Will the newest Walmart c-store concept be the one that sticks?

Discussion
Image: Walmart
Dec 15, 2016
Matthew Stern

News of Amazon Go has been reverberating around both the tech and convenience store worlds in recent weeks. But another major player is making a big, albeit more conventional, new move into c-stores. Walmart has been piloting a new c-store concept in two cities.

The chain has opened locations called Walmart Pickup and Fuel in Huntsville, AL and Thornton, CO, according to Convenience Store Decisions. And while the concept’s branding make it sound more like a traditional truck stop than the futuristic Amazon Go, Walmart’s new store is not without an omnichannel bent. Walmart Pickup and Fuel locations allow customers who are shopping for groceries online to pick up their orders the same day at each location. Groceries are bagged at an adjacent Walmart Supercenter and loaded into the customer’s car at the Pickup and Fuel location. This is in addition to the standard grab-and-go c-store offerings.

Walmart’s latest attempt at cracking the c-store market comes in the wake of a recent c-store letdown. Beginning in 2011, Walmart began piloting its Walmart Express c-store concept. In 2016, the retailer announced the closing of 154 stores including 102 Walmart Express locations, effectively killing the concept.

Criticisms of the Walmart Express concept were numerous, as reported earlier this year on RetailWire. Some noted it having a product selection that catered to a traditional suburban Walmart audience rather than an urban one. Others suggested its supply chain was not suitable for a concept the size of a c-store.

Walmart is not the only big box chain to pilot smaller concepts recently. Target, for instance, has rolled out small format stores throughout New York City and New Jersey with more localized assortments meant to cater specifically to urban shoppers. Lowe’s Hardware launched two high-tech, small format stores in Manhattan geared towards urban home improvement needs.

It’s not clear whether Walmart will attempt to use Pickup and Fuel to court urban audiences the way others have. After all, the concept has “Fuel” in its name, which suggests this Walmart c-store incarnation is not targeted at urbanites, many of whom tend to use public transportation.

DISCUSSION QUESTIONS: Can Walmart succeed in breaking into the c-store market with Walmart Pickup and Fuel? Will the way this concept is structured remedy the problems that led to the closure of its previous attempts in the c-store space?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Picking up groceries and getting gas at the same time is convenient. But is it more convenient than ordering Peapod and not leaving your house at all?"
"...if the goal is to reach older Millennials and younger Generation Xers the concept is going to need a fresh brand image."
"The first question in my mind: “Is the typical Walmart customer one who wants to buy their groceries online?”"

Join the Discussion!

18 Comments on "Will the newest Walmart c-store concept be the one that sticks?"


Sort by:   newest | oldest | most voted
Meaghan Brophy
BrainTrust
Meaghan Brophy
Senior Retail Writer
2 years 11 months ago

I really don’t think so. Walmart is known for their Supercenters, and that’s going to be a tough box for them to break out of. Many consumers don’t associate Walmart with grocery shopping. Walmart already offers online grocery pickup at many of its stores, and the concept really hasn’t taken off for them. With the new Pickup and Fuel stores, Walmart has to pack the groceries at a nearby Supercenter then transport them over to the Pickup and Fuel store. They’re creating a logistical nightmare for themselves that will have very little return. Sure, picking up groceries and getting gas at the same time is convenient. But is it more convenient than ordering Peapod and not leaving your house at all?

Jasmine Glasheen
BrainTrust
Jasmine Glasheen
Principal Writer & Content Strategist, Jasmine Glasheen & Associates
2 years 11 months ago

Although c-stores are on the upswing, I don’t see Walmart’s expansion becoming very popular without a proper rename and marketing campaign to go along with it.

Since Walmart recently failed with the c-store concept, they could instead use the Jet nameplate for their newest attempt. Jet is associated with fast and mobile service and the brand doesn’t carry with it the negative associations Walmart itself has garnered over the years.

The term “Fuel” could refer to gas or to grocery, so I wouldn’t rule out the idea of Walmart targeting young urbanites. However, if the goal is to reach older Millennials and younger Generation Xers the concept is going to need a fresh brand image. The mini-Walmart in the above image isn’t going to do it for younger demographics.

Shep Hyken
BrainTrust
There is a reason it is called a convenience store. Because it is convenient! And the plan that Walmart is implementing is all about customer convenience. Short of delivering the groceries to the door, this is the next best thing. And, if Walmart is smart about how they go about it, their people will deliver friendly service (smiles, attitude, etc.) which translates to a human connection. That could help garner a little “loyalty,” when the customer sees his or her favorite employee on a somewhat regular basis helping and thanking them for doing business with Walmart. The one thing that would concern me is how easy (or not) it is to get in and out of the parking lots of these stores. Many times the stores are located in Walmart parking lots which mean a little more traffic (and inconvenience) compared to a typical convenience store parking lot and drive-up. While I can’t predict if this concept will work, this concept is more viable and accepted than even a year or two ago. Many consumers… Read more »
Dick Seesel
BrainTrust

I give credit to Walmart for effort, but they continue to struggle with small-store formats. Didn’t they announce recently that they were shutting down Walmart Express and the food-only stores? Do they feel there is space in a crowded c-store market for something only marginally different?

From an execution point of view, a c-store pickup point for BOPIS purchases at a nearby Supercenter is ripe for error. What if those fresh groceries and frozen foods aren’t shuttled promptly from the full-size store to the nearby c-store? What if they are mishandled in some way, or allowed to thaw? Frankly, Walmart would be better off perfecting its omnichannel practices (especially BOPIS) in its core stores before rolling out a new concept.

Adrian Weidmann
BrainTrust

If Walmart can offer automotive fuel at reduced prices they’ll have an edge. The convenience store aspect of this concept could address a number of emerging opportunities. Providing click and collect (BOPIS) lockers and/or service for online purchases (and returns), prepared foods and locally relevant products could all be addressed through this concept. Walmart IS a logistics company and with the recent acquisition of Jet to amplify their online service, a convenience store concept could provide a physical presence for Walmart in non-rural locations.

Richard J. George, Ph.D.
BrainTrust

They may be called c-stores, but for Walmart it is another “final mile” option. Since omnichannel is about customers, not channels, convenient pickup is a desired attribute. There no doubt will be logistical hurdles to overcome. However, if executed properly this may become the impetus for other c-store chains, acting as mini-depots, to consider partnering with local retailers. By offering one-stop pickup for its customers, there exists the potential for additional c-store purchases in the process.

Manmit Shrimali
Guest

I don’t think so. They are targeting to fix something which is really not broken. This is the classic example of misjudging how and why consumers buy.

Jim Prewitt
Guest

The issues that plagued their earlier attempts are the same challenges facing their newest c-store effort. Will they get the mix right? Customers are using the c-store and other small formats to “top off” their grocery needs, with the small formats moving to fresh and prepared foods much the way c-stores are used in the rest of the world. Can their supply chain support the small-format store? Low-efficiency piece pick is not their typical model. The wildcard is click and collect. Their remote pickup locations are expanding and the merging of the two will be interesting to watch.

Mel Kleiman
BrainTrust
2 years 11 months ago

After the prototype announcement from Amazon, this just looks another convenience store. My question, is other than having the Walmart name on the door, what will make it different?

In the past I think most c-store operators would be shaking in their boots. I think the great operators are going to see this as another competitor, but one that will be manageable.

Lee Peterson
BrainTrust

The most difficult factors for big box companies that try to open smaller formats are logistics and organization. I know that sounds really boring, but it’s positively major. Think of it — no smaller docks with no pallets, smaller trucks, smaller shipments, boxes, etc., all of which flow back to the manufacturers in China and associates in the warehouses and stores, on and on. Their entire system is set up for huge stores, including every aspect of HR, operations, merchandising, purchasing, marketing, etc. So here’s the question: is this a separate company with completely separate all-of-the-above? I doubt it. So how’s this going to work?

The other huge factor is, how many smaller stores does it take to get to the revenue of ONE big box? Ten? Twenty? In other words, it’s just not going to move the needle the way they’re used to moving the needle (with much less effort). Another question: do they have the patience to get to 1,000 stores to create true growth? I guess we shall see.

W. Frank Dell II
BrainTrust

The more successful convenience store operators changed their approach years ago. No longer is the selection mostly collecting dust. The beer, cigarette and snack categories that built the convenience stores have declined while prepared food has increased.

Walmart appears to want to increase volume through its Supercenter by picking customer orders and delivering to a pickup point. Even with Walmart’s highly efficient logistics system, associates picking customer orders will never be cost effective. Doing a correct cost-assessment, every item picked has a negative net profit. This is why having associates walk a supermarket and pick orders for home delivery is never profitable. So volume goes up and profit goes down. Walmart will change the format as it will not be successful longer-term.

Martin Mehalchin
BrainTrust

Amazon Go is launching in the heart of a big city and seems aimed at Millennials and the tech savvy. This Walmart format sounds much more like a suburban or even ex-urban concept. The US is a big market with many different types of consumers so both formats could find their fans and convert them into core consumers.

Lee Peterson brings up some great points above. Pickup and Fuel could find a consumer base and still fail because of the organizational, logistical and cultural issues surrounding the launch of a new concept inside a behemoth the size of Walmart.

Jeff Hall
BrainTrust

The first question in my mind: “Is the typical Walmart customer one who wants to buy their groceries online?” I’m not convinced they are, or do, and so the downstream behaviors of them then driving to the c-store to have their groceries loaded into their vehicle really comes into question.

I have confidence Walmart can operate c-stores and do just fine. I just really question if their customer base is looking for the grocery BOPIS service. According to today’s poll, half of the respondents doubt this concept will see continued growth.

Craig Sundstrom
Guest

Will this succeed any more than their previous small store efforts? I see nothing to suggest why. The country is already well served with both c-stores and gas-stations, and I don’t see Walmart bringing anything new to this already crowded field.

Steve Montgomery
BrainTrust
I believe this is an interesting test, but not likely a long-term business for Walmart. The concept of having fuel very much ties into the c-store concept. Adding the available of extra product available from a nearby Walmart is also a plus. So where are the negatives? Although not everyone will see them the same way, here are my thoughts. The items purchased from Walmart have to be paid for online, otherwise they would have be removed from the bag and rung up and then re-bagged. As has been pointed out, this may not the typical Walmart shopper’s modus operandi. Buying “blind” is not an issue if buying a known brand. However, with perishables and it gets more interesting. True, buying sight unseen is true for any home delivery, but these have to be stored at the c-store and handled properly there with produce separated from the frozen items. If not picked up that day, they have to keep overnight and again handled properly. This process requires the separate bags be located quickly and the… Read more »
Jeff Sward
BrainTrust

It’s a great idea, and I agree with many of the caveats and call-outs mentioned. But, it’s a great idea, and therefore deserves to be tested and sorted out. I am reminded of putting banks and dry cleaners inside grocery stores. CONVENIENCE. Genuine respect for the customer’s time. One of my favorite all-time mergers is FedEx + Kinko’s = FedEx Office. Tough to argue with efficiency and convenience. Yes, lots of room for error. The logistics are messy. But a tip of the hat for the effort.

Ken Cassar
BrainTrust
Ken Cassar
Vice President, Research, Shoptalk
2 years 10 months ago

Walmart is doing exactly what it should be doing to learn into this space. Gas is a terrific traffic driver, especially if it’s aggressively priced. If I can gas up, pick up groceries to tide me over for a few days and grab a cup of coffee in one stop, it could be a major convenience. Could be a great value option in the suburbs for moms on the go, especially. Kudos, Walmart! Keep on experimenting — do it quickly and look to scale quickly when you find the right model(s).

gordon arnold
Guest

Convenience stores are money makers and will remain so for the long term. The issue is finding a way to put a big-box mentality into a gas and go market. This is why Walmart is bleeding profits without return. I suspect they are too big to flourish and expand in the land of profit-taking small foot prints.

To make this easier, they need sales and marketing to run this instead of operations. Step one is to quickly get an effective retail sales and marketing — not merchandising — team put together. Step 2 is to focus on the results of step one and nourish and grow the team as needed for this and future ventures. Operations is there to support the stores for the customers’ needs, not to tell the stores and customers what they want.

wpDiscuz
Braintrust
"Picking up groceries and getting gas at the same time is convenient. But is it more convenient than ordering Peapod and not leaving your house at all?"
"...if the goal is to reach older Millennials and younger Generation Xers the concept is going to need a fresh brand image."
"The first question in my mind: “Is the typical Walmart customer one who wants to buy their groceries online?”"

Take Our Instant Poll

How likely is it that Walmart Pickup and Fuel locations will expand throughout the U.S. over the next five years?

View Results

Loading ... Loading ...