Walmart is widening its lead in grocery, targeting consumers who are put off by rising prices. In the quarter ended October 29, 2021, the chain saw grocery sales grow “nearly 10%,” with food sales growth of $3.6 billion, the strongest in six quarters, company executives announced Tuesday (Nov. 16) on a call discussing the chain’s Q3 earnings. Additionally, the retailer gained market share in grocery, standing out against competitors by leveraging its scale to keep food prices lower than other grocers are able to.
“Our unit growth in grocery is growing faster than dollars and that’s our position we’d like to stay in as long as we possibly can,” John Furner, president and CEO of Walmart U.S., told analysts. “We want to keep prices low for customers all across the business and we’ll be the last to go up.”
The quarter’s results suggest a successful execution of the strategy that executives had shared the previous quarter, when they discussed how inflation could actually work as a tailwind for the business, rather than a headwind. In fact, while Walmart is the largest grocery retailer in both the United States and the world as a whole, its leading U.S. competitor, runner-up Kroger, saw a modest decrease in sales in its most recent earnings release for the quarter ended August 14, 2021. On a call discussing these results, Kroger’s CFO Gary Millerchip highlighted the challenge of inflation “higher than originally contemplated in our 2021 business plan.”
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Walmart is also leveraging its low prices to set its eCommerce offerings apart from competitors, a counterpoint to the subscription costs and delivery fees that come with Walmart’s program and with competitors’.
“We’ve got [our] stores so close to people that we can do fresh and perishable delivery along with the rest of the supercenter fast and at Walmart prices,” Doug McMillon, president and CEO of Walmart Inc., told CNBC on Tuesday. “Sometimes people get focused on an annual membership fee or other aspects. The cost of goods matters, too … That’s differentiated, and we’re being aggressive in that space.”
He added that, by offering other, non-monetary benefits such as exclusive access to certain items, the company can set its program apart without additional spending.
The retailer also announced a number of grocery-related initiatives in the quarter geared toward attracting new customers and driving up frequency for existing shoppers. Walmart is leveraging major partnerships with leading online content providers — in September, the chain announced that it was teaming up with Meredith Corporation and that it was growing its existing partnership with Buzzfeed, leveraging these media companies’ audiences to drive sales by incorporating shoppable recipe articles and videos. Additionally, Walmart launched a new program that month, “Built for Better,” which flags healthy and eco-friendly goods for wellness- and impact-conscious shoppers.
See also: Walmart Partners With Meredith for AI-Informed Contextual Grocery Commerce
Walmart Grows Its Shoppable Content Empire With Buzzfeed Partnership Expansion
Walmart ‘Built for Better’ to Draw Impact- and Health-Minded Shoppers
Still, for all these investments in grocery, the retailer also has an eye on the larger picture — the overall in food spending shift away from grocery toward restaurants. The chain opened its first U.S. in-store virtual restaurant in partnership with Ghost Kitchen Brands, serving up to up to 25 restaurant brands from the one delivery- and pickup-only location, with dozens more locations to come.
“The dynamic of the 1950s where somebody would cook six square meals a week and maybe go out once a week is going to be totally the opposite,” Marc Choy, president of Ghost Kitchen Brands, told Karen Webster in a conversation discussing the Walmart partnership. “This is how people are going to know how to get their food — by ordering.”
Read more: In-Store Ghost Kitchens Turn Walmart Into Uber Eats Competitor
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