Walmart’s CFO explains why consumers are relying on the company for their grocery needs.
Walmart is doubling down on its grocery business as more consumers turn to the company for their grocery needs.
The nation’s largest retailer reported in the previous quarter that sales at US stores rose 5.3% as it continued to gain market share in the grocery and general product categories.
Part of the reason it is seeing growth within the grocery segment, which has seen costs rise from inflation, is that the company is remodeling the produce sections of its stores and increasing the assortment of foods it offers, according to Walmart’s CFO John. David Rainey.
WALMART BEATS WALL STREET EXPECTATIONS, GROWS OVERALL AS IT OFFERS MORE SALES DISCOUNTS
“It’s (the produce section) very attractive. We have a very high quality product offering for people and it invites them in,” Rainey said. “It’s a much wider variety than what we’ve had historically.”
The company has built new modernized stores and remodeled hundreds of others. Over the past three years, it remodeled an average of about 700 stores each year and plans to convert more in the coming year. The company’s new and updated stores include improved layouts, greater product selection, refreshed signage, paint and shopping carts.
In addition to the improved aesthetics, Rainey also valued his private label as another driver. Walmart is seeing an increase in private brands as a larger share of overall sales, driven in part by consumers’ focus on price during high inflation. Earlier this year, the company launched its latest and broadest private label brand, Bettergoods, which includes 300 items including frozen, dairy, snacks, drinks, pasta, soups, coffee and chocolate.
A Walmart location at 2844 North Broadway Street before its permanent closure in Chicago, Illinois, US, on Wednesday, April 12, 2023. (Christopher Dilts/Bloomberg via Getty Images/Getty Images)
Not only does the company offer a wider selection of private-label food, but the quality of the food has also improved, Rainey said.
“It’s much broader and attracts a lot more customers and members,” Rainey said, adding that “the quality is just a lot different than what you’ve seen historically.”
He also pointed out that consumers’ growing reliance on convenience is benefiting Walmart. According to Rainey, one-third of their customers are paying extra for fast food delivery through Walmart’s delivery services.
SOME WALMART EMPLOYEES WEARING BODY CAMERAS IN STORES FOR SECURITY
It comes as the $25 billion merger between Albertsons and Kroger collapses amid concerns from federal regulators that the deal would undermine competition in the grocery industry. The deal would be the largest merger in the history of the food industry.
Walmart’s modernized grocery department. (Walmart)
But U.S. District Judge Adrienne Nelson said the plan presented by the two companies to cut grocery prices and eliminate more than 500 stores failed to address concerns about reducated competition in the sector and the impact it may have on consumers and workers.
Albertsons, which subsequently sued Kroger for not doing enough to secure the merger, claimed the deal would expand competition, lower prices, raise associate wages, protect union jobs and improve customer shopping experience.
GET FOX BUSINESS IN ALBANIA by clicking HERE
As of September, Albertsons Companies operated 2,267 grocery and drug retail stores with 1,726 pharmacies, 405 gas stations, 22 dedicated distribution centers and 19 manufacturing facilities.
Meanwhile, Kroger operates 2,750 retail grocery stores under a variety of names, including Kroger, Ralphs, Dillons, Smith’s, King Soopers and Fred Meyer.
In the US, Walmart operates just over 4,600 stores. That doesn’t include its membership warehouse, Sam’s Club, which houses about 600 locations nationwide.
