If you've been around the block a time or two, chances are you recall a time when you'd visit a couple of different locations to procure your food and essentials for the week.
You might visit a butcher shop for your meat, a produce stand for your fruit and veggies, a cheese shop and bakery for all those pantry staples, and a pharmacy for your prescriptions.
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Nowadays, however, that process has consolidated into a one store experience, and it's a toss up whether you even have to go in person to get your stuff.
Such a consolidation has been happening over time and was pretty inevitable; big corporate incumbents have been snapping up smaller mom and pop or regional access points for years now. If it seems like there are a lot more Giants, Krogers, Target grocery stores, or Walmarts (WMT) near town than there used to be, it's probably because there are.
But much of this change was ushered about even quicker during covid, when smaller regional businesses couldn't afford to stay open during hard economic times with decreased foot traffic. In their place came the Walmarts of the world, and customers happily obliged.
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After all, Walmart is the number one grocer in the United States –and for good reason. It's large enough to undercut most of its competition thanks to its massive footprint. It's able to control price fluctuations more effectively than smaller operations, and often runs rollback promotions intended to keep people coming back week after week.
Walmart keeps adapting
But even sales and large footprints aren't enough to keep Walmart on top. Plenty of other competitors, like Amazon (AMZN) , want a piece of the grocery pie. And Covid made the market ripe for such a disruption.
No longer were folks so loyal to brand names. With many stores closed, customers went online for groceries and got a lot of goods delivered. This meant one of the most central issues they were staring at was, in addition to quickness and convenience, pricing.
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At the time, most Prime members had access to free or cheap Whole Foods grocery delivery, depending on where they lived. So Walmart had to adapt; it quickly ramped up its online delivery capabilities for everything from sunscreen to pet supplies and everything in between. Walmart+ was born out of necessity – to compete with Amazon by giving customers free and fast delivery –but it also soared in success because it utilized Walmart's already robust brick and mortar presence as fulfillment centers.
Walmart tries to widen the grocery gap
Despite Amazon's best efforts, Walmart still reigns supreme in the grocery game, however. In 2023, Walmart claimed over 23% of grocery dollar share and $264 billion in grocery revenue – more than both Kroger and Albertsons combined.
But it's not resting on its laurels.
Walmart on July 10 announced it would add five new grocery distribution hubs across the United States in an effort to further bolster its dominance in the space.
The distribution facilities will be approximately 700,000 square feet on average and focus on automating fresh food deliveries, specifically for online customers – one of its largest growing cohorts. It saw a 22% rise in e-commerce sales in its most recent quarter and chalks a lot of that up to convenience and changing consumer habits.
These glitzy new hubs are also incredibly capable; each one boasts about double the storage capacity that a traditional storage hub offers, and thanks to its technological advances it also processes demand and volume in half the time it would ordinarily take. Robotic retrieval systems also largely replace human workers, which helps to cut down on fulfillment time, too.
Walmart has been outspoken about its automated distribution efforts, claiming it offers the gilded path to a profitable future. By 2026, it plans to have two-thirds of its stores with some degree of automation and 55% of fulfillment center orders done via automatic technology.
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