
Bloomberg
Grocery stores are booming as the coronavirus pandemic drives Americans to stock up their pantries. But the nation’s biggest grocer is largely missing out.
Walmart Inc, which has sat at the top of the food chain for years, has lost market share to companies like Kroger Co and Albertsons Cos, whose quarterly sales have risen by double-digit percentages.
While much is made of Walmart’s high-stakes battle with Amazon.com Inc, right now it’s mainstream supermarkets who are nibbling away at Walmart’s dominance in the nation’s $900 billion grocery market.
Walmart investors are concerned, with shares down 3.1% over the past week. Meanwhile, Kroger is up 10% since it reported better-than-expected sales in its first quarter, while Ahold Delhaize, the European owner of US chains like Stop & Shop and Food Lion, rose 7.6% in August through this week. The setback could just be temporary, though, as pandemic-inspired spending habits revert back to normal.
The share loss is due to several factors. Walmart’s penny-pinching core shoppers don’t eat out as often as those who frequent mainstream grocers, so those chains are enjoying a greater uplift as their clientele shift their budgets to homemade meals. Traditional supermarkets also have largely abandoned their usual discounting strategies given the unprecedented demand for food, so they’re selling more at full price, boosting their gains.
“While Walmart is performing well, it is losing some share to traditional supermarkets,†Scott Mushkin, an analyst at R5 Capital, said. “Consumers have rediscovered the traditional supermarket, and they like it.â€
With Walmart about to introduce a grocery-based membership program to rival Amazon Prime, it’s a bad time to be grappling with disloyal shoppers. And as supermarket workers earn praise as unsung heroes of the pandemic,
shoppers may be keen to shift more dollars to the corner grocer than the nation’s biggest retailer.