Walmart customers could soon be paying for substitutions they receive for online pickup and delivery, according to an internal memo viewed by Insider. Previously, Walmart customers were charged the same price for the item they originally ordered, even if the substituted item was more expensive.
The memo, sent to Walmart store managers Friday, said the substitution pricing policy will be updated in the coming weeks. The new policy is a standard practice in the industry.
The move comes as Walmart continues to try to expand its grocery market share without alienating its value-based customers. The Bentonville, Arkansas-based retail giant has long dominated the US grocery segment.
“Moving forward, customers will now pay the list price for specific substitution items made on their order,” the memo reads. “Customers and members will receive updates about this change in the Walmart app at various points in their shopping experience.”
The company also said in the memo that this move is part of a larger push to give customers “extra controls over what substitutions they receive when an item is unavailable.” That includes giving customers the opportunity to select and save preferences for substitutions, allowing them to accept or reject substitutions, and letting them opt out from receiving substitutions at an item and order level.
“As we continue to expand our popular online pickup and delivery service, we’re giving our customers more control of how and when items are substituted, including enhanced preferences and the ability to approve or reject substituted items,” a Walmart spokesperson told Insider.
“This flexibility is an important part of how we continue to give our customers more control over their pickup and delivery experience,” the spokesperson said. “In addition, we’ve made the decision to start charging for any item substitutions within these orders – a standard practice in the industry.”
Walmart has long dominated grocery sales. In 2021, the retailer had about 25% of the overall market, according to Euromonitor.
That momentum has continued into 2022. As inflation has jacked up costs on many items from fuel to general merchandise, customers have been more likely to spend their money on food and drink necessities.
Sales for Walmart groceries increased year-over-year in the second quarter by more than 10%, according to Walmart’s earnings release last month, as the company saw an increase in higher-income shoppers.
The company spokesperson didn’t seem concerned about alienating or angering customers with the substitution policy change. “There will be a bit of a transition period” as people learn about the policy change, “but overall, this is pretty common, and we don’t anticipate customers would have an issue paying for items they’re receiving from us.”
The spokesperson added that if customers receive items they didn’t want, there are easy ways to get refunds, either at the store at the time of pickup or on the Walmart app for delivery.
Across many Walmart grocery competitors, such as Instacart and Amazon-owned Whole Foods, customers have been paying for any substitution included in their order. One notable exception is the second largest grocer in the US, Kroger, which had just over 8% of sales in 2021.
“If you accept the substitution, you will be charged the lower of the price of the item you ordered or the price of the substituted item,” Kroger’s terms and conditions of use for pickup and delivery read. “Substitutions will not increase the cost of your order.”
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