Operations
06 July 2022
Walmart+ adds 'direct-to-fridge' delivery service
It comes as Walmart is expanding the InHome service to more cities.
InHome is coming to more homes. (Photo courtesy of Walmart)
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Walmart is adding a service that offers delivery straight to a customer’s kitchen as part of its membership program.
Walmart’s InHome service will now be offered as part of Walmart+, the company announced on Wednesday. There's no limit to how many times customers can use the service, or a requirement to tip.
It’s effectively an upgrade for Walmart+, as Walmart said the InHome service will be available for an additional $7 a month or $40 per year. The base price for Walmart+ is s $12.95 a month, or $98 a year.
Walmart is also growing the geographic footprint of InHome, aiming to reach more than 30 million US households this year. With Wednesday’s announcement, Walmart said it is expanding to Miami, Tampa, Orlando, Dallas, Austin, San Jose and San Francisco. This nearly doubles the footprint of locales where the service is available.
Launched in 2019, InHome is designed to provide grocery delivery for customers, even if they aren’t at home. Shoppers order groceries online. Then, a full-time Walmart associate enters their home via smartlock or garage door opener. (For those who don’t want to have someone enter their home, a doorstep delivery option is available).
Offering the “direct-to-fridge” service allows Walmart to make delivery more convenient. At the same time, it relies in part on the trust of consumers, who must be willing to provide entry into their homes.
By combining the two services, InHome will be added to the growing list of Walmart+ perks. Initially, the membership included free shipping and delivery, and scan-and-go service for in-store shopping. This year, it expanded a fuel discount to 10-cents a gallon and extended it to gas stations beyond Walmart, offered six free months of Spotify and held members-only deals events such as the recent Walmart+ Weekend. Walmart hasn’t yet revealed membership numbers for Walmart+, but leaders have said it is a key part of its growing digital business.
Walmart said it is making the move to combine the programs under one membership in response to asks from consumers who want to complete all of their ordering and delivery steps in one place.
“When Walmart+ members ask for something, we work around the clock to make it happen for them,” said Chris Cracchiolo, SVP and GM of Walmart+, in a statement. “Our members want options and a shopping experience that is easy to navigate and accommodates their individual needs, while saving them time and money—this is true now more than ever.”
Walmart said the move to bolster Walmart+ is among the steps it is taking to continue to invest in its ecommerce business, which grew 38% over the last two years.
Surcharges for suppliers coming
Elsewhere in its business, Walmart is planning to add fees to account for rising costs of fuel and transportation. According to Reuters, the company sent a memo to suppliers – or, the vendors that produce and provide goods sold by the company – detailing two new fees that will be enacted in August for those who use Walmart services to transport goods to warehouses or stores. The fees include a fuel surcharge, and a new “collect pickup charge” that will be calculated as a percentage of the cost of foods received.
Walmart is among many retailers facing rising costs during the current period of 40-year-high inflation. The company cited fuel costs as among the reasons it was cutting its full-year profit outlook in its first quarter earnings report.
It’s not alone among those upping fees, either. Amazon enacted a 5% fuel surcharge on third-party sellers in April, saying at the time that it intended the fee to be temporary.
At Walmart, the new charges “allow us to share cost accountability with our Collect suppliers, helping to enable us to meet our everyday low price commitment to our customers," the retailer’s memo said.
As costs rise, it grows more likely that they will be passed down the supply chain.
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Marketing
09 June
'There's a lot of ways to frame value'
Campbell Soup Company CEO Mark Clouse offered thoughts on messaging amid inflationary shifts in consumer behavior.
Photo by Kelly Common on Unsplash
After months of elevated inflation and interest rate hikes that have the potential to cool demand, consumers are showing more signs of shifting behavior.
It’s showing up in retail sales data, but there’s also evidence in the observations of the brands responsible for grocery store staples.
The latest example came this week from Campbell Soup Company. CEO Mark Clouse told analysts that the consumer continues to be “resilient” despite continued price increases on food, but found that “consumers are beginning to feel that pressure” as time goes on.
This shows up in the categories they are buying. Overall, Clouse said Campbell sees a shift toward shelf-stable items, and away from more expensive prepared foods.
There is also change in when they make purchases. People are buying more at the beginning of the month. That’s because they are stretching paychecks as long as possible.
These shifts change how the company is communicating with consumers.
Clouse said the changes in behavior are an opportunity to “focus on value within our messaging without necessarily having to chase pricing all the way down.”
“No question that it's important that we protect affordability and that we make that relevant in the categories that we're in," Clouse said. "But I also think there's a lot of ways to frame value in different ways, right?”
A meal cooked with condensed soup may be cheaper than picking up a frozen item or ordering out. Consumers just need a reminder. Even within Campbell’s own portfolio, the company can elevate brands that have more value now, even if they may not always get the limelight.
The open question is whether the shift in behavior will begin to show up in the results of the companies that have raised prices. Campbell’s overall net sales grew 5% for the quarter ended April 30, while gross profit margins held steady around 30%. But the category-level results were more uneven. U.S. soup sales declined 11%, though the company said that was owed to comparisons with the quarter when supply chains reopened a year ago and expressed confidence that the category is seeing a longer-term resurgence as more people cook at home following the pandemic. Snacks, which includes Goldfish and Pepperidge Farm, were up 12% And while net sales increased overall, the amount of products people are buying is declining. Volumes were down 7%.
These are trends happening across the grocery store. Campbell is continuing to compete. It is leading with iconic brands, and a host of different ways to consume them. It is following that up with innovation that makes the products stand out. Then, it is driving home messaging that shows consumers how to fit the products into their lives, and even their tightening spending plans.
Campbell Soup is more than 150 years old, and has seen plenty of difficult economic environments. It is also a different business today, and will continue to evolve. At the end of the day, continued execution is what’s required.
“If it's good food, people are going to buy it, especially if it's a great value,” Clouse said.
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