Walmart’s grocery and e-commerce units surge as battle with Amazon intensifies

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Ahead of a battle the Amazon-Whole Foods grocery alliance, Walmart is growing its digital operation and its grocery division is as strong as its been in years.

On Walmart’s quarterly earnings call Thursday, CEO Doug McMillon said the company’s food categories delivered the strongest quarterly comp sales growth in five years. Online retail, where Walmart has invested billions to acquire retailers like and Bonobos in recent years, showed net sales growth of 60 percent. Under the leadership of founder Marc Lore, the e-commerce unit is getting more items online every day and adding enticements like free, two-day shipping.

Online grocery is now available at 900 U.S. stores. Walmart is investing in grocery pick up and delivery programs to complement online shopping, as Amazon has opened its first two pick up grocery stores. McMillon said the company is testing a new program in a few locations where in-store employees can sign up to deliver orders directly to customers. Additionally, Walmart will soon have approximately 100 “automated pickup towers” in stores across the U.S., where customers can quickly pick up orders they made online.

Walmart stock dropped following its earnings report Thursday, but shares are rising Friday morning.

Walmart, which is becoming “more of a digital enterprise that moves with speed and agility,” McMillon said, is experimenting with several other tech-based initiatives, as it continues to compete with Amazon.

“We have tests going on with digital endless aisle shopping, robotics and image analytics to scan aisles for outs and we’re using machine learning to assist our merchants with pricing,” McMillon said.

Another example of Walmart’s tech push is its new “Scan & Go” app, which allows shoppers to purchase items in-store without waiting in line or paying at a register. Shoppers will be able barcodes of items they want to purchase and then click a button to pay using their smartphones. They simply have to show a digital receipt to a Walmart greeter on their way out. Shoppers without smartphones can use hand-held scanners provided in-store.

It’s like a manual version of Amazon Go, a check-out free grocery store that launched in Amazon’s hometown of Seattle last year but remains in private beta testing limited to the company’s employees.

As Forbes notes, Walmart is also overhauling in store layouts, emphasizing produce by putting it close to store entrances and grouping similarly colored items together for visual purposes. Walmart is also teaching employees how to pick produce to fill customers’ online orders.

Walmart is finding other ways to leverage its massive retail footprint. Digiday reports that Walmart’s treasure trove of in-store data is making the company a burgeoning force in advertising,