MENU

How the old guard are fighting back – Walmart
Disruption is increasingly a harsh reality for many once‑dominant incumbent, or legacy, companies. Netflix and other streaming content services have upended cable TV. Amazon and other online vendors have challenged brick‑and‑mortar retailers. Tesla has pushed automakers to innovate with its electric vehicles and the promise of self‑driving ones. But these days, some of the legacy companies have recognized how this is playing out and are fighting back aggressively. In a series of three articles, we look at established “old guard” firms that have shifted their strategy to fight back.

Walmart makes gains with "Click and Collect"

Every day brings new evidence of the “retail apocalypse,” the devastation of brick‑and-mortar stores wrought by Amazon’s rocketing growth. But long‑dominant Walmart, itself once a disrupter, is fighting back by rapidly developing its online channels.

Walmart’s transition began with the purchase of Jet, an online retailer, and Flipkart, an Indian online vendor — plus heavy investments in its digital capabilities. In the beginning, the market didn’t give Walmart the benefit of the doubt, but now it’s demonstrated that it can win, at least in certain segments, such as groceries.

For now, the key to Walmart’s grocery gains has been no‑cost “click and collect.” Customers order groceries online and pick them up at a designated time, with the orders brought to their cars — somewhat like a drive‑through lane at a fast‑food outlet. Recently, it launched an unlimited grocery home delivery service for USD 98 a year. 

21st Century grocery shopping:

Ultimately, “click and collect” is a hybrid solution. The endgame will likely be free home delivery of groceries within hours of ordering. The question is who will get there first.

In this, Walmart faces many competitors, not least Amazon; Target; Costco; and Kroger, the largest supermarket chain in the US, now partnering with British logistics firm Ocado, to master delivery.

Hiring someone to go around a Walmart and pick up grocery items is not cost-effective in the long run versus having dedicated, fully automated warehouses to fill orders. 

What we're watching next​

Among the key questions facing incumbent firms shifting their strategies in the face of disruption from technological innovators is how much their losses in these transitions may total before potential gains from their new business models kick in. For example, Walmart is going to have to invest more to compete with Amazon and others to widely offer low‑ or no‑cost, same‑day delivery of groceries.

The specific securities identified and described are for informational purposes only and do not represent recommendations.

CISI CPD Logo

To earn 30 mins of structured CPD, read this article and complete the short assessment on Adviser Home.

Sign up for US equity insights from T. Rowe Price

Share this article:

Share on linkedin
Share on email
T.Rowe Price 2020 Election Blog
US Flag

Election 2020

Our US Political analyst reports from Washington on the campaign trail, see our insights into the impact of the election on your investments.

Copyright 2019 FactSet. All Rights Reserved. www.factset.com

Important Information

For professional clients only. Not for further distribution.

This material is being furnished for general informational purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, and prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.

Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources’ accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date noted on the material and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request.

It is not intended for distribution to retail investors in any jurisdiction.

This material is issued and approved by T. Rowe Price International Ltd, 60 Queen Victoria Street, London, EC4N 4TZ which is authorised and regulated by the UK Financial Conduct Authority. For Professional Clients only.

© 2019 T. Rowe Price. All rights reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE, and the bighorn sheep design are, collectively and/or apart, trademarks or registered trademarks of T. Rowe Price Group, Inc.

201911-1019416

You might be interested in…

See our comprehensive range of US equity funds

Thank you for registering for US equities updates. The latest insights will be sent straight to your inbox, in the meantime access our latest thinking:

Important Legal Information

This site is intended for financial intermediaries in the United Kingdom. I have read the terms detailed below and confirm that I am a financial intermediary and that I wish to proceed. By accessing this website, you consent to T. Rowe Price collecting information by way of cookies.

Information contained in the T. Rowe Price website is not intended for investors in any jurisdiction in which distribution or purchase is not authorised, including the jurisdiction of the reader of this information, where applicable. For example, the information herein is not for distribution to and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States of America to or for the benefit of United States persons.

Information obtained from this site is intended specifically for the individuals who have agreed to these Terms and Conditions and may not be redistributed without prior consent from the T. Rowe Price Legal department.

The information is designed for professional investors, including financial intermediaries or members of the media, and is published for informational purposes only. In particular, the information is directed at only informing persons falling within one or more of the following categories:

(a) A government;
(b) A bank or insurance company;
(c) A pension fund or charity;
(d) Persons whose ordinary activities involve them, as principal or as agent, in acquiring, holding, managing or disposing of investments for the purposes of a business carried on by them or whom it is reasonable to expect will, acquire, manage or dispose of investments for the purpose of such a business;
(e) Persons whose ordinary business involves the giving of advice, which may lead to another person acquiring or disposing of an investment or refraining from so doing;
(f) Representatives of the media for corporate and background information about T. Rowe Price.

Persons who do not fall into one of the above categories should not act upon the information contained herein.

Certain persons may have access to information regarding the T. Rowe Price Funds SICAV, an investment company incorporated as “Société d’Investissement à Capital Variable” (‘SICAV’) under the laws of Luxembourg and the T. Rowe Price Funds OEIC, an open-ended investment company (‘OEIC’) incorporated in England and Wales. The sub-funds referred to on the site are only offered by the current prospectus. The prospectus contains more complete information about the sub-funds, including investment objectives, charges and expenses. However, the prospectus and other information relating to the sub-funds will not be intentionally distributed to persons in any country where such distribution would be contrary to local law or regulation.

Past performance is not a guide to future performance. The value of securities and any income generated from them might decrease as well as increase. Changes in rates of exchange may also have an adverse effect on the value, price or income of securities. Investors should also be aware of the additional risks associated with investments in emerging markets, high yield securities and smaller companies.

This information herein does not constitute investment advice and the products described may not be available to or suitable for all investors. You should consider, if appropriate, obtaining independent professional advice before making an investment decision.

Unless otherwise noted, the content appearing in this Section of the T. Rowe Price website has been issued by T. Rowe Price International Ltd, 60 Queen Victoria Street, London EC4N 4TZ, which is authorised and regulated by the U.K. Financial Conduct Authority with the reference number 194667.