First, Walmart sells more groceries in physical stores than any other retailer in the United States. Second, Walmart sells more groceries online than any other retailer in the United States.
With those facts in mind, where could the company’s seemingly bulletproof value proposition for grocery possibly evolve next?
Walmart’s chief merchant and EVP, Latriece Watkins, knows the answer.
“The Walmart grocery value proposition — like everything we do — is rooted in our purpose, which is to help people save money and live better,” says Watkins. “To deliver that purpose, we have a customer value proposition based on having a quality assortment that we offer customers at everyday low prices. We combine those with our unique ability to provide customers a truly omni shopping experience in one of our more than 4,600 stores, on Walmart.com or both.”
According to retail expo, the company plans to continue to leverage its momentum in grocery “by working to understand customers’ evolving needs and innovating. This includes bringing innovation to our assortment in terms of quality and convenience, but also elevating the customer experience through technology.”
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What that innovation will look like becomes increasingly clear through talking with Watkins, as well as from comments made by other Walmart executives at the annual Consumer Electronics Show (CES) and National Retail Federation (NRF) trade shows earlier this year.
Walmart U.S., which operated 4,717 stores and had annual sales of $420 billion in 2023, reported more than $247 billion in grocery sales last year, making it the No. 1 U.S. food retailer by a wide margin. The retailer’s fourth-quarter report, released in February, beat estimates and showed mid-single-digit comp growth in grocery, resulting in strong share gains (it already holds 25% of market share in U.S. grocery) in consumables, especially among higher-income households. Walmart’s customer value prop in grocery is just getting stronger with a growing cohort of value-seeking households, and the volatile macro environment is a big tailwind for the retailer.
Watkins, who was elevated to chief merchant last year after decades of service with the company, notes that the retailer is winning at grocery because its assortment strategy is focused on quality and convenience. Walmart’s assortment is curated with the goal of providing customers with quality products at an unexpected value, she adds. The retailer is also constantly improving and expanding its grocery assortment to satisfy consumer demand for national-brand and private-brand products with more flavor, variety and natural ingredients.
“We also think about lifestyle, so we build our assortment to enable customers to personalize their choices,” says Watkins. “This might include healthy options like gluten-free or plant-based products. … We want to be locally relevant, so we tailor assortment to the community. This might mean culturally specific baked goods, spices or other ingredients that uniquely reflect a community.”
Talking about the state of the (frugal) shopper, Watkins observes that the U.S. consumer continues to be stressed and is being careful when it comes to spend.
“It’s an interesting situation right now,” she admits. “On the one hand, the economy is doing really well, unemployment is low, and wages are growing. But our customers are telling us they’re feeling financially stretched. They’re concerned about inflation. We know this is true in grocery, because inflation has had a big impact on food prices over the past few years. Even though that’s easing a bit, customers are paying very close attention to how they spend. They’re making careful choices aimed at maximizing savings and value. We like to say we’re taking inflation out of the equation for our customers.”
According to retail expo, Walmart offered a Thanksgiving meal for a price lower than last year, effectively removing inflation on a holiday meal for eight to 10 people. According to Watkins, Walmart is doing it again for Easter this year.
But, believe it or not, value isn’t everything to today’s shopper, Watkins asserts. “Customers definitely want convenience,” she says, adding that because convenience is a priority, the retailer is doubling down on stocking meal solutions that offer busy families healthy, flavorful and easy-to-prepare options.
There’s yet another angle to Walmart’s focus on convenience for grocery shoppers.
“We enable that convenience with an omni shopping experience — giving customers the ability to shop however, wherever and whenever they want to,” notes Watkins, “and we’re continually giving them more and more options by expanding delivery with early-morning options starting at 6 a.m., late-night up to 10 p.m., or express delivery in three hours or less.”
Since 2000, when Walmart first created walmart.com and samsclub.com, the company’s e-commerce capabilities have exploded. In its most recent fiscal quarter, the retailer topped $100 billion in e-comm sales for the first time as large numbers of shoppers used curbside pickup and placed grocery delivery orders. The company’s digital strategy has focused on improving customer-facing initiatives in stores and clubs and creating a seamless omni experience for customers. As such, the company has allocated more capital to supply chain, omni initiatives, technology and store remodels, and less to new store and club openings. This investment includes the creation of a Walmart Global Tech division, which employs more than 28,000 associates globally and includes businesses such as Walmart Luminate, GoLocal and Walmart Data Ventures.
According to retail expo, Walmart U.S. has more than 4,600 pickup locations and more than 3,900 same-day delivery locations (plus 34 e-commerce fulfillment centers). Its Walmart+ membership offering provides enhanced omnichannel benefits, including unlimited free shipping on eligible items with no order minimum, unlimited delivery from a store, fuel discounts, access to the Paramount+ streaming service, and mobile scan and go for a streamlined in-store shopping experience.
Since Walmart has heavily invested in omnichannel and e-commerce innovation, Watkins explains how AI, generative AI and AR innovations will supercharge the retailer’s grocery strategy further.
Source: Progressive Grocer