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A Leaked Memo Shows Walmart Is Losing Customers to These Grocery Chains

The retailer is worried about competition in several retail categories, including groceries.

A recently leaked Walmart memo obtained by Recode indicates that the retail giant is losing ground to its competitors. The 100-page document prepared by Walmart for its advertising agencies reveals the company lags behind the competition in multiple retail categories, including grocery, and concludes that "Walmart is not first and preferred."

This seems to be in stark contrast to Walmart's overt image. The retailer has had a good start to 2021, announcing partnerships with a number of popular fast-food restaurants and publishing impressive quarterly earnings releases. It's also no secret that Walmart fared better than most during the pandemic, enjoying growth in its e-commerce sales during 2020, and increasing its total value in 2021 by over $20 billion. By 2022, the company plans to invest $14 billion in distribution technologies (including automation) and seems poised to maintain its position as the world's number one retail store.

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But Walmart's competitors have also thrived during the pandemic, the memo points out. It reveals that as of February 2021, Amazon and Target were, in fact, outperforming Walmart in general merchandise sales, claiming the lion's share of customer spending in this category. In groceries, the memo mentions an increase in sales at Publix, Target, and Albertsons juxtaposed to a drop in grocery traffic at Walmart.

The grimmest news, however, came from online grocery sales. Pre-pandemic, Walmart owned a healthy 40% of that market. As of February 2021, that share is down almost 10 points, while Walmart's main competitor Instacart grew its share from 20% to a worrisome 30%. According to the memo, Walmart hopes to edge out Instacart with investment in drone delivery services and mini-warehouses.

The big-box chain has attempted to remain competitive by developing its own membership and loyalty program Walmart+, similar in concept to Amazon Prime. Launched last September, the program offers numerous customer perks, including free grocery delivery and next-day shipping on some products. For more, check out Walmart Is Expanding This Grocery Service, but People Are Skeptical, and don't forget to sign up for our newsletter to get the latest restaurant news delivered straight to your inbox.

Owen Duff
Owen Duff is a freelance journalist based in Vermont, home of Ben & Jerry’s. Read more about Owen
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