FAYETTEVILLE -- Wal-Mart Stores Inc. is partnering with ride-sharing services Uber and Lyft to conduct a limited grocery delivery service test, another step in the retailer's ongoing efforts to meet the needs of shoppers and compete with Amazon.com.
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The pilot program was unveiled by Wal-Mart Chief Executive Officer Doug McMillon before the company held its 46th annual shareholders meeting Friday in the University of Arkansas' Bud Walton Arena. About 14,000 shareholders and employees attended the star-studded pep rally, which was emceed by The Late, Late Show host James Corden and included musical acts Katy Perry and Nick Jonas.
The delivery service, which is being introduced on a trial basis in Denver and Phoenix, was the day's biggest news. The pilot program will begin within two weeks, according to Wal-Mart, with no immediate plans to roll it out to a larger audience in the near future. But the retailer believes its experiment to find a potential solution to last-mile delivery is another example of its eagerness to evolve in an increasingly competitive retail environment.
"The Internet, mobile devices and the use of data have made new and exciting things possible," McMillon said during his keynote speech. "It feels like if we can imagine it, we can do it. What does that mean for us? It means we have the opportunity to reimagine retail again. So that's what we're out to do."
Wal-Mart, whose revenue dipped to $482.1 billion last year from $485.6 billion the previous year, believes it can increase traffic in its stores and grow sales by providing customers with the tools to shop for any item, at any time and in any way through its network. The company predicts its success should translate to revenue growth between $45 billion and $60 billion over the next three years.
McMillon referenced Wal-Mart's transformation into an omni-channel retailer as the fourth chapter in its history, saying the company is determined to deliver a seamless shopping experience for customers.
Wal-Mart's work to achieve it was the dominant theme of Friday's meeting. Board Chairman Greg Penner, who completed his first year in the position, told the crowd of shareholders and employees that customers are evolving quickly in the e-commerce age. While Wal-Mart's 11,500 stores worldwide remain vital to its success, Penner said the retail giant is changing its way of thinking.
"We're moving away from serving customers with a model of where we are and moving toward a model of where they are," Penner said. "Those who don't will struggle to stay relevant to customers."
Wal-Mart's test with Uber and Lyft will allow customers to order groceries online and select a window of time for delivery. Wal-Mart employees will prepare the order and request a driver from one of the services. Drivers will take the order to a customer's location.
Wal-Mart said the service will include a $7 to $10 delivery charge online and no payment will be required for the driver. Sam's Club already is testing a similar service for general merchandise and groceries through delivery service Deliv in Miami.
"We're trying to satisfy for the customer those things she needs on a regular basis," said Neil Ashe, Wal-Mart's CEO for global e-commerce. "We're trying to do that better than anyone else."
The grocery delivery pilot program isn't the company's first foray into last-mile delivery.
Wal-Mart has tested a grocery delivery service by using its own trucks in Denver and San Jose, Calif. But Ashe said Friday during a question-and-answer session with investors that followed the shareholders meeting the delivery service has not been successful in the U.S.
So Wal-Mart now is working to attack the final mile in a different way with Uber and Lyft.
"I hope you'll give us some leeway to try things," McMillon told investors. "I don't know if they'll work or not, but we want to try things. There will be things we do that don't work. I'm good with that."
The retailer has proven it isn't shy about trying new things, using the week to showcase some of its successes and provide a sneak peek of other plans.
Wal-Mart's grocery pickup service, in which customers order groceries online, drive to the store and have them delivered to their vehicle, continues to be rolled out and will be available in 54 markets soon. The company also is rolling out Wal-Mart Pay, a mobile payment service, across the chain by the end of the month. Wal-Mart recently announced plans to alter its ShippingPass pilot program, shrinking the delivery time from three days to two days for subscribers in an effort to rival Amazon.com.
Edward Jones retail analyst Brian Yarbrough said Wal-Mart is trying to be "everything to all people," and wonders if it will mean much for profits. Either way, Yarbrough believes it's another example of the retailer emulating Amazon, which is expanding its grocery delivery service.
"Where they used to be the company that everyone else is chasing, they've become a company that's chasing Amazon," Yarbrough said. "At the end of the day Wal-Mart has to find a way to drive more traffic into the stores and drive people to spend more money. That's the difficult position for them. It's so big. It's such a huge ship to turn that it's not an easy proposition."
The announcement was part of a three-hour meeting that mixed entertainment with business. Corden produced plenty of laughs with numerous jokes about McMillon's youthful appearance, a lengthy and awkward embrace with chief financial officer Brett Biggs, and by kidding Penner that the reason he had become board chairman is because he married former board Chairman Rob Walton's daughter.
Three shareholders proposals were voted down during the meeting, while Penner was one of 12 individuals elected to Wal-Mart's board of directors.
The size of the board has been trimmed from 15 members because the company believes it will help Wal-Mart become more nimble in the quickly changing retail environment.
The group also becomes younger as Steuart Walton, grandson of Wal-Mart founder Sam Walton, was added. Walton replaces his father, Jim Walton, who was one of four who officially retired from the board Friday. Former CEO Mike Duke also retired as a board member.
"Wal-Mart is a big company, but we can't let what slows most large companies down hold us back," Penner said. "Change is never easy. It takes time, hard work and persistence to move a business of our size in a new direction. But the board and I couldn't be more optimistic about the future of the company."
Business on 06/04/2016