story by Kim Souza
Grocery giant Wal-Mart Stores will soon unveil its “Pickup Grocery” format with the first concept store near its home base in Bentonville.
The retailer has named the test format Walmart Pickup Grocery as signs went up at the small warehouse on Monday (Aug. 25) amid a flurry of activity as the 15,000 square-foot grocery center is being stocked with 10,000 fresh and dry grocery products – everything from cereal, chips and bread to fresh produce, meat and milk.
Wal-Mart told The City Wire that several tests will be conducted before the online grocery service opens to the public early this fall. Walmart declined to provide a specific date or share who will be allowed to test the service.
In the past, the retailer has allowed its employees to test certain programs such as Scan & Go before tests or use by the general public. With some 10,000 employees in the region, Wal-Mart has a diverse testing pool in its own ranks, many of which commute to Bentonville daily and pass by the new grocery format.
“I can tell you that several aspects related to the new Walmart Pickup Grocery are being tested thoroughly,” said John Forrest Ales, Wal-Mart corporate spokesman.
The no-frills warehouse is equipped with freezer and cooler space built with maximum flexibility in terms of shelf configuration and there is no need for aesthetic displays given consumers will never see the inside of the venue.
It will be run by the logistics division with pickers like those who work in the distribution centers. There is only one delivery dock at the small facility which will be fulfilled by the local distribution centers daily as demand dictates.
Consumers place their grocery order online and request a pickup time at their convenience. The retailer asks for a two-hour window to fill the order. The consumer will drive through one of a dozen lanes up to the kiosks where they await delivery to their 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,” said Deisha Barnett, Wal-Mart spokeswoman.
She said this new convenient grocery format in no way is meant to replace traditional stock-up trips at its supercenters and Neighborhood Market stores.
Judith McKenna, chief development officer at Walmart U.S., has years of expertise as the retailer’s British grocery chain ASDA. In June, she said the ASDA model offers lessons as U.K. shoppers are more accustomed to online grocery.
“ASDA customers have moved quickly to online and pickup grocery models. A program called Click & Collect was not available two years ago. It’s in 300 stores now and will be in 600 stores by next year,” McKenna said.
She this new format in Bentonville is a trial and the retailer doesn’t know what the outcome will be, but there is plenty of evidence in other places that it has possibilities.
“Wal-Mart is testing this format because it is a vehicle (literally) for next-stage scale-building and a complement to its small format strategy,” said Carol Spieckerman, CEO of newmarketbuilders.
“Wal-Mart has everything to gain as it offers yet another option for convenience-starved customers and without the overhead of its other physical formats. Shopping eats up time and can be a major inconvenience for parents with small children and the elderly and infirm. This is also a great way for Wal-Mart to make the most of its digital platform, to acclimate more customers to using it and to gather more information on its customers’ searching and shopping habits as they place orders online,” Spieckerman explained.
She also said the new store could recruit customers who do not shop at Walmart.
“It’s a pioneering move in the U.S. and that alone has the potential to bring new customers into Wal-Mart’s physical and digital ecosystem,” Spieckerman said.
Wal-Mart does not allow price comparison with its online business and its physical stores, citing different cost structures in the formats. The retailer has not yet revealed if the prices at the new Pickup Grocery venue will be on par with the neighboring supercenters and Neighborhood Markets.
“Wal-Mart has made a point of ensuring price consistency across its physical formats and not to gouge its customers based on convenience. Wal-Mart has not maintained consistency between its online and in-store prices and openly claims not to, however that shouldn’t present a problem for Walmart Pickup Grocery since online prices will be the only reference for these customers,” Spieckerman said.
She also said the stores could serve as a buffer against Amazon and other pure online retailers.
“It remains to be seen whether Wal-Mart will attempt to integrate online-unique items into its pickup location. Making items from third-party sellers and its own endless aisle assortments available for pickup would head Amazon off at the pass as it continues to cozy up to small businesses,” she said.