Wal-Mart Stores Inc. plans to test its first fresh grocery delivery service in California as the biggest retailer looks online for new sources of revenue growth, Bloomberg News reported April 1, citing a person familiar with the project.
The Web service, internally dubbed “Project Titan,” hasn’t yet been approved and may not happen, the person said, according to Bloomberg. If the plan goes forward, Wal-Mart stores in the San Jose area would fill deliveries for shoppers living nearby, according to the person, who declined to be identified because plans aren’t final.
Wal-Mart already through its website offers many of the retailer’s merchandise categories, including “dry” groceries such as coffee and canned goods. Wal-Mart is the largest U.S. food retailer, and while that business has grown rapidly in recent years, the company’s broader sales have eroded, in part because the retailer lost customers to dollar stores.
“Wal-Mart needs to get more serious about e-commerce,” Matt Nemer, an analyst at Wells Fargo, said, according to the Bloomberg report.
“Grocery delivery works in urban markets, and they already do it in the U.K., so they have experience,” Nemer said.
In an April 4 e-mail, Ravi Jariwala, a Wal-Mart spokesman, said “there are rumors about our business all the time, and we just don’t comment on them.”
“Last year, we expanded our dry grocery assortment online and now offer breakfast items, beverages, snacks and candy for home delivery,” Jariwala said. “As always, we’ll continue to evaluate our merchandise assortment to determine where we may expand and better serve our customers.”
Wal-Mart’s U.S. grocery business, including fresh produce, meat and dairy products, generated about $140.6 billion in sales last year, up 2.1 percent from the previous year, based on a recent company filing with the U.S. Securities and Exchange Commission.
Groceries accounted for 54 percent of Wal-Mart’s total U.S. revenue in the year ended Jan. 31, the company’s fiscal 2011, according to the filing. That was up from 53 percent in 2010. The figures exclude Sam’s Clubs stores.
But Wal-Mart’s comparable-store sales, a key gauge of retailer performance, fell 1.5 percent for the U.S. in fiscal 2011 following a 0.7 percent decline in 2010.