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If you've been in the business once or twice, you can probably remember a time when you visited a couple of different locations to purchase groceries and essentials for the week.
You can visit a butcher shop to buy meat, a produce stand to buy fruits and vegetables, a cheese shop and bakery to buy all those pantry staples, and a pharmacy to fill your prescriptions.
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Today, however, that process has been consolidated into a one-store experience, and it's anyone's guess whether you'll need to go in person to pick up your stuff.
This consolidation has been happening over time and was pretty much inevitable; large established corporations have been snapping up regional or smaller mom-and-pop store hotspots for years. If it seems like there are a lot more Giants, Krogers, Targets or Walmarts out there, (WMT) closer to the city than there used to be, which is probably why there is.
But much of this change happened even faster during the COVID-19 pandemic, when small, regional businesses couldn’t afford to stay open during tough economic times because of declining foot traffic. In their place came the Walmarts of the world, and customers happily obliged.
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After all, Walmart is America’s number one grocery chain, and for good reason. It’s big enough to outperform most of its competitors thanks to its massive footprint. It can control price fluctuations more effectively than smaller operations, and it often offers promotions aimed at keeping people coming back week after week.
Walmart continues to adapt
But even sales and a large presence are not enough to keep Walmart on top. There are many other competitors, such as amazon (amazon.com) They want a piece of the purchasing pie. And COVID-19 made the market ripe for such disruption.
People were no longer as loyal to brands. With many stores closed, customers were buying online and having many products delivered to their homes. This meant that one of the most important issues they had to consider was, in addition to speed and convenience, price.
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At the time, most Prime members had access to free or cheap grocery delivery from Whole Foods, depending on where they lived. So Walmart had to adapt, quickly ramping 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 offering customers free, fast delivery), but it was also wildly successful because it used Walmart’s already robust brick-and-mortar presence as distribution centers.
Walmart tries to widen the supermarket gap
Despite amazon’s efforts, Walmart remains the king of the grocery market. By 2023, Walmart had more than 23% of the dollar market share and $264 billion in grocery revenue, more than Kroger and Albertsons combined.
But he is not resting on his laurels.
Walmart announced on July 10 that it would add five new grocery distribution centers across the United States in an effort to further bolster its dominance in the space.
The distribution facility will average about 65,000 square meters and will focus on automating fresh food deliveries, especially for online customers, one of its fastest-growing segments. In the most recent quarter, the company reported a 22% increase in e-commerce sales, which it attributes much of to convenience and changing consumer habits.
These shiny new centers are also incredibly capable, each boasting roughly twice the storage capacity offered by a traditional warehouse center, and thanks to their technological advancements, they also process demand and volume in half the time it would normally take. Robotic retrieval systems also largely replace human workers, which also helps reduce fulfillment time.
Walmart has been outspoken about its automated fulfillment initiatives, claiming they offer the golden path to a profitable future. By 2026, it plans to have two-thirds of its stores with some degree of automation and 55% of distribution center orders fulfilled using automated technology.
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