story by Kim Souza
ksouza@thecitywire.com
Retail giant Wal-Mart and its Sam’s Club division have spent much of the past two days explaining to the media gathered in Northwest Arkansas for shareholders week the importance of grocery pick-up.
Wal-Mart showed off a new pickup and delivery truck model for its grocery pickup and delivery service in Phoenix and San Jose. The delivery truck is bi-functional in that is used in some markets for home delivery in Denver and San Jose, and in Phoenix it is now being used as a pickup site for online grocery orders.
Two weeks ago Wal-Mart began testing off-site pickup in Phoenix with the delivery truck parking in local business centers for two hours each week. The temperature controlled truck is segmented to keep frozen foods, refrigerated foods and items at room temperature. Just like with store pickup being tested in Phoenix, the off-site truck pickup gives shoppers another option for convenience.
Wal-Mart coordinates with area businesses to determine the appropriate times they will park the truck and set up a mobile pickup site. At the site customers pull up and are treated to a bottled water and snack while their online grocery order is retrieved from the truck and loaded into the customer’s car. During this test phase the retailer is trying to get a broad sample of customers to use the service through a reward-type system. First time users are given a welcome box with free sample products, while loyal shoppers are rewarded with a premium box of free items that can range from dog treats to snacks or health and beauty aids.
In Bentonville, Wal-Mart has offered referral cash and up to $10 discounts of first time orders of $50 or more in an effort to woo customers. Wal-Mart told the media Thursday (June 4) during a media tour that the feedback gleaned this far for users has been favorable. Bentonville’s pickup format, the only one of its kind in the country reports 90% of customers have rated the service 4 out of 5 stars.
In Denver, a curbside pickup in local stores in addition to home delivery have been under pilot testing for nearly two years. The company reports that 80% of its orders come from repeat customers. In San Jose, a home delivery service tested for two years reports that 75% of its customers choose Wal-Mart over competitors. Wal-Mart also recently expanded the store pickup for grocery in Phoenix and Huntsville, Ala.
Analysts have said Wal-Mart’s biggest asset is its possible distribution points, and the store pickup option looks like it may be more broadly utilized. That said Kieran Shanahan, vice president of operations for Walmart.com, said the truck off-site model takes advantage of someone else’s real estate and said it could be one way the retailer penetrates areas where land costs prohibit brick and mortar.
Ellen Martinez, operations manager for the Bentonville pickup grocery, uses customer feedback to tweak the items kept in inventory. She said there has been a conscious effort to add more organic produce in recent months because consumers have asked. The retailer did not tell the media how many items are carried in the Bentonville pickup format. One complaint of such options is item selection is not broad enough in some categories such as pet food or consumables. That is not an issue in the store pickup tests as Supercenters carry about 110,000 items in their stores.
Wal-Mart did not disclose how fast it may continue to roll out the grocery pickup noting that there are still lessons to learn and operations to perfect for the service rollout nationwide. The retailer did say this was the fastest it has pulled together a brand new format which went from concept to opening in 30 weeks and it was a cross functional project between grocery operations in Bentonville, @WalmartLabs and the technical team in Bentonville.
Shanahan said Wal-Mart continues to leverage its learnings from ASDA, its retail banner in the U.K., that has been delivering groceries to homes for 15 years. He said that market moved faster to delivery, while pickup there has lagged behind. He also said Wal-Mart is committed to giving customers choices and pickup grocery is one area where that Steve Bratspies, executive vice president of grocery, said Wal-Mart aims to win.
Sam’s Club also is working with @WalmartLabs on its own version of club pickup. Sam’s Club just unveiled mobile check-in at its clubs across the country that allows shoppers to place their order online before midnight, and then pickup in the club the following day.
In Bentonville, Sam’s Club is also testing drive-thru pickup using the same parameters. Club execs told the media on Thursday that the drive-thru pickup is gaining popularity. The local club has set aside an area with a covered drive-thru area. A shopper gets out of their vehicle comes into the club and signs for the merchandise which is loaded in their vehicle. At this time the mobile check-in is not linked to the drive-thru service being tested.
Sam’s Club also shared a glimpse into a new pilot coming soon which will offer a curbside pickup option attached to the mobile check-in application.