COVID-19

Curbside pickup, delivery poised to boost Walmart sales

Justin Ho May 18, 2020
Heard on: Marketplace Morning Report
HTML EMBED:
COPY
An employee restocks a shelf at an Ohio Walmart. Employees shop for customers for the chain's popular curbside pickup option. Chris Hondros/Getty Images
COVID-19

Curbside pickup, delivery poised to boost Walmart sales

Justin Ho May 18, 2020
An employee restocks a shelf at an Ohio Walmart. Employees shop for customers for the chain's popular curbside pickup option. Chris Hondros/Getty Images
HTML EMBED:
COPY

Walmart reports quarterly earnings this Tuesday. The company’s stores have stayed open throughout the crisis, giving it a front-row seat on how our shopping habits have changed.

One of the brightest spots of Walmart’s business has been curbside pickup, a service where customers order things online, drive to the store and wait while a worker loads everything into their trunks.

“And that, during COVID, has just accelerated,” said Lei Duran, who follows Walmart for the research firm Kantar. She said curbside pickup has gotten huge because people are using the service to buy groceries.

That’s an area where Walmart already dominates.

“We show that half of all online grocery shoppers are using Walmart for their online grocery orders,” Duran said.

Walmart’s success with curbside pickup comes with costs. Charlie O’Shea, Moody’s lead retail analyst for Walmart, said labor is a big one. It’s a manually intensive process for workers to pick out and scan hundreds of grocery products.

“You’ll see the employees standing in front of the shelf, kind of scratching their head every so often, [thinking] ‘All right, which one of these, and uh-oh we don’t have it. What do I substitute?’ ” O’Shea said.

Groceries also carry lower margins than the other products Walmart sells, like barbecues, bikes or clothes. On Friday, the government said apparel sales dropped almost 80% last month.

O’Shea said the crisis is changing the way Walmart makes money.

“You’re going to see just absolute blowout sales in food, consumables. You will see obvious softness in the discretionary categories.”

Curbside pickup has one big advantage for Walmart. It doesn’t have to deliver those groceries to your house. Brian Yarbrough, a consumer research analyst at Edward Jones, said curbside pickup is more profitable for retailers than online delivery.

“It’s the shipping costs and the free shipping that really eats all the margins,” Yarbrough said, adding that the pandemic is pushing more customers toward online delivery, too. While Walmart loses money delivering products to customers, he says it can still benefit.

“For Walmart, it’s about gaining market share, and gaining new customers, and offering the options,” he said. What remains to be seen, Yarbrough said, is whether those new customers continue to shop at Walmart when the pandemic calms down.

COVID-19 Economy FAQs

Pfizer said early data show its coronavirus vaccine is effective. So what’s next?

In the last few months, Pfizer and its partner BioNTech have shared other details of the process including trial blueprints, the breakdown of the subjects and ethnicities and whether they’re taking money from the government. They’re being especially transparent in order to try to temper public skepticism about this vaccine process. The next big test, said Jennifer Miller at the Yale School of Medicine, comes when drug companies release their data, “so that other scientists who the public trust can go in, replicate findings, and communicate them to the public. And hopefully build appropriate trust in a vaccine.”

How is President-elect Joe Biden planning to address the COVID-19 pandemic and the economic turmoil it’s created?

On Nov. 9, President-Elect Joe Biden announced three co-chairs of his new COVID-19 task force. But what kind of effect might this task force have during this transition time, before Biden takes office? “The transition team can do a lot to amplify and reinforce the messages of scientists and public health experts,” said Dr. Kelly Moore, associate director for the Immunization Action Coalition. Moore said Biden’s COVID task force can also “start talking to state leaders and other experts about exactly what they need to equip them to roll out the vaccines effectively.”

What does slower retail sales growth in October mean for the economy?

It is a truism that we repeat time and again at Marketplace: As goes the U.S. consumer, so goes the U.S. economy. And recently, we’ve been seeing plenty of signs of weakness in the consumer economy. Retail sales were up three-tenths of a percent in October, but the gain was weaker than expected and much weaker than September’s. John Leer, an economist at Morning Consult, said a lack of new fiscal stimulus from Congress is dampening consumers’ appetite to spend. So is the pandemic.

Read More

Collapse

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.