Competition is heating up among U.S. grocery chains, but Americans are increasingly buying their food at Walmart.
The retailer on Thursday said food sales had grown to their highest level in five years, as Walmart expands its grocery business both in stores and online by adding more organic produce. The company is also testing grocery delivery in New York, and has taken aggressive steps to compete with Amazon.com, which is the process of buying Whole Foods Market for $13.7 billion, as well as with European discounters like Aldi and Lidl, which are ramping up their presence in the United States.
“We’ve seen strong results from the rollout of online grocery, which is now in more than 900 U.S. locations,” Doug McMillon, president and chief executive of Walmart, said in a Thursday call with analysts. “We’re expanding this service in many of our markets around the world.”
Earlier this year, Walmart created its own “designer” cantaloupe that it says tastes as sweet in winter as it does in summer, and a company spokeswoman says its next goal is to develop a more flavorful tomato. The company has also expanded its lineup of exclusive snacks, including Oreo O’s cereal and Jelly Donut Oreos.
Food sales make up more half of Walmart’s revenue, accounting for nearly $200 billion worth of groceries each year, said Joseph Feldman, an analyst for Telsey Advisory Group in New York. (By comparison, the country’s second-largest grocery chain, Kroger, brought in $115.3 billion last year.)
“There’s been a real effort to improve fresh foods — produce, meats — and they’ve been very aggressive in keeping prices low,” Feldman said. “Big picture, we’re feeling pretty good about Walmart.”
In all, the company said e-commerce sales increased by 60 percent in the most recent quarter. Walmart.com is now the second-largest online retailer, behind Amazon.com, following its $3.3 billion acquisition of Jet.com last year. (Jeffrey P. Bezos, the founder and chief executive of Amazon, owns The Washington Post.)