When it comes to the grocery wars, executives at Walmart are concerned about the company’s tenuous number one position as well as loss of share to fierce competitors, according to brutal self-assessments in a leaked memo and presentation from February obtained by Recode.
The document was reportedly created for ad agencies bidding for the retail giant’s business. The company didn’t respond to requests for comment from Recode.
“Grocery, the growth engine of the business, is losing share rapidly,” one slide reads, according to Recode. “More than ever, Walmart shopper[s] are choosing the competition.” The slide includes logos of Publix, Target and Albertsons and their increasing customer stats while Walmart declines.
The deck also shows concern over Instacart, indicating it’s pulled nearly even in e-grocery in the past year as it exploded during the pandemic, and Walmart struggled at first to keep up with curbside and delivery demand. To grocers, Instacart has almost become like another Amazon, with some worried about the service’s fees and seeking alternatives, although it’s hard to replicate its widespread reach and deep penetration.
In terms of Walmart+, the company’s answer to the wildly popular Amazon Prime, the leaked memo indicates that while the $98 per year subscription program is gaining membership and the renewal rate is growing, there are still concerns about its stickiness and the ability to sign up trial members, Recode reported. There is also worries that not enough Walmart+ members are buying more profitable general merchandise vs. just lower-margin groceries.
Consumer Intelligence Research Partners (CIRP) said that as of Jan. 30, Walmart+ had 7.4 million to 8.2 million members, representing 13%-14% of its online customers, four months after its launch. CIRP also said subscribers spent $1,000 per year on average. Then in March, Walmart did the inevitable, dropping the $35 threshold to qualify for same-day delivery with its Walmart Express service. It has done the same with Walmart+ at the end of 2020.
Free same-day delivery is available to Prime members, who pay $119 per year or $12.95 per month for the privilege, and get a boatload of perks besides. Its growing army of contracted sprinters and stepvans has become as visible on the road as UPS, FedEx and the U.S. Postal Service.