Wal-Mart testing free grocery pickup at new c-store formats

Dive Brief:

• Wal-Mart is developing and testing convenience stores offering free, same-day online grocery pickup.

• Non-grocery orders can also be picked up at the Walmart Pickup and Fuel outlets, though not the same day, according to the Denver Business Journal.

• Wal-Mart is testing the concept at pilot locations in Huntsville, AL and Thornton, CO.

Dive Insight:

These convenience stores, which include fuel pumps, offer “grab-and-go" items like sandwiches, snacks and coffee as well as grocery basics like bread, eggs and milk — the usual c-store fare — and are open from 5 a.m. to 11 p.m. daily. But the pilots are making news because patrons can also pick up online grocery orders: Items purchased before 1 p.m. can be retrieved after 5 p.m. the same day, according to Business Insider. Wal-Mart employees will pick and pack online grocery orders from the Wal-Mart nearest the convenience store, bring them to the pickup area in refrigerated trucks, and load them into customers’ cars for free.

While Amazon is poised to introduce small brick-and-mortar convenience stores of its own, the stores are targeted exclusively to members of its Prime Fresh food subscription service, which requires a $15 per month membership fee on top of the retailer’s regular $99 annual Prime membership cost. Kroger, another grocery chain that offers pickup of online orders, charges about $5 for the service.

But the service introduces a level of inefficiency and cost that is not natural for Wal-Mart, which has thrived as a big-box retailer guaranteeing low prices on massive amounts of merchandise on brick-and-mortar store shelves.

In fact, Wal-Mart’s biggest worry when it comes to grocery may come from no-frills grocery chains like Aldi, Lidl and Trader Joe’s, which have eschewed most online operations in favor of small stores and limited selections at prices that beat Wal-Mart by as much as 30%. Faced with stiff competition from such stores in the U.K., Wal-Mart’s Asda grocery unit halted its own click-and-collect grocery operations in order to cut costs.

“If I ran Wal-Mart, I would be much more concerned about [Lidl coming to America] than about Amazon,” Nick Egelanian, president of retail real estate consulting firm SiteWorks, told Retail Dive earlier this year.