Walmart tests gas station grocery pick-up concept

By Adi Menayang contact

- Last updated on GMT

Photo: Walmart
Photo: Walmart

Related tags: Supermarket, Walmart

Retail giant Walmart opened its second grocery pick-up and gas station hybrid store in Thornton, Colo., where shoppers can pick up their online order as they fill up their tanks.

This second location joins the first one built in Huntsville, Ala., in April of this year. The stores are part of a string of ideas Walmart is testing as the world continues to digitize. This summer it announced it will pilot a delivery service using drivers from ride-share apps​ such as Uber, Lyft and Deliv.

Though there are only the two trial locations at the moment, Business Insider dubbed the concept as a ‘major threat’ to Amazon and Kroger​. “If expanded, they could make Walmart an even bigger threat to companies like Amazon and Kroger that are betting big on the growth of online grocery shopping,”​ wrote reporter Hayley Peterson.

Why at a gas station? Because it’s the US

IRI data suggests less than 5% of all food and beverage purchases come from the e-commerce channel, which is higher than prior estimates​, but IRI says more industry growth is coming from online shopping​. Walmart already rolled out free online grocery in-store pickup in several locations throughout the country, but according to Laura Kennedy, director of retail insights at consultancy firm Kantar Retail, there’s something especially American about the gas station concept.

“What has really caught on is the curb-side pick-up, because people are already out in their cars. It’s sort of a cultural thing,” ​Kennedy told FoodNavigator-USA. “There’s a pick-up window but it’s not the same as having to wait in your house for a certain time.”

She forecasts more promise of longevity for this concept than she did with Walmart’s Express small-store experiment, which the company admitted was a failure​ at the beginning of this year.

“Shoppers were basically using it in the same way they would use a Neighborhood Market (30,000-40,000st ft), and Walmart couldn’t seem to figure out how to get the merchandising right, so you’d see 40lb bags of dogfood and products that didn’t make sense for a format that is supposed to cater for a different kind of shopping trip,”​ Kennedy said in a previous interview about the Express stores.

Is there a future for online grocery shopping?

A survey of 1,000 consumers conducted by TABS Analytics found that just 4.5% of Americans regularly purchased food and beverages online​, whereas other product categories have shifted online much more rapidly.

“For the fourth year in a row, consumers have turned their backs on buying groceries online no matter how much online grocery retailers try to entice them—69% of consumers never buy groceries online”​ said CEO Dr Kurt Jetta of TABS Analytics.

“With only 15% of consumers stating loyalty to shopping for groceries online, this is not a sustainable business model, especially when you consider the industry loyalty rate benchmark is 70%.”

But the numbers have only sparked entrepreneurial juices to flow. From Chef’d to UberEats to AmazonFresh, start-ups are neck-to-neck with established companies in outdoing each other for carving up space​ in the online food and beverage sector.

Kennedy pressed that she sees Walmart's two new concept stores as a trial to keep tabs on. “For some retailers, opening two of something, it would be significant, but Walmart has 4,000 stores, so for something to make a significant impact it takes time.”

“But I think they’re seeing a lot of success from the pick-up model,” ​she added. And while the retailer has launched an online home delivery service back in 2011 in a couple of US cities, she thinks the gas station has an edge for the US market. “Delivery works better in I think the UK, and Europe, because it’s a densely populated part of the world. Here in the US it hasn’t caught up enough unless you live in an urban area—If I had to pick right now an online grocery model that the consumers have embraced more, it’s the curb side model.”

Related topics: Markets

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