Pickup with Fuel Isn't Just About Going Small Or Digital
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Wal-Mart’s Multi format Gamble Pickup With Fuel isn’t just about going small or digital— it’s a sign of our omnichannel future BY SAMANTHA OLLER, GREG LINDENBERG AND STEVE HOLTZ 32 csp March 2017 March 2017 csp 33 wise man once said, “Most large He countered Click-and-Collect, Step by Step organizations embrace the idea of that claim with Wal-Mart’s pickup service combines online ordering with outdoor kiosks to maintain a smooth flow invention, but are not willing to suffer the Amazon Go, for customers. Here’s how it works: string of failed experiments necessary to an 1,800-square-foot get there.” ¶ That man, Jeff Bezos, c-store that offers founder, chairman and CEO of Amazon, food, grocery and has a name synonymous with retail the ability to pay 1 Create an online disruption. He poses his company’s “outsized returns”— without a checkout account and place your order, anything $107 billion in sales, according to Forbes—as the result of betting line, currently in from fruits and vegetables to shoes against conventional wisdom. ¶ Most recently, this includes the idea test in Seattle [CSP— or a lawnmower. Pay online and that an e-commerce retailer doesn’t translate into brick and mortar. Feb. ’17, p. 28]. reserve a time slot for pickup. or traditional brick-and-mor- tar retailers, news of Amazon A Small-Format Tour Go—and rumors of 2,000 oth- Jan. 2011 er small-format stores in the Wal-Mart has a history of Wal-Mart on Campus works—must feel reminiscent of tinkering with formats to meet Size: 2,500-4,100 square feet that famous scene from the horror 2 competitive threats, whether Description: Traditional film “The Ring,” when the malev- Pull up to a kiosk at it be discount supermarkets neighborhood c-store on or near a olent long-haired girl climbs out the Wal-Mart Pickup such as Aldi and Trader Joe’s, college campus, without fuel of the TV. Not only is Amazon With Fuel store at or online interlopers such Status: Five stores defining the shopping experience the appropriate time, as Amazon. online—and resetting customers’ then enter your name expectations along the way—but or order number into March 2011 now it’s attempting to do so on the kiosk. You’ll be Wal-Mart Express the street. And with each move, directed to one Size: 10,000-15,000 square feet it is driving to become the truest of three pickup bays. 1998 Description: Small-format stores convenience retailer, meeting Wal-Mart Neighborhood Market offering groceries and limited consumers wherever they want Size: 38,000-45,000 square feet assortment of merchandise, some to buy and with the fastest transaction. Description: Medium-format stores with fuel The retailer has more than “There have been retailers in the past offering groceries, some with small, Status: All 102 stores closed 650 Neighborhood Market that have tried to steer consumers into cer- freestanding c-stores with fuel and sold or converted; format locations in 31 states. Ftain solutions that were easier and more Status: More than 650 stores in discontinued profitable to execute,” says Carol Spieck- 3 31 states erman, president of Spieckerman Retail, a Your order will Bentonville, Ark.-based retail consultancy. be delivered and 2014 April 2016 Amazon has blown this up by deferring to loaded into your 2008 Wal-Mart to Go Wal-Mart Pickup With Fuel the consumer. “Now [retailers are] realiz- car by a Wal-Mart Wal-Mart Marketside Size: 5,200 square feet Size: 4,000 square feet ing if they don’t offer convenient choices, associate within Size: 16,000 square feet Description: Traditional c-store Description: C-stores and online they can be left behind or shoppers will go a five-minute Description: Medium-format stores with fuel order pickup sites with fuel elsewhere.” window. (No tipping offering groceries Status: One store, Status: Two stores, in Madison, Ala., This includes the world’s largest retailer, allowed.) And you’re Status: Wal-Mart closed the four in Bentonville, Ark. and Thornton, Colo. Wal-Mart Stores Corp. With $482.1 billion in on your way. locations in October 2011. worldwide sales, the Bentonville, Ark.-based 34 csp March 2017 March 2017 csp 35 chain of 5,000 U.S. stores dwarfs Amazon in sheer size. But with only 2.8% share of THE FEARLESS e-commerce sales, according to eMarketer, Wal-Mart is a very distant second to Ama- TESTER zon online, which commands more than ezos may seem boldly willing to 74% share. fail, but Wal-Mart’s way ahead of And increasingly, when asked to choose him. It has cycled through more where to shop, consumers are picking on- than a half-dozen medium- and line—and they’re picking Amazon. small-format concepts in the past “[Amazon’s] taking trips out of shoppers’ two decades. It is quick to drop Clickbait portfolios,” says Laura Kennedy, director of those that fail to meet its goals— retail insights for Boston-based Kantar Re- such as Wal-Mart Marketside and tail. Half of Amazon Prime members shop Wal-Mart Express—and to invest with Amazon before another retailer, ac- in those that do, such as Wal- cording to Kantar Retail. And based on the Mart Neighborhood Market, with 76% firm’s penetration data, Amazon is about to more than 650 locations. (See Amount of shopping trips pass Wal-Mart as the most shopped retailer sidebar, p. 34.) that begin online in the United States. “Wal-Mart’s main challenge is that they It’s forcing Wal-Mart to question its dif- Bhave yet to come up with a model that pro- ferentiation, which can no longer be just vides the returns of a Supercenter. All of about everyday low price. “What is Wal- these efforts are part of this,” says Neil Mart’s unique role with shoppers?” Kenne- Stern, senior partner with retail consultancy dy says. McMillanDoolittle LLP, Chicago. This chal- 55% Of course, Wal-Mart did not get to be lenge has only grown as Wal-Mart’s efforts Amazon’s share of product the largest retailer in the world by playing it to expand Supercenters into urban markets searches on retail sites safe. To broaden its online presence, it has have met with fierce local resistance. “It is been acquiring e-commerce players such critical that they solve the puzzle of urban lo- as Jet.com and Shoebuy.com. And to make cations and nontraditional locations if they shopping more convenient, Wal-Mart has are to continue to find growth.” been expanding its buy online, pick up in- Ben Bienvenu, a research analyst for Ste- store (BOPIS) efforts, most recently with phens Inc., Little Rock, Ark., sees Wal-Mart 21% Wal-Mart Pickup With Fuel, a combination Pickup With Fuel as an outgrowth of the Amount of households in c-store, gas station and click-and-collect lo- chain’s February 2016 decision to end its 2015 that bought groceries online cation, currently in test. partnership with Murphy USA on new fuel- in the past 30 days As these two giants duke it out, other re- ing locations. Up until then, Murphy had built tailers need to be ready to learn, and to ride 1,100 gas stations on Wal-Mart Supercenter the wave. lots, with about 50 left to build. Wal-Mart has “Wal-Mart is in a very dynamic mode, about 200 of its own private-branded gas sta- and they’re making some big, big bets,” says tions today [CSP—May ’16, p. 28]. Spieckerman. “When Wal-Mart does that, it “Wal-Mart wanted to have flexibility,” 9% always creates disruption.” says Bienvenu. “They recognize fuel is es- Amount of North American sential to complete the basket and drive traf- respondents to Nielsen’s Connected fic and loyalty, and it has been a big success Commerce Survey who have factor for Kroger. So they’re trying to find the purchased fresh grocery online right balance.” “It’s got all the stuff Wal-Mart Pickup With Fuel’s very name suggests the retailer is making an effort you usually see to find a winning e-commerce/brick-and- in a [convenience mortar combination—and with it, satisfy the store], but they’ve modern consumer’s every desire. The com- 5.3% vs. 7.0% pany opened its first location in Madison, Wal-Mart customers who shopped maintained Ala., in April 2016, with the second following for groceries via a desktop or laptop in November in Thornton, Colo. computer within the past 30 days Wal-Mart prices. In a recent visit to the Colorado location, (September 2014 vs. January 2016) That’s huge.” CSP saw a c-store design as modern as any of Sources: IRI; Bricks to Clicks; Nielsen; Prosper Monthly Consumer Survey March 2017 csp 37 during his visit, was won over. “This is the best idea Wal-Mart has ever done,” says customer Aaron Cherry. Living within a mile of the store, Cherry says he watched the construction of the site progress and was excited when he saw the Wal-Mart brand go on the store. “It’s the prices,” he says. “It’s got all the stuff you usually see in a [convenience store], but they’ve maintained Wal-Mart prices. That’s huge.” PICK IT UP ut what makes this concept dif- ferent from the company’s earlier c-store concepts is the ability to Convenience plus big-box low prices: Wal-Mart’s new format may be a powerful combination.