Walmart On U.S. Grocery Delivery: Not Enough Demand

Walmart (NYSE:WMT) is continuing to test online grocery ordering and delivery in San Francisco, but so far the retail giant isn't seeing enough consumer demand to make it a viable business in the U.S., according to Supermarket News.

Neil Ashe, Walmart's president of e-commerce, told reporters: "Grocery delivery is not new for us. We know what it is and we know how to do it. It requires market density—enough customers. It requires basket density—meaning you have to put enough items in that basket to make it work. And it requires route density, meaning you've got to put enough orders into a truck."

But in the chain's ongoing "Walmart To Go" tests in San Francisco and San Jose, which started in 2011, "we haven't proven market density. We haven't proven that customers want it," Ashe said. He spoke at a press event the day before Walmart's shareholder's meeting last week.

Walmart is doing grocery delivery successfully in the U.K., where it owns the second-largest grocery chain, Asda. But that situation is different because all its competitors also jumped in on delivery. "The reason we think grocery delivery worked in the U.K. was that so many people threw in behind it: Tesco, Asda, Sainsburys, Ocado, etc. So there was density and enough customers who wanted it," Ashe said.

In the U.S., he added in an oblique reference to Amazon's (NASDAQ:AMZN) just-announced expansion of its AmazonFresh service, "if somebody else wants to pay to develop the market, we are ready to go. We can pick from our own stores and roll that capacity out in months. If the customers say that's what they want, we are good to go."

For more:

- See this Supermarket News story

Related stories:

Amazon Reportedly Expanding AmazonFresh Grocery Service to Los Angeles And San Francisco
U.S. Supermarkets Grab Market Share From Walmart And Warehouse Chains
The Real Business Rationale For AmazonFresh

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