By Saabira Chaudhuri
LONDON--On a spring evening in North London, Maneesha Anastasiou
visited a wall of lockers at a gas station to do her grocery
shopping.
The 31-year-old mother punched in a code on a
temperature-controlled locker, which opened to reveal a bag of
items she had ordered online the day before from Wal-Mart Stores
Inc.'s British supermarket chain, Asda. The whole transaction took
under a minute, and Ms. Anastasiou didn't have to unbuckle her baby
from her car seat.
Wal-Mart is watching the experience of Ms. Anastasiou and others
like her as it races to cater to customers who increasingly shop
online. The world's largest retailer by sales is testing online
grocery delivery as well as free in-store pickup across five
locations in the U.S., in a trial that "leverages best practices
from our successful Asda grocery delivery business in the U.K.,"
the Bentonville, Ark., giant said in its annual report.
Aided by the deep pockets of its parent company, Asda offers
online grocery delivery across 97% of the U.K. and is pushing
aggressively into "click-and-collect," where customers order online
and pick up in person at no extra charge.
The retailer in February bought 15 gas stations, at which it is
installing click-and-collect lockers. Asda offers the service at
all of its 592 stores and is targeting 1,000 pickup sites by 2018
as it rolls out the service across stand-alone locations like
parking lots.
Grocery home delivery is notoriously tough to get right given
that different foods need to be kept under various temperatures,
while an on-time delivery is essential so as to not alienate hungry
customers. It is also widely seen as unprofitable since the
delivery fees don't cover the added costs. Grocery pickups, if they
catch on widely, could be a good middle ground, since they are
convenient for shoppers and less expensive for retailers.
Asda is in the midst of constructing a "supercenter of lockers,"
at a gas station on a major road between two of the U.K.'s biggest
cities, Liverpool and Manchester, says the chain's former retail
director, Mark Ibbotson, who now leads innovation for Wal-Mart U.S.
That locker center will put Asda on the radar of commuters who
might never have shopped there before, he says.
The unit, which should be ready this summer, will be loaded each
morning by staff with customers' orders for the day. Robotic arms
will then reach in and move these into one of three compartments:
frozen, chilled or room temperature. Once a customer punches in a
code, the arms locate the orders from their compartments, and put
them on a conveyor belt from which they emerge at a collection
point for pick up.
Wal-Mart will be watching to see how customers respond--and how
the sales stack up against costs. "There's a constant dialogue,"
Mr. Ibbotson says. "The international team in Bentonville is
looking at the U.K.'s experience for the rest of the Wal-Mart
world."
As of late last year, Wal-Mart's websites are, in part, run out
of what Mr. Ibbotson describes as a "mission control center" in the
north of England. The center, along with one in Silicon Valley and
another in Bangalore, India, allows the retail giant to have
someone watching its websites around the world all the time.
Wal-Mart's push to expand its U.K. business--and harness what it
has learned for use in the U.S. and elsewhere--comes as the
retailer grapples with increased competition from Amazon.com Inc.,
which has been expanding its grocery home-delivery service. Other
rivals are dabbling with grocery pickups. Whole Foods Market Inc.
is piloting a program in Boston, Austin and Philadelphia to let
customers pick up groceries ordered through online grocery service
Instacart Inc. in their local store. Kroger Co. offers
click-and-collect at some of its Harris Teeter stores. Peapod,
owned by grocery-chain holding company Royal Ahold NV, has hundreds
of pickup points across its U.S. stores, including Stop &
Shop.
In the U.S., grocery click-and-collect is still nascent and
fragmented, reflecting the immaturity of the online grocery market
overall, say analysts. The U.S. is the graveyard for a long list of
online grocery delivery services: Webvan Group Inc., HomeRuns.com,
ShopLink.com, and Streamline.com, to name a few.
"The underdevelopment of click-and-collect in the U.S. is
primarily due to the underdevelopment of e-commerce in food, except
in densely populated urban areas like Manhattan," says Bryan
Gildenberg, head of research at Kantar Retail.
England, which is also heavily populated, has long been a leader
in online grocery delivery, and now click-and-collect is taking off
there. Market leader Tesco PLC, offers click-and-collect at about
400 of its nearly 3,500 stores. J Sainsbury PLC, the No. 3 chain by
market share, after Asda, in March opened its first
click-and-collect sites in stores, with the target of opening 100
by the end of the year.
Data from Mintel estimates that 17% of all U.K. online sales
will be collected by customers this year, and that grocery's share
of all click-and-collect sales will rise to 7% from 5% in 2014.
Over time, Mr. Gildenberg predicts grocery pickups will catch on
in the U.S., too, in a way that is similar to the model in France,
where lower population density makes offering home delivery
unprofitable. Drive-through grocery pickups account for about 10%
of the French grocery market, according to Kantar.
Asda recently set up a team at its headquarters in the Northern
English city of Leeds that will evaluate various markets outside
the U.S. in which Wal-Mart could offer grocery delivery or pickup.
Headed by Saeed Anslow, who previously ran e-commerce development
for Asda, the new group also will help Wal-Mart refine its existing
grocery efforts outside the U.S.
Asda and Wal-Mart have long drawn from each other for help.
"There are many American accents in Asda House and there are
many English accents in Wal-Mart," says Mr. Ibbotson.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
Access Investor Kit for The Kroger Co.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US5010441013
Access Investor Kit for Wal-Mart Stores, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US9311421039
Access Investor Kit for Whole Foods Market, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US9668371068
Subscribe to WSJ: http://online.wsj.com?mod=djnwires