Walmart Shareholders

2018

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6 NWA Democrat-Gazette Walmart Shareholders Thursday, May 31, 2018 Walmart photo Walmart Inc. plans to make its grocery-delivery service available to about 40 percent of U.S. households by the end of the year. Walmart Inc. plans to make its gro- cery-delivery service available to about 40 percent of U.S. households by the end of the year, expanding a program that has become part of its strategy to com- pete for grocery sales with Amazon.com, Target Corp. and others. The Bentonville company said in mid-March that the next step for the program will make grocery deliveries available to more than 100 metro areas, covering about 800 stores, by the end of 2018. Walmart will use its personal shop- pers to collect orders in stores and con- tinue to work with ride-hailing services like Uber for deliveries, which will carry a $9.95 fee and require a minimum order of $30. The company said no subscrip- tion is required. Walmart began delivering groceries through a pilot program in Phoenix, Denver and San Jose, Calif., two years ago, then expanded the experiment to include Tampa, Fla.; Orlando, Fla.; and Dallas last year. The retailer did not specify which markets will offer the service as part of the latest expansion, but Tom Ward, vice president of digital operations, said Walmart will be aggres- sive with the rollout. "It's going to happen pretty quickly throughout the year," Ward said, adding that the ultimate plan will be to reach as many households as possible. "We'll leverage our footprint where it makes the most sense to reach as many people with the services as we can." A study conducted by the Food Mar- keting Institute and Nielsen concluded that 70 percent of consumers will be gro- cery shopping online in as few as five to seven years. There has been plenty of activity from retailers like Walmart and others in the grocery delivery space to support it. Amazon, which acquired Whole Foods for $13.7 billion last year, recently introduced two-hour grocery delivery from Whole Foods to its Prime members in four cities — Austin, Texas; Cincinna- ti; Dallas; and Virginia Beach, Va. — with further expansion expected. Target acquired Shipt, a grocery de- livery service, for $550 million late last year and is offering same-day delivery on groceries, essentials and other prod- ucts in some cities with plans for more. Even discount chain Aldi is exploring grocery delivery options. The Germa- ny-based grocer announced last summer it is working with Instacart to conduct delivery tests in Dallas, Los Angeles and Atlanta. Aldi has since expanded the program to additional markets. Carol Spieckerman, a retail consul- tant and president of Spieckerman Re- tail, said the grocery delivery expansion should give Walmart an opportunity to "forge relationships with new custom- ers," especially those who value conve- nience but don't want to navigate the retailer's stores. "Walmart must expand its delivery ARKANSAS DEMOCRAT-GAZETTE Walmart plans to expand its grocery-delivery service The warehouse division of Walmart Inc. is adding a perk for its premium members — free shipping on nearly ev- ery item available on its website. Sam's Club CEO John Furner an- nounced the new offering for "Plus members" during a conference call with reporters in February. In addition to the free shipping, Furner and Samsclub. com President Jamie Iannone said the club chain is also trimming membership types to simplify the options for shop- pers. The changes come as the company continues to transform the business, at- tract more members and increase sales as it competes with rival Costco. "We are creating a new Sam's Club for our members," Furner said. "We're adding more value to our membership, we're making strate- gic choices and we're c h a n g i n g h ow we work to drive sustain- able growth." Sam's Club's plus members, who pay an annual fee of $100, will receive free ship- ping on more than 95 percent of the items available on Sams- club.com under the new plan. The offer does not require a minimum purchase, and the available items include near- ly every product under the company's Member's Mark private label brand. Plus memberships with Sam's Club already include perks like early shop- ping hours, cash rewards of $10 for every $500 spent, and pharmacy and optical discounts. The company previously had two other types of memberships in addition to the premium level — Sam's business and Sam's savings — with a $45 annual fee. Iannone said Sam's has decided to consolidate those two into one group — Club members — to reduce complexity. The company will now have just two types of membership — Plus and Club members. "We went back and looked at our membership structure to make sure it was right for our members and our busi- ness," Iannone said. "After that review, we decided that part of our transforma- tion had to be to simplify our member- ship offerings." The moves announced in February continue Furner's plans to transform the warehouse business, which has typically been behind Costco's sales growth in the club segment. Furner said last year that the com- pany had decided to sharpen its focus and began catering to budget-conscious shoppers, pulling back from business owners. He defined those target custom- ers as homeowners who earn between $75,000 and $125,000 annually and typi- cally live in the suburbs. Some of those target customers own businesses and order products for their restaurants and stores. Other initiatives have been geared toward that core cus- tomer as well, and Furner believes the efforts are gaining traction after Sam's Club reported a net s a l e s i n c r e a s e o f 4.4 percent during the third quarter of the fiscal year that ended Jan. 26, while same-store sales in- creased for the sev- enth-straight quarter. "We've taken the last year to make sure we are making really clear, deliberate choices in a way that adds value for that core consumer," Furner said. Brian Yarbrough, a retail analyst with Edward Jones, said narrowing its focus makes sense as Sam's Club tries to in- crease sales growth and keep pace with Costco. But he also believes Sam's must strike a "delicate balance" because it doesn't want to walk away from business members too much. "They were trying to be too many things to too many people and they felt like that was hurting a little bit, so they're really trying to simplify this down and get it down to their core base and of- fer them great deals, and it can drive longer-term growth," Yarbrough said. "Whether it works or not, your guess is as good as mine. But it definitely seems like they're really trying to simplify the entire thing to make it more convenient for consumers." Delivery now mostly free for premium Sam's Club members ARKANSAS DEMOCRAT-GAZETTE "We are creating a new Sam's Club for our members. We're adding more value to our membership, we're making strategic choices and we're changing how we work to drive sustainable growth." — Sam's Club CEO John Furner See SAM'S, Page 12 See DELIVERY, Page 18

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