Retail giants continue to invest heavily in e-commerce

No retailer will say they have the answer to e-commerce yet, but they all know e-commerce is the answer to future sales.

Some shoppers prefer buying everything online, including food, while many others are slowly warming to it. There’s no scenario where consumers collectively buy fewer things online, so retailers are investing in different methods to meet this market demand.

This month several retailers made news with their e-commerce results and strategies.

Walmart
The biggest was the biggest retailer. Walmart’s third quarter financial report revealed 3.4% sales growth over Q3 last year, which was higher than Wall Street expectations, but it also showed a 43% increase in e-commerce sales, leading some analysts to suggest Walmart is holding its own against Amazon.

Walmart president and CEO Doug McMillon said in an official statement that the company is a leader in retail innovation, as evidenced by its increasing automation and the use of robotics, aggressively rolling out grocery pickup and delivery, and the use of blockchain for food safety.

Walmart has more than 2,000 locations with grocery pickup and plans to offer same-day grocery delivery in more than 800 stores by the end of the year.

Retail analyst Bill Bishop, chief architect and co-founder of Brick Meets Click, said the most interesting battle in retail is between Walmart and Amazon.

“Walmart is on the forefront, while 2018 was a reset year for Amazon,” he said. “The speculation is that 2019 will be a push year for Amazon. Amazon is doubling down and has to win in food to win in the b-to-c-world.”

Kroger
In mid-November, Kroger announced that its first automated fulfillment center with its British online grocery partner Ocado, will be based near its Cincinnati headquarters of Monroe, OH. Kroger previously said it plans to build 20 high-tech warehouses.

Bishop said Kroger’s huge technology investment shows they intend to compete strongly with Walmart and Amazon.

“Humans can pick about 60 items per hour, and automated systems can pick 500 to 600 items per hour,” Bishop said. “This is a dramatic improvement and would improve profitability.”

Instacart
Online grocery company Instacart is expanding its new click-and-collect service, Instacart Pickup. This national program comes after a pilot program, involving retailers in 25 metro areas and more than 200 stores in chains such as Aldi, Food Lion, Publix and Wegmans.

“We want to make grocery shopping effortless by helping our customers get the groceries they need from the retailers they love,” said Nilam Ganenthiran, chief business officer at Instacart, in a company statement. “Our customers want choice, and we’re excited to now offer the pickup option they’ve been asking for.”

Bishop estimated online grocery is about 5% of overall sales, and he expects it to rise to 8% in the next few years.

That’s solid growth, but a total shift in consumer behavior will take time. As with any new business plan, retailers need to make sure they give their efforts time to be evaluated and give consumers time to get comfortable with new ways of buying food.

Greg Johnson is Director of Media Development for Blue Book Services Inc.