The mass merchants ramped up omnichannel services at their thousands of U.S. stores, resulting in enormous gains in online sales. Digital Commerce 360's 2021 Omnichannel Report reveals more about how retail chains weathered the pandemic in 2020.

During a year when shopping online and picking up curbside or deliveries replaced shopping in stores for many of their customers, Walmart Inc. and Target Corp.—two of the country’s largest retail chains—stood out.

While many chains suffered due to coronavirus-related shutdowns, Walmart (No. 3 in the 2021 Digital Commerce 360 Top 1000 Database) and Target (No. 7)—mass merchants that are also major grocery retailers—ramped up omnichannel services at their thousands of U.S. locations as the pandemic dragged on. The result was a surge in orders for curbside or in-store pickup and on-demand, contact-free home delivery from customers who wanted products as fast as possible.

Pickup and delivery soars at Walmart stores

Walmart’s online sales grew 79% for its fiscal year 2021, which ended on Jan. 29. In Q4, online sales grew 69%, the retail giant reported.

The retailer says sales on the Walmart marketplace and pickup and delivery sales increased triple-digit percentages year over year. In the grocery segment, pickup and delivery saw record-high sales volumes, reflecting a continued customer shift toward ecommerce and omnichannel options, Walmart says. Walmart now offers pickup of online orders at about 3,750 stores and same-day delivery at about 3,000, the retailer says.

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During a Feb. 18 conference call with analysts, CEO Douglas McMillon said growth was strong across the company, even as the retailer took steps to protect employees and customers’ health during the COVID-19 pandemic. Those steps included adding more capacity for pickup and delivery of orders placed online and adding hundreds of thousands of employees to its workforce.

In September 2020, Walmart doubled down on ecommerce and omnichannel delivery by launching a premium loyalty program called Walmart+. The program, which costs $98 per year or $12.95 per month, offers members free next-day delivery, two-day shipping with no order-size minimum, free local delivery on orders of $35 or more and fuel discounts. Also included is an in-store service called Mobile Scan & Go, which allows customers to scan products and check out with their smartphones as they shop.

Consumer Intelligence Research Partners LLC (CIRP). CIRP estimates 13% to 14% of Walmart.com customers joined Walmart+ as of Jan. 30. In the U.S., Walmart.com customers spend an average of $1,000 per year at the website, CIRP says.

Omnichannel drives growth for Target

In the fiscal year ended Jan. 30, Target’s ecommerce sales grew 145%. Omnichannel services drove that growth: Curbside pickup sales, which Target calls Drive Up, grew 600% year over year for the retailer. Same-day delivery through its Shipt delivery unit grew 300%. Online orders picked up at stores jumped 70% from 2019. Combined, fulfillment through same-day services grew 232% year over year in its fiscal year ended Jan. 30. Target acquired Shipt in 2017.

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For Target, contact-free fulfillment from its stores helped it increase online sales—in dollar terms and as a percentage of overall sales. The chain’s online sales for the year surged to $16.63 billion—up more than $10 billion compared with 2019. As a result, ecommerce now accounts for 18% of Target’s total sales—compared with 9% in 2019. Target says it fulfilled 95% of all sales via its almost 1,900 stores.

During a March 2 conference call with analysts, John Mulligan, Target’s chief operating officer, explained that the emphasis on fulfilling from stores means more than providing contact-free fulfillment; it also helps the bottom line. Mulligan said on the call that fulfilling same-day orders through Shipt costs 90% less than shipping from a warehouse.

During the same call, Michael Fiddelke, executive vice president and chief financial officer, said customers who try the drive-up service for the first time spend about 30% more on average than they did before using the service, including an increase in conventional in-store shopping.

Consumers approve of omnichannel experiences

A Digital Commerce 360 and Bizrate Insights of 1,052 shoppers in February 2021 found consumers are happy with picking up orders placed online.

On a scale from 1 to 10, where 1 is poor and 10 is excellent, 77% rated their in-store and curbside pickup experiences as 8 or higher. Only 6% gave a score of 5 or below.

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Now that consumers have learned how to use omnichannel services, there’s no going back to the 2019 version of normal once the pandemic ends, experts say.

Seth Basham, managing director for equity research at investment firm Wedbush Securities Inc., also thinks it’s unlikely that consumers will stop using omnichannel services after the pandemic becomes a bad memory.

“Consumers are demanding these omnichannel options more and more because of COVID,” Basham says, “And once they try them, they realize they are quite convenient and make their shopping experience better and easier.”

Brian Gioia, director of product strategy at online agency Scrum50, says savvy retailers and brands will continue investing in omnichannel services. He says retailers should look at the mass adoption of ecommerce during the pandemic as an acceleration of existing trends.

“A lot of consumers that have adopted or increased their ecommerce shopping have found it to be a convenient time-saver,” Gioia says.

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Omnichannel can be challenging for retailers with stores

Eric Roth, managing director at investment firm MidOcean Partners, agrees that omnichannel investments are a good idea but cautions that retailers must understand the challenge.

Omnichannel favors retailers that can “effectively communicate the capability and have great digital acumen,” Roth says.

“Omnichannel is very expensive and also culturally challenging because many retailers’ DNA is store-based—which means change is tough,” Roth says. But, he says, store-based retailers that don’t invest in omnichannel services will fall behind their competitors.

“True omnichannel retailers want to make shopping more convenient and easier,” Roth says. Contactless services enable consumers to “more easily get what they want, which means they are more likely to be sticky and return,” he says.

The 2021 Omnichannel Report

The Digital Commerce 360’s 2021 Omnichannel Report reveals more about how retail chains weathered the pandemic in 2020. The report includes:

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  • An in-depth assessment of how COVID-19 triggered retailers to launch or expand omnichannel services.
  • Longevity analysis of the omnichannel services retail chains offered prior to and throughout the pandemic.
  • A detailed look at how smaller retail chains handle omnichannel.
  • Consumer insights into what works—and doesn’t work—when making an omnichannel purchase.
  • 15+ charts and graphs detailing omnichannel trends, bankruptcies in 2020, consumer shopping behavior and more.

This article is based on analysis from Digital Commerce 360’s 2021 Omnichannel Report. This report is available to Digital Commerce 360’s Gold and Platinum members, or available to purchase for $399. View the table of contents for full details on what’s included in the report. You can learn how to purchase the 2021 Omnichannel Report here.