Wal-Mart (NYSE:WMT) didn't invent online grocery shopping, and in fact, it was pretty late to the game. Very late, actually. Peapod has been successfully delivering groceries year in, year out for over two decades.
But it was the retailer's vast network of superstores around the country serving as regional distribution hubs that was seen as giving it an advantage over regional players like Peapod and even national ones such as Amazon.com (NASDAQ:AMZN), which decided produce could be shipped nearly as easily as books and electronics, but had to wait until it had its own national distribution center footprint established before it could take the plunge.
Who remains standing is still to be decided, but it turns out Wal-Mart's biggest impact on online grocery shopping may not be in delivery after all, but rather in pick-up.
Just as it pioneered the concept of "free delivery" for customers who were willing to pick up their purchased items in their local store through its ship-to-store program -- one that's since been emulated by retailers across the industry -- Wal-Mart is taking what it learned there and layering it over groceries, a move that could change the industry for good.
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Drive-thrus aren't exactly new, having got their start here in the U.S. during the Great Depression, though their most common use today seems to be in allowing us to conveniently buy fast food without having to get out of the car.
Using them for grocery shopping, though is still fairly unique, and the retail king's application of it in combination with online grocery shopping heralds what could be a new growth opportunity for supermarkets.
It was the U.K.'s supermarket giant Tesco (OTC:TSCDY) that really launched the drive-thru grocery pick-up market back in 2010 and today it offers the service at over 250 locations. The concept is spread across the continent so that even Wal-Mart's own Asda grocery store chain offers drive-thru services while as many as 20% of French grocery shoppers say they've used similar "click-and-collect" services.
Now it's spreading across the pond with Canada's Loblaw (OTC:LBLCF) unveiling a service up north and Wal-Mart doing so here in the U.S.
But because Wal-Mart will be applying what it's learned in the U.K. with what it knows about online grocery shopping, it will rapidly become the frontrunner in what is sure to become a widespread phenomenon representing the next growth phase for supermarkets.
Omnichannel marketing at work
In reality what we're seeing is Wal-Mart build out a range of shopping services for customers, allowing them to shop when they want, how they want, over whatever device they want -- in store, online, and over the mobile device of their choice.
Right now the rather unimaginatively named Walmart Pickup Grocery service is still in its infancy, being tested in just one location. But customers at the Bentonville, Ark. site can order and pay for their groceries online, and then set a pick-up time anywhere from two hours to three weeks later. There are some 10,000 different grocery and consumable items to choose from, including meat, dairy, and produce.
Wal-Mart built a dedicated warehouse for the online grocery shopping pickup service and constructed kiosks where the shopper can pull in to have an attendant load the groceries in the car.
According to an April report in The City Wire, the retailer noted the changing needs of its customers, saying, "They want and need more shopping options and we have the means to give them low prices, wide assortments along with value and convenience in a seamless shopping experience."
It's those "means" that has allowed Wal-Mart to become a leader in a broad range of services, even when it hasn't been first to market. Merely entering the field changes the industry dynamic. Its leadership comes from being willing to invest heavily in whatever space it enters to make the consumer experience easier and more convenient.
Doing whatever it takes
To a certain extent there's a bit of self-preservation involved. The grocery market is only getting more ruthlessly competitive and Wal-Mart has seen its sales remain sluggish for an extended period of time. As my Foolish colleague Travis Hoium suggests, it goes beyond just the usual business cycle or ebb and flow of the economy. It's endemic to the business itself. Thus the need to be all things to all consumers is an imperative.
Wal-Mart's rediscovery of online grocery shopping pickup services could lead to the retailer's renaissance though there are limitations to how far it can go. It says population density is key to proliferation and success.
Bigger is better
As Wal-Mart wasn't first-to-market with grocery delivery or even adoption of technological standards, its ultimate arrival meant the time had finally come for them to advance to the fore. Now that the retail king is widening the path blazed by others in pickup service, online grocery shopping is sure to become the norm and no longer a drudgery to be feared.