Daily Insights

Why Retailers Are Pivoting to Services

By: Evan Bakker | Feb 19, 2019

As retailers race to compete with Amazon’s unrivaled convenience, they’re highlighting the services they provide, more than the products they sell.

Grocery in particular has granted a prime opportunity to push same-day pickup. Retailers like Walmart and Target have long sought to disrupt brick-and-mortar grocery — a $641 billion market in the US. However, they’ve been hindered by the products’ short shelf life and steep costs of upgrading inventory management technology. Thus far, Walmart has upstaged incumbent grocers, committing vast resources to its grocery business and holding 11% of the online grocery market in 2017, second behind Amazon’s 12.5% and well ahead of Kroger’s 6.4%.

Another sign of promise? Monthly visits to Walmart’s grocery site surged by 144% over the course of 2018, while competing grocers saw stagnant traffic, according to Gartner L2’s Omnichannel report.

In order to capitalize on the momentum, Walmart launched a nationwide ad campaign promoting its grocery drive-up service, unveiling it on the night of the 2019 Golden Globe Awards and NFL playoffs. The retailer buttressed these efforts with coinciding YouTube and Facebook videos that garnered a combined 20 million views in two weeks.

Omnichannel

Walmart’s grocery push is part of a larger effort to brand the retailer as the ultimate provider of convenience. Fulfillment services became a focal point of the retailer’s TV campaigns throughout the holidays. A Gartner L2 analysis of the retailer’s TV ads over 30 days from November to December revealed that the majority of its TV spend was directed to ads referencing pickup or free shipping. By comparison, Target only devoted 24% of TV spend to these types of ads. Walmart placed emphasis on its grocery drive-up and free two-day shipping with no membership fee, signaling how the retailer seeks to differentiate itself from Amazon.

See more: Retail , Walmart , Kroger , Target