Amid the Amazon chatter, Walmart proves it's grocery-war winner

Walmart posted its best quarterly sales growth in the grocery category in nine years, fueled by an improved selection of low-priced produce, meat and bakery items

Walmart Inc’s blowout quarter provided a stark reminder that despite all the buzz around Amazon.com Inc.’s Prime Day and its push into the food business, the Arkansas retailer remains the undisputed goliath of the grocery aisle.

The world’s biggest retailer posted its best quarterly sales growth in the grocery category in nine years, fueled by an improved selection of low-priced produce, meat and bakery items. It’s also rolled out curbside pickup of online food orders to more than 1,800 stores, more than double what it had a year ago, and will offer home delivery to about 40 per cent of the US by the end of the year.

Combined, those initiatives will allow Walmart to expand on its dominant share of the $800 billion US grocery market, where it collects about 25 cents of every dollar spent, according to researcher Euromonitor. Amazon, for all the noise around its acquisition of Whole Foods Market and the discounts it’s dangling on fresh-caught halibut for members of its Prime loyalty program, isn’t even close, with less than a 2 per cent share.

That matters because 86 percent of Walmart customers also shop at Amazon, according to analysts at Cowen & Co. If even some of them shift part of their food spending to Amazon, Walmart loses the reliable customer traffic that’s the lifeblood of brick-and-mortar retailers.

To prevent that, Walmart’s taking the food fight to the mean streets of New York City, where it plans to offer same-day grocery deliveries from its Jet subsidiary via a new distribution center opening in the Bronx this fall. That will match a similar offering from Amazon’s Prime Now service.

The online push has brought Walmart new customers while existing ones often add extra items in their basket when shopping online, US Chief Executive Officer Greg Foran said in an interview Thursday. Grocery is by far Walmart’s biggest category, accounting for 56 per cent of its US sales last year.  A more pressing concern for Walmart could be German discounter Aldi, which is expanding its range of fresh and organic food options and rapidly opening new stores with designs to be the nation’s third-largest grocer.