Playing Catch-Up With Walmart, Amazon Offers Digital Grocery Pickup at Whole Foods

Amazon has found itself in the rare position of playing catch-up with its rivals.

The e-commerce giant announced Wednesday that its Whole Foods stores will allow customers to order their groceries online and pick them up in person. Walmart, the nation’s largest grocer, already offers online grocery pickup in nearly 1,800 stores across the United States, and plans to roll out the service to as many as 2,200 stores by the end of the year.

Amazon’s new service is starting in Sacramento and Virginia Beach. Shoppers who pay the Amazon Prime subscription fee — $12.99 a month or $119 a year — can order their groceries online and pick them up 30 minutes later at a Whole Foods.

The latest move comes as Amazon and Walmart vie head-to-head for dominance of America’s shifting retail landscape. Amazon continues to rule pure online shopping, but Walmart has been making inroads by incorporating digital shopping with its vast network of super centers. Fresh food is where the competition is perhaps the most fierce because customers shop for it so frequently.

Retailers may be doubling down on their online grocery offerings, but is this what consumers want?

Apparently not. A recent research report by analysts at Morgan Stanley says retailers still haven’t quite convinced shoppers of the merits of online grocery shopping.

Among shoppers who have never tried ordering groceries online, polled as part of the investment bank’s annual survey, 65 percent said it’s because they prefer to physically see food before they buy it. They want to see the strawberries and feel the avocados themselves.

But among digital options, “click and collect” services, as they’re called, seem to be attracting more shoppers than services that ship directly to your home.

More shoppers are willing to order fresh foods — like cheese and fruits — online and pick them up in the store, rather than have them delivered, according to Morgan Stanley.

Retailers are trying to be sensitive to concerns about freshness. Last week, when Walmart unveiled a new automated system designed to help its store workers assemble online orders more efficiently, the retailer made a point to note that human workers, not machines, would still pick the fruits and vegetables.

For Amazon, new services like online grocery pickup are a test of whether it can integrate its digital prowess with its recently acquired brick-and-mortar network of Whole Foods.

But Amazon has a long way to go in denting Walmart’s dominance. With a 23 percent share of grocery spending, Walmart sold more than twice as much food as the second largest national grocer, Kroger, over the last three months. Whole Foods captured just 2 percent of grocery spending, according to Morgan Stanley.

Note: Charts show the results of a survey conducted in May 2018 by Morgan Stanley Research and AlphaWise. The survey polled 2,951 consumers who were responsible for their household’s grocery shopping. Responses were weighted to match the demographic profile of the population of the United States in terms of age, gender and region. The survey has a modeled error estimate (similar to a margin of error in a standard telephone poll) of plus or minus 1.8 percentage points, so differences of less than that amount are statistically insignificant.