May 31, 2011, 4:48 PM

Seeking growth, Wal-Mart invests in web grocery businesses in the U.S. and China

With slack store revenue in the U.S., the world’s largest retailer is looking to new markets for growth opportunities.

Facing stagnant store revenue in the U.S., where same-store sales declined 1.1% in the first quarter ended April 29, the world's largest retailer by sales is looking for growth opportunities. And Wal-Mart Stores Inc. is targeting online grocery sales, in both the U.S. and China, as one such avenue for reinvigorating sales.

In April, Wal-Mart, the sixth-largest North American retailer in terms of web sales, began testing in California home delivery of online orders of groceries, including fresh produce, meat, seafood, frozen goods, alcoholic beverages, household supplies, over-the-counter pharmacy items, and health and beauty productsÑall picked, packed and shipped from a Wal-Mart store, the company says.

Wal-Mart is offering the Walmart To Go grocery home delivery service through stores in San Jose, a spokesman says. The retailer is charging a base delivery fee of $5, though the fee may be higher depending on the day or time of delivery.

Wal-Mart is not new to home delivery of groceries, but in the past has limited delivery to packaged goods, not perishable items like meat and produce. In addition to Walmart To Go, the multichannel retailer offers national delivery of a limited number of packaged goods, such as breakfast cereals, snacks and candy, that shoppers can order online. Wal-Mart fulfills those orders from warehouses or via drop shippers. And Wal-Mart's Asda supermarket chain in the United Kingdom provides home delivery of online grocery orders, including fresh produce.

Now Wal-Mart is positioned to grow home delivery of online grocery orders in China, where it has been in the retail store business since 1996. Last month Wal-Mart announced it had bought at an unspecified price a minority stake in Yihaodian, a China-based online retailer that launched in July 2008.

Wal-Mart says that Yihaodian is especially strong in online sales of groceries, offering next-day delivery of "essential daily items." Yihaodian also sells baby products, consumer electronics and apparel, offering 75,000 products in all, the U.S. retailer says.

"Online sales in China are growing rapidly and are projected to match U.S. online sales in the next few years," says Eduardo Castro-Wright, vice chairman of Wal-Mart Stores and CEO of the company's global e-commerce and global sourcing units.

paul@verticalwebmedia.com

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