Walmart expands test of pickup-only grocery store concept

Discussion
Developer rendering of proposed Walmart pickup-only location, Lincolnwood, Ill
Oct 01, 2018
Tom Ryan

Walmart is seeking approval to open a pickup-only grocery store in a former Dominick’s store in the suburbs of Chicago in spring 2019.

Standalone pickup facilities have been tested near Walmart’s headquarters in Bentonville and with a location in Metairie, LA, but the proposed facility — called Walmart Pickup — appears significantly larger at 41,700-square-feet.

Shoppers will order groceries through Walmart’s website or mobile app and arrive at an assigned canopied bay in the parking lot at the specified time to pick up their purchases. The primary focus will be on groceries, although customers will be able to order other products and have them delivered to the location in Lincolnwood for free pickup.

Walmart predicts the number of pickup trips at this facility, which includes 24 stalls, will be about 180 per hour or 1,960 daily, according to Supermarket News. The retailer will also make home deliveries from the site — an estimated 30 per day. Thirty to 40 employees are expected to run the facility.

Walmart spokesperson Ann Hatfield told the Chicago Tribune the proposed facility gives customers “yet another location close to where they live or close to where they work where they can go online, order their groceries and pick it up at this location. They don’t have to get out of their car.” 

Walmart has significantly ramped up investments in pickup and delivery options. At the end of Q2, Walmart U.S. had more than 1,800 grocery pickup locations, more than 320 stores offering grocery delivery and more than 325 pickup towers, which focus on general merchandise. Grocery delivery is expected to reach 40 percent of the U.S. population by year-end.

Surveys show that consumers prefer outside pickup. It is also thought that the pickup-only concept addresses perishable item challenges, out-of-stock risks and inefficiencies from having associates fetching orders across store aisles.

In a similar experiment in mid-September, Walmart opened a second grocery pickup kiosk next to its superstore in Sherman, TX that enables customers to pick up orders without having to interact with a store associate.

DISCUSSION QUESTIONS: Do separate pickup-only facilities make the most sense for grocery? Does fulfilling grocery pickup through stores face too many execution issues?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"This is definitely a positive for the consumer, but the question remains as to whether there will be enough traffic to make this profitable for Walmart."
"Click-and-collect models, when picked from stores, can become disruptive if they’re “too successful.” "
"The key to making this work will be if the back-end logistics work for Walmart (and will most likely manifest for the shopper if perishables are done well)."

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17 Comments on "Walmart expands test of pickup-only grocery store concept"


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Shep Hyken
BrainTrust

Does it really matter where the customer picks up their groceries, as long as it’s convenient? I don’t think so. And if it also makes logistical sense for the retailer, then it’s a win/win.

Art Suriano
BrainTrust

I can see the benefit of free-standing pick-up facilities. However, I would rather see this concept offered where there is a Walmart store for those spur-of-the-moment shoppers who realize once there that they needed something.

My concern which I’ve stated before with all the home and pick-up delivery opportunities that retailers and grocers are developing is that not many of these companies are thinking about the long-term problems when they have successfully kept all their customers out of their stores. Delivery is expensive, cuts into their margin and they lose out on impulse buying. It is essential that they address customers’ needs, so home delivery is necessary, but the goal should always include incentives for keeping customers coming into their stores, which is a more natural way to increase sales.

Bob Amster
BrainTrust

I think it’s a challenge. While – from a customer service perspective – it is a good concept, the idea creates a number of execution challenges, not the least of which is managing the movement of inventory into these pickup locations in a timely fashion. The positive side is that Walmart has certainly lead the industry in logistics and, therefore, may be the one company that can execute.

Neil Saunders
BrainTrust

This has been around in the U.K. for almost 18 years; over there, the outlets are known as dark stores.

The concept works if there is a significant amount of volume. The theory is that it is much more efficient to fulfill from a dedicated center than from existing stores, where operations and stock levels can be severely disrupted by too much online order picking and collection.

Volume is key, however. Sainsbury’s, which was the first U.K. grocer to open such a facility, subsequently closed it down as there was not enough volume to justify the operation. Because of this, most dark stores tend to be in areas of high population density and undertake a mix of collection and delivery services.

Jeff Sward
BrainTrust

Good insights. I was having trouble imagining a store where they didn’t want customers inside. Testing and experimenting sorts out real life from guessing. A critical mass of volume makes the pickup store viable and customers who want to actually shop still have other choices. Makes sense.

Richard J. George, Ph.D.
BrainTrust

As noted, this is an expanded test which should allow Walmart the opportunity to gauge customer feedback as well as fine tune the logistics issues. I am still a fan of pickup at a store in which customers can access additional products, often impulse and high=margin perishable goods. However, if the customers prefer this delivery mechanism and Walmart can do so in an efficient and profitable manner, then bring it on.

Zel Bianco
BrainTrust

I’ve seen the one in Bentonville and although it that city is the headquarters for Walmart, the wide variety of venues showcase how this concept can work in other markets. Having options available for the busy shopper/consumer is smart and Walmart is smart to continue to test and modify as they continue to innovate. This also effectively solves the perishables challenge.

Michael La Kier
BrainTrust

There are three basic questions I always use to evaluate opportunities like the Walmart pickup idea. Does it make the shopper better? Does it help the shopper shop faster? Does it help them feel smarter? A dedicated grocery pickup makes the shopping experience faster and better. Ordering quickly and picking up on the way helps shoppers feel smarter. The key to making this work will be if the back-end logistics work for Walmart (and will most likely manifest for the shopper if perishables are done well).

Min-Jee Hwang
Guest

This is definitely a positive for the consumer, but the question remains as to whether there will be enough traffic to make this profitable for Walmart. The other risk for the company is the loss of impulse buys and the lack of a traditional Walmart onsite. We could see Walmart combining this strategy with their brick-and-mortar stores in the future to keep shoppers in-store.

Keith Anderson
BrainTrust

Click-and-collect models, when picked from stores, can become disruptive if they’re “too successful.” Opening standalone pick up points can be a good way to support online demand while minimizing the impact on in-store customers’ experience.

Andrew Blatherwick
BrainTrust

There is so much research at the moment that the data and information can be confusing and contradictory. Walmart says research shows customers prefer not to enter a store to pick up their grocery online orders, yet only a few weeks ago RetailWire reported research saying that 29 percent of consumers did not want their fresh foods picked for them.

There is a danger that if we move further down this track of pickup-only stores, we will lose the opportunity to sell to customers and gain additional sales through impulse purchases that take place when a customer enters a store. I am sure there is a place for pickup-only stores but would caution that they could reduce the overall spend on groceries. There is an art to retailing that creates impulse purchases and additional sales though smart merchandising and all this is lost if the consumer does not ever enter a store.

Doug Garnett
BrainTrust
10 months 21 days ago

Fulfilling through separate pickup locations is a marketing mistake.

Customers who choose to pick up are not “pickup only” customers. Rather, they are “pickup sometimes” or “pickup mostly” customers.

So rather than get their minds focused on remote locations where they wouldn’t shop, pickup should be at the store location — so that when customers think of “Walmart” they still think of a store.

This is especially critical in that pickup appears to be primarily a valid side-option — a way to build loyalty so that the more profitable store trips happen with YOUR brand and not a competitor. Moving that action away from the store is incredibly short-sighted.

gordon arnold
Guest
There are many stubborn issues with pickup-only build and execution. We can go on and on about these issues or simply try to work them out. The biggest concern should always be profitability and effective performance. The largest obstacle is how we have issued a created an impossible job out of customer satisfaction by mandating the objective over and above manageable limits. Within present day parameters automation with total customer satisfaction as synchronous objective is an unavoidable failure due to the unpredictable associated costs. The only solution is to openly inform the market what may be expected in the unlikely event of an unforeseen experience. Equally important is traffic management. This will require all new specifications for the store exterior expanding well into the surrounding street characteristics. I doubt there is much to work with here outside of airport and terminal studies. There is an imperative for the store units to be convenient. This will ultimately determine the success of these individual stores perhaps even matching or superseding location. We don’t want this whole new… Read more »
Rich Kizer
BrainTrust

Hold it. I re-read this twice. They did say 1,960 pickups per day, right? f assembling a pickup order takes only 10 minutes (and full orders will surely take more), they are going to need a lightning fast staff of pullers. And consider that all that business will be done in less than 18 hours a day. Everyday. That’s what I call an extended rush on steroids. But I love the concept, and can’t wait to see this one working.

Cate Trotter
BrainTrust

So many considerations here. The biggest being whether there will be enough traffic as there is nothing else to bring customers to the site — no regular store or other services — it’s pick-up only. So you need enough customers to make it worthwhile. Although naturally, this concept will be much cheaper for Walmart to run than a full-scale store. For customers it’s definitely a convenient option, but I wonder what the pick-up slots/hours are? On the one hand you don’t want to offer such a big window that you have staff standing about a lot, but on the other hand, convenience is going to be key here.

As a test concept though I like that they’re trying it. The other projects it’s doing with its behind-the-scenes robots and pick-up kiosks and click-and-collect towers suggests Walmart is doubling down on trying to work out what works and doesn’t work when it comes to alternatives to costly delivery. Even if this doesn’t pan out, they’ll learn from it.

Ananda Chakravarty
BrainTrust
Sounds like an ecomm. distribution center, with a drive up. Most sense for grocery? Not right now, and not confident about future use either. Lockers have failed to drive tremendous volume, and grocery shopping online is relatively still tiny. High frequency shopping and the need to select quality perimeter goods make this a convenience only option for customers in grab-and-go mode. Customer’s haven’t adopted pickup standards yet and facilities similar to Walmart’s are just being market tested. Stores lose valuable associate-customer engagement, impulse shopping, marketing, shelf revenue, and store branding. Right now, the volume isn’t there to justify operating costs. Concepts like perishables still aren’t addressed, although out-of-stocks might be. What you take out of the cash wrap still leaves gigantic store size locations (41k sq. ft.!) with the same operational needs as a typical store facility. With 24 drive-in bays for cars, any semblance of personalization vanishes and I doubt customers want to feel like a delivery truck driver pulling up to pick up a load. The separate grocery pickup facility sounds like a… Read more »
Susan Viamari
BrainTrust

To maximize convenience, the pick-up locations need to be where shoppers are. Pickup-only facilities have the potential for location-based convenience, and also offer a quick and easy in-and-out experience. I expect that we will see a combination of models (pickup-only and in-store pickup) going forward, particularly as retailers test various formats to find out what works best for their brand, location, and geography.

wpDiscuz
Braintrust
"This is definitely a positive for the consumer, but the question remains as to whether there will be enough traffic to make this profitable for Walmart."
"Click-and-collect models, when picked from stores, can become disruptive if they’re “too successful.” "
"The key to making this work will be if the back-end logistics work for Walmart (and will most likely manifest for the shopper if perishables are done well)."

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