NANTUCKET, MASS. — “Drive” is the latest retail concept under consideration by Wal-Mart Stores, Inc., Bentonville, Ark. The program would allow consumers to order products on-line and then schedule a time to pick it up at a Wal-Mart location.
“Many of you may be familiar with what is happening in Europe, particularly in France,” said Jeff Davis, executive vice-president and chief financial officer for Wal-Mart U.S. “But basically what we are looking at testing is a customer will be able to go on-line and build their basket. In doing so, they can also select then the time that they will want to pick up their item. They would then drive to our Drive depot and upon arrival be able to receive their merchandise without getting out of their car. So once again, we look at this as an opportunity to allow customers to shop how they want to, when they want to.
“Within this depot, it will have access to about 10,000 items. Many of those items are driving the majority of the volume in a Neighborhood Market, so, as you can imagine, these are high-volume items and it is not only in grocery and fresh and dry, but it also would include anything in our over-the-counter market also.”
Mr. Davis made his comments June 19 during the Jefferies Global Consumer Conference in Nantucket, and he noted how important food has become as a traffic driver for the retailer.
“We also recognize that our fresh and fresh impression in the store really sets the tone for the entire store,” he said. “So we really focus on improving our quality and specifically our experience in our fresh departments.
“One of the things that we have done over the last several years is really focused on how we can go upstream and actually work more directly with our growers, particularly in produce and vegetables. By doing so, we have been able to increase our specification while reducing our overall cost by continuing to reduce some of those middle costs. The other thing that we have done here is we’ve also allocated additional labor, particularly in these areas, to make sure that we are culling our inventory and making sure it has the right presentation for our customer.”
Value remains a focus for Wal-Mart and Mr. Davis noted that the retailer is not taking pricing actions on key commodities that have experienced a run-up in costs.
“In the first quarter we’ve seen some pretty significant cost inflation particular in meat and produce,” he said. “And one of the things that we have done here is we have actually not passed on a lot of that cost inflation to our customers. Being the agent for the customer was really important for us to be able to hold back on that as best we could. What we’ve seen is actually unit lift and comp increase particularly in these areas as customers are responding to that quality and that price and that value.“But you also see in the second quarter and as we move through the course of the second quarter here, is that we are focused also on bakery and deli and prepared meals. In bakery we have come out with a rollback on our French bread. We have rolled that back to $1 everyday price. And then our rotisserie chicken, we’ve also reduced that by almost a full $1, also. So our customers are actually seeing great produce, great product being extended beyond and further into our stores in fresh, and deli and bakery.”