seen as a prototype that, if successful, would roll out in current form. In fact, retailers often announced staged rollout plans simultaneously with each launch.
“Wal-Mart exemplifies how much that model has changed and is leading the charge when it comes to diverse and disparate concept launches,” she said.
She said Wal-Mart’s Asda division has more than 100 drive-through pick-up locations in the U.K., with plans for more. But it also launched its first temperature-controlled locker pick-up location in the U.K. a couple of weeks ago.
“Wal-Mart’s international presence and ability to test concepts in non-U.S. markets is a huge advantage, particularly given the wider adoption of online grocery shopping in markets like the U.K.,” Spieckerman added.
Barnett also said Asda has been delivering online grocery orders for sometime in the U.K., as well as using Kiosks to order items that can be picked up at its drive-through locations.
Retail analysts agree that online grocery is more widely used in the U.K. than in the U.S. at this time.
“In the U.S., Wal-Mart is testing and deploying a dizzying array of convenience, pick-up and delivery options in various markets and I expect the proliferation of options to accelerate,” Spieckerman said. “For the short term, I see diversification, not consolidation, as Wal-Mart’s goal and its U.S.-based competitors will have to formulate a response. They certainly can’t afford to play wait-and-see. … No retailer other than Amazon is matching Wal-Mart’s ‘multi-testing’ mojo these days and Wal-Mart will reap the benefits of working the kinks (and costs) out before many others even get started.”
The City Wire asked a few consumers their opinion of the new online grocery shopping format proposed for Bentonville later this year. Several shoppers said they would welcome the concept.
Lana Flowers of Rogers said the service could appeal to elderly shoppers and others that don’t feel like getting out. However, she likes the store experience.
“As long as I am healthy enough to walk through a store, I’d rather pick up my own items and pick them out. Otherwise, I may not find new products or different flavors or iterations of favorite brands,” Flowers explained.
Spieckerman said click-and-collect concepts have gained more traction in non-U.S. markets, but U.S. retailers have been slow to follow. It’s unfortunate given the lower associated costs, but she said Wal-Mart is poised to take full advantage. She also sees a connection between Wal-Mart’s recent move to introduce Wild Oats-branded organic foods and its click-and-collect forays.
“Brands like Wild Oats will help Wal-Mart build a bridge to more affluent shoppers who might not otherwise have Wal-Mart top-of-mind for site-to-store grocery shopping,” she said. “Wal-Mart already carries an impressive selection of online-unique ethnic, organic, vegan and other specialty offerings.”
Spieckerman said as Wal-Mart hones its site-to-store and site-to-home model, these items will find their way into more shoppers’ homes, giving Wal-Mart the opportunity to build an omni-channel relationship with new customers before competitors move off the mark.