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Walmart

Walmart is doubling down on grocery in its race against Amazon

Charisse Jones
USA TODAY

As competition in the grocery space heats up, Walmart isn’t ceding any ground to Amazon saying shoppers will be able to pick up online grocery orders at 1,000 more stores  in the U.S. starting next year.

Company executives told investors Tuesday that grocery is key to hooking shoppers who may then go on to purchase the cosmetics, clothing and various other products that fill Walmart's shelves.

“If you could offer fresh produce ...  with the very best prices, with a really good experience whether it be pick up or delivery, then you have a good  chance to build a long standing relationship that you can then leverage to sell the rest of general merchandise,'' Marc Lore, president and CEO of Walmart eCommerce U.S., said at the annual investors meeting in Bentonville, Ark. "I think we have an advantage. We have assets to leverage in that area and so we’re going to  . . . lean in pretty hard.’’

Walmart, the world’s biggest retailer, has been engaged in a fierce battle with online giant Amazon, buying up niche e-commerce sites while also touting the advantage of having a fleet of brick and mortar stores.

The big box chain is more than three times bigger than Amazon based on revenue, and is the largest grocery retailer in the U.S. But Amazon, currently the fifth biggest player in the U.S. grocery space, bought Whole Foods for $13.7 billion in August, sparking speculation that it would use the premium supermarket brand's 468 locations to expand Amazon's grocery delivery service.

Since then, Walmart has been busy making its grocery offering more convenient. It announced last month that it is testing a service in northern California in which drivers not only deliver groceries and other online orders, but will put the meat, milk and eggs right in the customer's refrigerator.

Shoppers who buy produce, poultry and other household items at Walmart.com will be able to pick up their orders at 1,100 locations by the end of this year, and that number will nearly double in 2018.

Even as it makes the most of its brick and mortar footprint, Walmart is seeing significant success online, saying Tuesday that it predicts it will see a roughly 40% increase in e-commerce sales in the U.S. next fiscal year.

Walmart employee Yurdin Velazquez pushes grocery carts at a Walmart store in Miami. The Walmart company is the largest employer of publicly traded businesses in the United States.

Walmart shares were up 4.47% to $84.13 at the time the markets closed, but had slipped .12% to $84.03 in after hours trading.  

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Walmart also told investors that it continues to project adjusted earnings this fiscal year will range between $4.30 and $4.40 per share . 

"It is clear that Walmart intends to continue to turn up the heat online, with 40% annual growth an impressive goal, especially on the heels of the 30% outlined at the 2016 investor meeting," said Charlie O'Shea, the lead retail analyst for Moody's. "We still believe Amazon's lead in online retail is insurmountable, however, Walmart continues to widen the gap between itself and all other brick-and-mortar retailers by leveraging its unmatched physical resources ... and in the process is providing consumers with a compelling online alternative to Amazon."

Contributing: Kevin McCoy

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