Retail stock Wal-Mart Stores Inc. (NYSE: WMT) has become a heavyweight in all corners of the consumer market. But those put off by sprawling Walmart supercenters and long walks around the store, take heart: The next category the king of retail wants dominate may actually cut down the mileage on your shopping cart.
That business is home grocery delivery, which Walmart may soon test via online sales in California. And after that, it may be coming to a store near you.
Obviously, the motivation for the move is all about profits. The fresh grocery delivery service, internally referred to as “Project Titan” according to Bloomberg reports and not finalized by management, would be a serious e-commerce push for Walmart. As more consumers take to the Web – filling the coffers of Amazon.com (NASDAQ: AMZN) and other online retailers – the brick-and-mortar model of WMT is threatened in the long term.
Walmart already has a foot in the door, with experience with grocery sales and delivery via its British retail subsidiary Asda. So this is a natural next step. The company has made a big push into its online presence, including free shipping for holiday orders last Christmas, and grocery delivery in urban areas is a natural addition to the e-commerce model.
- Related Article: Will free shipping deal become permanent at Amazon.com?
What’s more, big cities are the perfect test market — not just because of large population density to make the deliveries more efficient and cost effective, but because Walmart remains focused on American suburbs and rural areas. This is effectively a way to get the retail behemoth into a new marketplace, where it’s gigantic stores just won’t fit.
Sales at U.S. Walmart stores topped $260 billion in its last fiscal year that ended Jan. 31 – so clearly the juggernaut doesn’t need this grocery experiment to make or break sales. But with a size like that, it’s becoming increasingly difficult for WMT stock executives to find meaningful ways to provide growth.
Grocery delivery may be it. But Walmart better watch out… Amazon.com is toying with grocery delivery too!
Jeff Reeves is editor of InvestorPlace.com. As of this writing, he did not own a position in any of the stocks or funds named here. Follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook.