Walmart to Expand Grocery Delivery as Convenience Battle Intensifies

If 2017 was the year online grocery pickup went mainstream, 2018 is shaping up as the year of delivery.

In the latest salvo, Walmart is expanding its nascent grocery delivery service, currently available in six markets, to 100 markets this year.

The move would bring Walmart delivery to roughly 40% of U.S. households and represents a bold new offensive to win convenience-minded shoppers. Walmart is hardly alone in the effort: Competitors Kroger and Aldi already announced major expansions of their respective delivery options this week in a pattern that resembles the expansion of "click and collect" announcements from companies such as Walmart and Kroger a year ago. 

Walmart officials Wednesday said the delivery service would offer groceries at the same prices they are in the store, and charge a flat $9.95 per-delivery fee for orders of more than $30. That’s less expensive in many cases than concierge services partnering with multiple retailers such as Instacart, and an alternative to the burgeoning offer from Amazon, which is in the process of adding free two-hour delivery from Whole Foods stores for paid members of its Prime loyalty program.

Competitors such as Albertsons, Kroger, Sprouts Farmers Market and Aldi in the meantime are expanding their delivery options through Instacart. Kroger earlier this week said it would add 25 new markets utilizing Instacart delivery this year to the two it currently serves. Aldi this week introduced Instacart service in the Chicago market, following what it termed a successful launch in three markets last year.

Related:Aldi Expands Instacart Service to Chicago

Kroger currently delivers from more than 872 stores across the country, and it offers 1,091 curbside pickup locations with plans to add 500 new locations in 2018.

"When you look at Kroger's customer coverage area for seamless shopping, two-thirds of our customers—more than 40 million households—have access to curbside pickup and/or delivery," said Yael Cosset, Kroger's chief digital officer, in a statement announcing the expanded Instacart service Tuesday. "Our goal is for these convenient services to be available to every customer."

Walmart's Sam's Club division late last month said it would utilize Instacart for delivery of the warehouse club's online grocery orders.

Grocery delivery still represents a small slice of the $700 billion U.S. grocery business. And though delivery poses challenges to profitability, it is expected to grow quickly as consumers demand additional convenience and “seamless” shopping experiences. Retailers are racing to win shoppers who use a combination of stores and online services, saying they tend to devote a greater share of their overall spend than shoppers who utilize only stores.

Walmart also operates grocery pickup service in 1,200 of its stores, and said it would add another 1,000 locations to that total this year.

“We’re saving customers time by leveraging new technology, and connecting all the parts of our business into a single seamless shopping experience: great stores, easy pickup, fast delivery, and apps and websites that are simple to use,” said Greg Foran, president and CEO of Walmart U.S., in a statement. “We’re serving our customers in ways that no one else can. Using our size and scale, we’re bringing the best of Walmart to customers across the country.”

Walmart said it would utilize its own employees to pick and assemble orders at stores, and contract driver services such as Uber and Lyft to fulfill them. The retailer said it employs more than 18,000 personal shoppers who must complete a three-week training program.

“Our commitment goes further than saving customers money,” said Tom Ward, VP of digital operations for Walmart U.S. “Ninety percent of Americans live within 10 miles of a Walmart store, and we serve more than 150 million customers a week, which gives us a unique opportunity to make every day a little easier for busy families. Today, we’re expanding this promise by helping even more customers save time and money without leaving their homes.”