Wal-Mart plans to pilot first fresh-grocery delivery, online service in San Jose, California, report says; retailer expects dry-grocery online sales at all stores by June

Graziela Medina Shepnick

LOS ANGELES , April 5, 2011 (Industry Intelligence) – Wal-Mart Stores Inc. plans to test its first online shopping service for delivery of fresh groceries in the San Jose, California, region, a person familiar with the project said, Bloomberg reported April 1.

Bill Simon, chief of Wal-Mart's U.S. operations, said in October the company would test online grocery delivery “in the coming year.” Currently, Wal-Mart already offers grocery delivery in the U.K., Mexico and Japan, Bloomberg reported.

The world's largest retailer recently transferred Richard Ramsden to Walmart.com headquarters in Brisbane, California. Ramsden previously headed home shopping for Wal-Mart’s Asda division in the U.K.

Walmart.com began operations in 2000 and offers more than half a million items, including some not available in its 3,800 U.S. stores. Online sales rose as much as 70% last year to about US$6 billion, according to Matt Nemer, a San Francisco-based analyst at Wells Fargo, Bloomberg reported.

Nemer said in an interview that Wal-Mart already has experience with grocery delivery and it “works in urban markets.” Nemer rates the shares “market perform.”

Last year, Walmart.com expanded its assortment of dry groceries to include breakfast items, beverages, snacks and candy, all sold in multi-packs. At the same time, the site began free same-day pickup of online orders in its stores. The service will be available at all locations by June, Bloomberg reported.

U.S. online retail sales grew 13% in 2010 to $176 billion, according to Forrester Research, which predicts they will climb to $279 billion by 2015. Online grocery sales contribute about $10 billion of that, according to Forrester.

Forrester analyst Sucharita Mulpuru said consumers still hesitate to buy some groceries online, in particular perishables. However, online grocery shoppers spend more money than other Internet shoppers, Mulpuru said, Bloomberg reported.

Ravi Jariwala, a Wal-Mart spokesperson, would not comment on the speculation, but said the Bentonville, Arkansas-based company will continue to assess where to expand.

CEO Mike Duke is also introducing smaller Express locations to lure shoppers from grocery stores and rival discounters such as New York-based Dollar General Corp. and Minneapolis-based Target Corp.

The primary source of this article is Bloomberg, New York, New York, on April 1, 2011.

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