Wal-Mart opens its Pickup Grocery format in Northwest Arkansas

story by Kim Souza (photos courtesy of Wal-Mart Stores Inc.)

Grocery drive-up convenience with low price guarantees are the latest ploy by Wal-Mart Stores Inc. to bridge the digital and physical retail worlds. And on Monday (Sept. 29) the retail giant is unveiled its Walmart Pickup Grocery service to registered customers in Northwest Arkansas.

A grand opening ceremony is set to take place at 7:30 a.m. at the warehouse site located near the intersection of J Street and S. Walton Boulevard in Bentonville. Wal-Mart said its employees have in recent weeks tested the new format and it wants to continue expanding the test by allowing registered shoppers to use the service beginning Monday.

Former Walmart U.S. CEO BIll Simon first announced the plans for a drive-up grocery depot in March. The Bentonville City Council approved the warehouse site in early May and construction was underway within days. Last month Wal-Mart revealed the name for the format – Walmart Pickup Grocery – and began letting employees test the service.

Consumers who want to use the service must first register online with an email address. Wal-Mart said it will begin extending invitations to try the same-day service via email. 

Registered shoppers can order from the online site (Link here for the page.) which contains roughly 10,000 grocery and consumable items including fresh meat, dairy, produce and common household products. The consumer then schedules a pickup time ranging from two hours to three weeks after the order is placed.

The shopper then drives to one of the kiosk stations at the pickup grocery site at the scheduled time and notifies the attendant who will bring their order to the car. Orders are paid for online. Wal-Mart said this test extends its everyday low prices with no hidden fee or surcharges.

“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,” Deisha Barnett, Wal-Mart spokeswoman, told The City Wire in April when the new format was made public.

Barnett said the new convenient grocery format in no way is meant to replace traditional stock-up trips at its supercenters and Neighborhood Market stores.

Judith McKenna, the chief development officer at Walmart U.S. who has years of expertise as the retailer’s British grocery chain ASDA, is one of the leaders of the new format. In June, she said the ASDA model offers “learnings” as the U.K. market is more adept at online grocery than the U.S.

“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.

McKenna said population density is needed for the home delivery option to make financial sense for retailers. But in drive commuter markets, she said the click & collect models for grocery could find favor among many shoppers. She said the new format in Bentonville is a trial, but there is evidence in other places that it has possibilities.

Wal-Mart has been clear from the beginning that the new mini warehouse format is a test, one of many it’s conducting across the country to assess consumer sentiment toward delivery options versus pickup services for groceries. 

The retailer has said the grocery home delivery tests in Denver were going well, but one   lesson learned in the process has been that more consumers would just as soon pickup their online orders at their own convenience for no added fees. The home delivery fee in the Denver market ranges between $5 and $10.

The online grocery market, worth $6 billion annually, is projected to grow at 9.5% a year between 2012 and 2017, according to the market research firm IBISWorld.

“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.

Continuing, Spieckerman noted: “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.”

She adds that the while the click & collect locations are common in the U.K., this new format may have more influence in the U.S.

“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.

During shareholder’s week in June, Wal-Mart execs were asked why they chose Bentonville as the home for this newest concept. They responded, “Why not?” 

Northwest Arkansas is a commuter society – with some estimates of more than 500,000 living in the metro area – and thousands of potential shoppers drive by the 15,000 square-foot pickup warehouse each day. In Wal-Mart’s own corporate ranks there are roughly 10,000 working just a few blocks away, many of whom commute into Bentonville from nearby towns.

Analysts said having the new grocery format close to the home office and technology center is also a benefit because they will be able to test new technology capabilities quickly and conveniently without travel.