Dive Brief:

• Recent investments in e-commerce and store operations have put Walmart in a position to beat out rivals like Aldi, Lidl and Amazon, according to an Oppenheimer & Co. report cited by CNBC.
• Oppenheimer analyst Rupesh Parikh noted that Walmart has added more fresh items and private label products to its stores, as well as increased customer service levels.
• The retailer’s rapid click-and-collect expansion along with its acquisition of e-commerce companies like Jet.com signal it will be a formidable online player. “In acquiring ecommerce operators, WMT is much more focused upon purchasing key, unique capabilities and technologies, rather than upon simply adding sales," Parikh noted in his report.

Dive Insight:

Facing pressure from discounters, conventional grocers and Amazon, Walmart is using every bit of its vast scale to evolve and increase its operational efficiencies. On the e-commerce side of the business, it’s aggressively expanding its click-and-collect program while also acquiring smaller online retailers. On the personnel end, Walmart just announced a reshuffle of department leaders in areas like produce, deli and bakery. And of course, the world’s largest retailer is putting enormous pressure on suppliers to lower prices.

Growth and efficiency have always been core parts of Walmart’s operations. Nowadays, the company is pushing the accelerator into the red as it aims to stay ahead of fast-moving competitors. Walmart recently implemented a policy that requires suppliers to get their products to the retailer on time or face a fine. Currently, suppliers must get 75% of their deliveries in on time or face a 3% fine on the items that were late or missing each month. By February, suppliers will be expected to get 95% of their deliveries in on time.

Walmart expects its “On-Time, In-Full” or OTIF initiative to increase yearly revenue by $1 billion.

“Variability is the number one killer of the supply chain,’’ Kendall Trainor, a Wal-Mart senior director of operations support and supplier collaboration, told vendors during a presentation earlier this year, according to Bloomberg.    

Amid all the focus on growth and cutting costs, Walmart hasn’t taken its eye off what’s arguably the most important piece of the retailing equation: the store experience. As Parikh notes, the company has noticeably improved its fresh assortment, customer service and presentation.

“They really are operating better grocery stores,” Parikh told Supermarket News. “I think the produce quality is better, the presentation is better, the stores are cleaner and they have faster checkouts.”

Parikh said Walmart is price competitive with Aldi and Lidl in the markets where they overlap. Kroger’s prices, according to his research, were 17% higher than the discounters offered.

Aldi and Lidl will continue to come after Walmart, and they may be able to respond to market demand more quickly given their smaller size and private label focus. Likewise, Amazon could challenge Walmart in home delivery and store pickup services.

Competitive challenges abound for Walmart, but so far the company has focused on improving across all fronts, and will likely continue to do so. With all the talk about new challengers and industry disruption, it seems a familiar competitor may be positioned to come out on top.