Walmart may have found the key to unlock its online growth potential (WMT)

pulse

March 14, 2018 2:36 PM

Walmart announced it will roll out online grocery delivery to over 100 US cities, tapping into a way of reaching its online growth targets.

The retail giant announced it will launch an online grocery delivery service in over 100 cities.

Walmart may have found a way to relieve its online growth concerns, as well as get it to its targets in the next two years.

The company plans to reach a 40% US online growth target by 2019. With the recent announcement that it will roll out an online grocery delivery option in over 100 cities, the retailer may get to those targets after all, Seth Sigman, an analyst at Credit Suisse, wrote in a note to clients.

This rollout will be available to around 40% of US households by the end of the year. Around 90% of Americans live within 10 miles of Walmart's brick-and-mortar stores, giving the company a significant advantage over its competitors. Due to its proximity to customers, Walmart could use its physical locations as a distribution hub to leverage its supply chain and provide faster deliveries.

Moreover, Walmart's online grocery delivery rollout will supplement the retail giant's ongoing expansion of grocery pick-up offerings, resulting in 2,200 stores that offer this service from 1,100 stores by this year. Sigman has been optimistic about the company's

Coupled together, this is where the retailer can shine, Sigman says, because online grocery still remains "largely an untapped market."

"For WMT, given how early it is, we think it can lead the growth, and attain [online grocery] share well above their online market share today in other categories," Sigman said.

Yet he admits that online grocery delivery is getting more competitive. Amazon has been testing a two-hour grocery delivery service from Whole Foods in select cities while Target

Walmart's stock was trading at $88.04 per share, and was down 10.65% for the year.

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