As the fall shopping season prepares to settle into place, the race for the customer’s grocery dollars is getting more competitive by the day. Last week’s big headline was Amazon opening its first Amazon Fresh brick-and-mortar grocery store. And this week, Walmart fired back with a major shot of its own: the official launch of the Walmart+ subscription service, which should boost its grocery business.
But although Walmart had the big news this week, Amazon and Target both made moves to raise their grocery game, expanding their product lines and broadening their mechanisms for omnichannel service.
Here are the latest developments:
Walmart+ Takes the Field
After months of speculation, Walmart has officially launched Walmart+, its competitor to Amazon Prime.
More than just a move on the grocery segment alone, Walmart+ takes aim at the entire Amazon eCommerce empire with a slightly cheaper premium subscription service ($98 if you pay by the year versus $119 for Amazon Prime).
“Life feels more complicated than ever,” Janey Whiteside, Walmart’s chief customer officer, said in announcing the new product. “Walmart+ is designed to make it easier, giving customers an option to not have to sacrifice on cost or convenience. We know shopping should fit customers’ needs, not the other way around. We have always been a champion for the right item at the right price, but now it’s more than that. We have the right shopping solutions at the right time, too.”
Walmart+ customers will get free same-day delivery of grocery and eCommerce orders, plus quick Scan & Go in-store checkout via the Walmart app and a 5-cent-per-gallon discount on gas. The service will be available to U.S. customers on Sept. 15.
After a 15-day free trial period, customers can either pay for a full year of Walmart+ upfront or buy the service on a monthly basis ($12.95 per month, essentially the same as Amazon Prime’s $12.99).
Walmart had originally planned to launch Walmart+ in March, but COVID-19 caused a delay, as the chain had to focus on reformatting its operations to conform with health and safety standards.
The new premium membership’s launch follows Walmart’s rollout last year of Delivery Unlimited at 1,400 of its stores. That service allowed grocery customers unlimited delivery without having to pay a fee every time. Delivery Unlimited customers will now automatically become Walmart+ members.
The Walmart+ rollout comes as Walmart, the nation’s largest retailer by sales, attempts to protect and strengthen its “firewall” – a popular grocery business. Amazon is increasingly expanding its grocery capacity in an attempt to chip away at Walmart’s lead in the segment. The eCommerce giant recently reported that online grocery sales tripled year over year during Q2, prompting Amazon to increase grocery delivery capacity by more than 160 percent.
The New ‘Dark’ Whole Foods
Meanwhile, Amazon beefed up its grocery services this week as well.
While the big news last week involved the first Amazon Fresh physical location, Amazon this week worked that conversion backwards, deciding to open its first Whole Foods-branded “dark store” for delivery only.
USA Today reported that the new site in Brooklyn, New York won’t have a prepared foods department, nor any pick-up option for shoppers. Instead, all orders will go out for delivery via Amazon drivers or bike messengers.
Nicole Wescoe, Whole Foods’ Northeast regional president, told the paper that the new site could be a trial run for future “dark stores.”
“We're always evaluating ways to increase grocery delivery,” she said. “Delivery is here to stay. People like options and this is an option that they really love.”
Target Expands Private-Label Grocery Line
Target is using a new tactic to capitalize on the massive movement among consumers toward home-cooking and baking amid COVID-19. The retailer plans to add hundreds of exclusive food and beverage items that shoppers can only find at its stores and website, including a new premium line of goods under its Good & Gather Signature label.
The premium line will include about 60 small-batch Italian sauces, as well as gourmet pastas and pizzas and specialty coffees that cost $2.99 to $9.99.
Good & Gather, a private label launched last year, has already brought in roughly $1 billion in sales, according to Target. The latest expansion will give the brand about 2,000 items, making it Target’s largest in-house brand by assortment.
Stephanie Lundquist, the company’s president of food and beverage, told CNBC that the new items will hit Target’s shelves at a time when consumers “are looking for inspiration. They are looking for products and ideas that can help them, particularly with the dinnertime rut.”
“One of the things we’re seeing is they want to create ‘dinner moments,’” she said. “They want to create special moments, because they aren’t able to get out as much. And so, those inspiring solutions – paired with great value – are what they’re looking for.”
What will next week’s big winning grocery move be? And will there even be a “winner” as much as a class of winners defined by the advances that multiple retailers are making in the grocery landscape?
Tune in next week, with all of the latest advances covered here.