Two interesting stories this morning that illustrate the delivery battleground on which Walmart and Amazon are engaging with customers.
From Bloomberg, a story about how “Walmart Inc. is testing dark stores, which resemble retail stores but are closed to the public, as a way to speed up deliveries.
“The company has opened one of these smaller warehouses in Dallas and plans to add another in Bentonville, Arkansas, where Walmart is based, according to people with knowledge of the matter who weren’t authorized to speak publicly. Walmart is exploring adding more locations, the people said.
“Faster delivery is a key priority area for Walmart, as shoppers are increasingly paying more to get their purchases faster. The dark stores aim to help the company cover a wider delivery radius and improve speed, as it seeks to better compete with Amazon.com Inc. and other digital giants … The new dark stores will carry some of the most popular items that shoppers buy, amplifying the reach of existing stores and bigger warehouses that fulfill orders. Walmart operated a handful of similar warehouses during the mid-2010s through the pandemic before closing them.”
Meanwhile, Amazon announced that it is “expanding Same-Day and Next-Day delivery to over 4,000 smaller cities, towns, and rural communities by the end of 2025.
“We’re investing over $4 billion to triple the size of our delivery network by 2026, with a focus on small towns and rural communities across the country.
“AI is helping us predict local customer preferences, so we can stock popular items alongside products curated for specific communities.
“This expansion is about transforming daily life for rural customers, who typically face limited delivery options when shopping online.”
And, the company said, “This expansion goes beyond speed. It’s about transforming daily life for rural customers, who typically live farther from brick-and-mortar retailers, have fewer product and brand choices, and face limited delivery options when shopping online.”
KC’s View:
It was just a couple a few weeks ago that Brick Meets Click came out with a forecast suggesting that e-grocery will be 17 percent of all grocery sales by the beginning of the next decade.
I certainly believe that – and in fact, am pretty much persuaded that it won’t take long to achieve 20 percent of total sales.
In part, that is driven by simple demographics – the center of the food consumer target is generational cohort that does not remember a time before Amazon. Clicking to buy is embedded deeply in their DNA.
But it also is being driven by investments like these being made by Walmart and Amazon that will drive penetration and adoption by making the experience more convenient and accessible.
This is a battlefield on which there will be collateral damage. There will be a lot of retailers for whom the top priority will be finding ways to not be part of the carnage.
Those efforts have to start now. Part of it will require figuring out how to offer differentiated e-grocery services that are not just me-too, but that reflect and even amplify a retailer’s brand. And part of it will demand raising the in-store game, creating compelling shopping experiences that go way beyond the warehouse-with-toll-booths approach that too many retailers adopt. (I’ve had a few retailers tell me that they believe, based on their own fleets and investments, this characterization is too harsh. But I think that some of these folks are delusional about how riveting their stores are.)
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