Wal-Mart's latest digital upgrades could deliver a one-two punch to its biggest competitors.
The first allows customers to refill and manage their prescriptions from their mobile devices and skip the line when they reach the pharmacy counter. The enhancement comes amid traffic declines in Target's pharmacy department, following its sale of that unit to CVS in December 2015.
Meanwhile, Wal-Mart will eliminate the physical paper trail now required of shoppers using its money transferring services, as well as the line at these desks. Combined with the retailer's pharmacy rollout, these two capabilities key into one of Wal-Mart's biggest strengths versus Amazon: its massive store network.
The upgrades come less than one year after the retailer completed the nationwide rollout of its in-app payment system, Walmart Pay.
"We're leaning into a behavior and habit that began with Walmart Pay, and it was all centered around how to improve the overall experience at checkout," Daniel Eckert, senior vice president of Walmart Services, told reporters Monday. "This is just going to add on to that overall experience."
As online sales continue to grab a larger chunk of consumer spending, Wal-Mart has been looking for ways to integrate its digital offerings with its massive store fleet. They include the continued rollout of Wal-Mart's online grocery business, which lets shoppers order food online and have it loaded into their cars at a nearby store.
But with its latest announcement, Wal-Mart is targeting two high-traffic parts of the business known to generate repeat visits. One-fifth of the retailer's shoppers conduct a financial transaction while they're in a store, while pharmacy and over-the-counter sales represent 10 percent of the company's domestic revenue. During the fiscal fourth quarter, an increase in prescriptions helped lift Wal-Mart's health and wellness sales by a mid-single-digit percentage.
At Target, which reported disappointing fiscal fourth-quarter results on Tuesday, trouble getting shoppers to switch their prescriptions over to CVS has been one culprit behind its recent traffic declines.
Though the bull's-eye retailer said in November that it expects "significant improvement" in this part of the business in fiscal year 2017, questions remain. CVS, whose app already enables digital refills, said that month that it expects to lose more than 40 million prescriptions to Walgreens after it signed partnerships with pharmacy benefits managers that exclude CVS from their networks. Target said Tuesday it will invest its own cash to ensure it is "clearly and competitively priced every day."
As for Wal-Mart, its new initiatives are the latest in its efforts to make shopping at its stores faster and simpler. While the average customer waits in its money services line for 11 minutes, it can take up to 70 minutes on a pay day, Eckert said.
Wal-Mart has also started testing a Scan & Go technology that allows customers to scan items from their mobile devices as they add them to their cart. They then click a button to process their payment, and have an employee check their receipt as they exit the store. While it is so far only in three Wal-Mart stores, this technology has already been rolled out across Sam's Club's fleet.
Shortening the time spent at checkout became an even bigger focal point last year, after Amazon said it would test a convenience store that eliminates the process.
"Our customers continue to tell us that the need to save time has become just as important as the need to save money," Eckert said.
Wal-Mart expects its pharmacy and money services functionalities to be rolled out across the chain by fall.