Wal-Mart Stores, Inc (NYSE:WMT) store pickup service launches a debate

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By Lisa Bradley on October 3, 2014 Consumer Staples

Wal-Mart Stores, Inc (NYSE:WMT) had earlier announced that it will be opening a drive through service for its registered customers in their hometown Bentonville, AR. The concept was pitched by the then CEO of the company Bill Simon. The concept is pretty simple. The customers have to place their orders online a couple of hours in advance. You can choose anything from the 10,000 items list: Dairy products, meat, household items etc. Then you’ll go to the Wal-Mart Stores Inc (NYSE:WMT) pickup store where you’ll notify the attendants through the kiosk that you are here to pick up your bag. There would be multiple kiosks placed outside the store.

Analysts say that it is a smart move by Wal-Mart Stores (NYSE:WMT) who realize that shopping can be quite hectic especially with little kids. Hence availing the benefits of the internet, you can just place your order and simply pick it up few hours later. However, going through a list of thousands of items and choosing can in itself be quite a taxing experience and depending on how well the software is designed, the consumer can become frustrated really quickly and never use this model again. The fact also remains that if people are ordering online why would they want to go to the store and pick up the groceries?

Research has indicated that some customers feel more comfortable picking up their own stuff, even if they have carefully ordered it online. Especially house wives who are quite particular about what they want and would want to see to it that they get the same items that they ordered. But this new model will have extra cost associated with it which will be passed on to the customer probably. The cost component would include labor, technology etc which will surely decrease the already thin profit margins in grocery. If this cost is passed onto the customer then that surely would mean a dwindling potential market who would be interested in this concept.

It’s another way of shopping like this and in a way quite liberating and convenient, as long as it keeps the customer happy and begets profit there is absolutely nothing wrong with such arrangements. However, this idea has been introduced before and has failed so what makes Wal-Mart (NYSE:WMT) think that it shall be successful this time? Some analysts raised the question whether the service would start from regular Wal-Mart Stores (NYSE:WMT) stores or new buildings would be made for such arrangements.

The demographics which demand this kind of model and having the right operator which is also low cost can make a difference but that doesn’t change the fact that it won’t really be a surge upwards but simply digitizing shopping. It’s not a new concept altogether and most people are actually quite happy with the usual shopping routine and ethic. Perishable items are probably going to be returned to Wal-Mart (NYSE:WMT) by the hoards as one is surely never satisfied.