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The company will widen its grocery aisles, making fruit and vegetable bins more visible, put organic food in one place and include new signage, all to help give the aisles an “open market feel.” It has dubbed the revamp “Produce 2.0,” and will roll it out across some 3,000 stores and 800 Supercentres. (The Logic, Bloomberg)

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Talking point: This is the latest sign of escalating brick-and-mortar competition between Amazon and Walmart in the grocery business. Groceries represent an estimated US$655-billion U.S. market that is increasingly going digital. Research firm eMarketer estimates that U.S. food and beverage e-commerce sales will grow 18.2 percent to nearly US$20 billion this year, making it “the fastest-growing product category online.” Shoppers buying fruits and vegetables have also been found to spend 55 per cent more on their trips, according to data tracker Nielsen. That’s becoming more important to Walmart amid Amazon’s increasing expansion into perishable food, having recently eliminated its additional fee for fresh-grocery delivery for its Prime members. Walmart has also launched its own unlimited grocery-delivery service for a US$98 annual fee, undercutting Amazon, while expanding its own “click-and-collect” pickup services.

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The Free & Fair Markets Initiative (FFMI), a non-profit, has criticized the e-commerce giant over its working conditions, data-safety practices and receipt of government subsidies in tweets and videos as well as op-eds in large newspapers like The Philadelphia Inquirer and the Houston Chronicle. FFMI declined to reveal its funders. Simon, which has 200 malls in the U.S., declined to comment. Oracle confirmed that it had supported FFMI financially. Walmart said it does not, but sources said it funds the group through an intermediary. (Wall Street Journal)

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Talking point: Astroturfing—lobbying efforts designed to look like grassroots advocacy, but driven by large companies with vested interests—typically focuses on influencing major policy decisions that affect a sector as a whole. Such campaigns normally do not target a single company, making FFMI’s effort a sign of what a threat Amazon has become to its competitors in different sectors. The group has achieved some of its aims. FFMI’s backers reportedly want policymakers to target the tech company with antitrust actions, and in Oracle’s case, to stop it from winning a US$10-billion defence contract. Several U.S. regulators have since launched investigations into the company’s anti-competitive practices, and the government has put the procurement on hold.

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Horacio Barbeito, who has been president and CEO of Walmart Argentina and Chile since 2015, will take over in October. He will replace Lee Tappenden, a 23-year Walmart veteran who had been CEO of Walmart Canada since 2016. (The Logic)

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Talking point: The executive shuffle comes on the heels of Walmart having lowered its projections for international sales growth earlier in August from five per cent to between three and four per cent, largely to account for sluggish Canadian business. Languid consumer spending has been a trend in Canada for more than a year, including a 0.3 per cent drop in January and flattening sales through the first half of 2019. Walmart is also increasingly competing with Amazon in the digital space—the company recently introduced an annual membership, as well as a same-day delivery model for groceries. Amazon expanded same-day delivery for Prime members to 13 new cities across Canada earlier in 2019, bringing the total number of cities and towns with the service to 32. Barbeito’s professional experience at Walmart has all been in Latin America—in his 25-year career with Walmart, he rose through various leadership roles, including in the supply chain and merchandising divisions. Barbeito has said that diversity and inclusion—especially women’s economic empowerment—are important values of his.

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Amazon said it does not plan on installing more Tesla products. Tesla called the fire an “isolated event” and said 11 other Amazon sites with SolarCity panels are operating normally. The statement comes on the heels of Walmart’s Tuesday lawsuit against Tesla, which alleges that SolarCity panels caused fires in at least seven retail stores, causing substantial damage to merchandise. On Thursday, Walmart and Tesla released a joint statement saying they are in talks to resolve their issues. (Bloomberg, Gizmodo)

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Talking point: This is the latest publicity blow to SolarCity, which has been a controversial Tesla acquisition from the start. When Tesla CEO Elon Musk acquired it in 2016, SolarCity was struggling with mounting debt, as well as problems on the consumer side, including accusations of shoddy installation. SolarCity customers have filed at least 671 complaints against the company with the Better Business Bureau, and 118 complaints with the U.S. Federal Trade Commission. SolarCity used to sell and install solar panels it imported from China, but when demand started to outpace supply, the company started manufacturing solar panels in 2014, under Musk’s leadership. With the retail giants’ accusations, it seems the company’s alleged quality control issues may have extended into its manufacturing business. SolarCity was founded by Musk’s first cousin, and Musk was chairman of its board. Tesla shareholders launched a class-action lawsuit against Musk over the acquisition in 2018, arguing that Musk’s role as a controlling stockholder in SolarCity gave him undue influence in the deal. That lawsuit is ongoing.

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Shoppers across Canada—excluding Quebec and the territories—can now order groceries on Walmart’s site and have them delivered that day in “as fast as an hour” by Instacart couriers. The partnership expands on the companies’ pilots, through which they’ve delivered groceries in the Greater Toronto Area and Winnipeg since September 2018. The service costs $7.99 per delivery, or $99 for a yearly Instacart Express membership. (The Logic)

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Talking point: The annual membership and same-day delivery model places Walmart in more direct competition with Amazon’s Prime service. Amazon has funnelled substantial resources into its own same-day delivery service—more than US$800 million in its latest quarter—and membership numbers have consistently grown. Walmart is wading into an increasingly competitive space, however. Loblaw launched grocery delivery with Instacart in 2017. And, Uber reiterated in its earnings call last week that it wants to expand in the grocery-delivery space after launching a pilot in Australia earlier this year. It also said in January it plans to prioritize grocery delivery at its new engineering hub in Toronto. Smaller players are also eyeing grocery delivery: last month, Inabuggy, a Toronto-based grocery-delivery startup, announced a new partnership with specialty grocer Starsky Fine Foods, its 44th retail client in the country.

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The retail giant acquired both companies in 2017, but the two brands are not profitable, according to multiple sources. Walmart has decided to keep Bonobos, the made-to-measure menswear label, but will sell ModCloth this year. It will also hold on to women’s line Eloquii, which is also not profitable. Walmart is projecting its U.S. e-commerce operations to lose more than US$1 billion this year on revenues of US$21 billion, according to sources. Walmart declined to comment. (Recode)

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Talking point: Walmart has spent big to compete with Amazon online. It bought the three fashion brands for around US$450 million combined. It also spent US$3.3 billion to acquire Jet.com, a membership-based e-commerce site, and US$16 billion on a majority stake in Flipkart, the Indian e-commerce marketplace. But while Walmart’s online market share has grown—from 2.6 per cent in 2016 to 4.7 per cent in 2019, according to research firm eMarketer—Amazon’s has expanded faster, from 32 per cent to 38 per cent. And, the fashion brands in particular face increasing competition from independent players. For example, Vancouver-based Indochino added chinos in September 2018, putting it into direct competition with Bonobos in more categories.

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The app lets customers scan items as they shop, bag their own items, then scan the app on exiting the store, at which point their credit card is automatically charged. Walmart plans to roll out the app to three other stores. (Globe and Mail)

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Talking point: Walmart has struggled to get customers to use its app in the past. In 2018, the company dropped a pilot program running in 20 Canadian stores, following customer complaints about the difficulties of weighing their own produce and the effectiveness of the scanner gun. The Toronto pilot is meant to address those concerns. For example, customers are now charged per produce item, not by weight. Loblaw is currently running a pilot in eight Toronto stores with a similar scanning process, although shoppers do need to weigh their own produce. Getting the small details right on this kind of app is tricky. In the U.S., Walmart abandoned a scan app in 2018 after customers complained that it was draining their phones’ batteries. Walmart and Loblaw’s interest comes as Amazon is considering opening 3,000 cashierless grocery stores across the U.S. by the end of 2021.

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The company reported earnings-per-share of US$1.13 in the first quarter of 2019, beating analysts’ estimates of US$1.02. Same-store sales growth in the U.S. was up 3.4 per cent, its 19th consecutive quarterly gain. However, it missed revenue estimates, at US$123.93 billion versus US$125.03 billion. Also on Thursday, Walmart Canada announced the creation of two “pickup towers” in its stores in the Greater Toronto Area (GTA). Meant to ease in-store order pickups, customers scan a barcode into the tower’s system, which then brings the requested items down through an elevator structure. (TechCrunch, Mississauga News)

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Talking point: Walmart’s strong financials derive mostly from its thriving online grocery business, and growth in both home and fashion online sales on its website. It’s been investing heavily in those areas to compete with Amazon’s expansion into e-commerce. In e-groceries, Walmart has an edge over its competitors because its brick-and-mortar stores—including those in the GTA—can be used as pickup sites, meaning goods ordered online don’t come with a markup. Walmart Canada is making a number of investments in its physical stores to streamline that process. In early May, it announced an investment of over $200 million to refurbish 31 stores, including an expansion of the online-order pickup option.

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The retailer will deliver orders worth more than US$35 of popular items—like laundry detergent, toys and electronics by the next day for free. The first markets are Phoenix, Las Vegas and Southern California. Walmart plans to expand to the service to three-quarters of the U.S. population by the end of the year. (Reuters)

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Talking point: Walmart’s move is a swift response to Amazon, which announced one-day shopping for members of its Prime loyalty service in April. Walmart has a cost advantage over its online rival, since its network of stores can act as fulfillment centres for delivery orders; Amazon is spending US$800 million to cut Prime shopping times down from two days. Walmart hasn’t announced any plans for an international rollout of one-day delivery. That’s good news for Instacart, which fulfills Walmart same-day orders in Canada, and for the 200 workers the grocery-delivery service is planning to hire in Toronto.

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At least 300 stores will have machines to scan for out-of-stock products, and 1,500 stores will have “autonomous floor scrubbers.” The retailer will more than double its automatic scanning and sorting conveyor belts to 1,200, and 900 stores will have online-grocery pickup kiosks. The retailer has been testing the robots for more than two years. The company said the machines are more productive and cost-effective than human labour, though it didn’t specify whether any jobs would be cut as a result of the rollout. Walmart Canada did not immediately reply to The Logic’s questions about whether the changes would affect Canada. (Wall Street Journal)

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Talking point: Physical retailers are increasingly turning to automation amid rising labour costs and low employee-retention rates. But Walmart is framing its new robots as co-workers to its existing employees, not competition. Mark Propes, Walmart U.S.’s senior director of central operations, said the move eliminates the need for workers to do tasks they “don’t enjoy doing,” allowing the company to create new jobs in “other things” in the store. Though he didn’t specify what those roles would involve, Walmart has also been hiring thousands to fulfill online grocery orders.