By Michael Corkery
New York: On a bank of the Bronx River, below the roar of the Bruckner Expressway, Walmart has finally found a foothold in a city that has long shunned it. Walmart’s e-commerce business, Jet.com, is leasing a 23,000-square-metre warehouse in the Bronx that will soon begin supplying MacBooks and organic eggs to New York’s well-heeled shoppers.
The physical presence is a victory for the US’s largest retailer, which has faced resistance from labour groups and their political allies every time it has proposed opening a store in the five boroughs. But it’s also an acknowledgement that the company’s long-time national strategy won’t work in certain big cities.
With a revamped Jet’s new push into New York, Walmart is trying to reach beyond its core base of big-box stores in rural and suburban America and compete for higher-income urbanites. A retailing empire built on no frills and low prices, Walmart is using Jet to entice millennials and young families with trendy, premium products like Dr. Martens shoes.
“We believe we can win in New York,” Jet’s president, Simon Belsham, said.
By acquiring stand-alone businesses, Walmart has been able to avoid the political furore it typically sets off in left-leaning cities where there is deep support for the unions that Walmart has rebuffed. Jet is also pushing to grow its business in Boston, Philadelphia and Washington.
It’s a more subtle approach. Walmart agreed to buy Jet for $3.3 billion (Dh12.1 billion) in 2016 and has preserved the company’s distinct purple logo. Jet’s packages are being ferried around New York by Parcel, a Brooklyn delivery service that Walmart acquired last year. Parcel delivery vans bear no obvious markings of their parent company.
It also helps that Walmart’s status as a lightning rod may be diminishing as working conditions at Amazon make it the target du jour. The retailer’s previous attempts to enter the New York market, in Queens and then in Brooklyn, ended in stinging defeat. Activists and city leaders turned the proposed stores into a referendum on Walmart’s labour practices.
Maritza Silva-Farrell, executive director of the labour and community group Align, worked to sink Walmart’s plans to open a store in the East New York section of Brooklyn. She and others argued that Walmart’s low prices would endanger local businesses and that its lower wages would depress pay at other retailers.
Silva-Farrell said she was still concerned about Walmart’s business model. But Amazon, she said, is becoming “a world threat” as the company increasingly dictates the global supply chain and broadens into manufacturing.
“Amazon is going to define how the economy is going to work,” she said. “It’s a bigger problem than Walmart.”
New York is now a testing ground for Walmart’s urban e-commerce strategy, which puts every step of the sale — from the mobile app to the “last mile” of delivery — under the company’s control.
When Walmart acquired Jet, it was not clear how the large retailer would integrate the website into its larger online strategy.
Founded by e-commerce entrepreneur Marc Lore, Jet was billed as the “Amazon killer” that could win over shoppers with low prices. But Jet seemed redundant with Walmart.com, leading some in the tech world to speculate the real motivation was to acquire Lore, who now runs Walmart’s e-commerce business nationally.
About a year ago, Walmart signalled that it was switching gears and focusing Jet’s efforts on certain cities in the northeast, where Walmart lacks a huge brick-and-mortar presence.
“This is a surgical strike,” said Burt P. Flickinger III, a managing director of the retail consulting firm Strategic Resource Group. “Walmart could be a top-10 retailer in the city within the first year.”
— New York Times News Service