United States: Hybrid Cars Surge as Electric Vehicle Sales Decline

1. Electric Vehicle Enthusiasm Fades

2. Challenges Facing EV Adoption

3. Impact on Major Auto Manufacturers

4. Market Shifts and Consumer Preferences

5. The Rise of Plug-in Hybrids

6. Future Outlook for the Auto Industry

Jica:  Well, on the CBS Money Watch, hybrid cars are back in the spotlight. Sales are surging as all-electric vehicle sales slow down. CBS's Elise Preston is in Los Angeles and took a drive to find out what's happening there. Elise?

Elise: Jica, EV enthusiasm is fading. Slumping sales and production delays make it clear that it's not quite full speed ahead to America's all-electric future. Electric vehicle sales in the US are slugging. Many shoppers say they want lower prices, batteries that last longer, and a reliable charging network.

Interviewer: How long are you going to wait to be able to charge your car?

Shopper: I mean, to be honest with you, you don't really have a lot of choice. The infrastructure is not very good.

Elise:   Nationwide, EV sales are down 7% so far this year, causing Ford to delay production of the next-generation electric F-150 and a three-row SUV. GM scaled down its 2024 EV sales projections by as much as half.

Interviewer: What does this mean for the industry over the next five years?

Analyst: I mean, I'd say over the next five to seven years we probably now have about 25-30% less potential EV buyers, and that's a big wake-up call for the industry.

Elise:   Production problems caused Tesla sales and stock to fall. Reuters reported that the company canceled plans to build a $25,000 entry-level family sedan. Competitors are coming from all angles. One of those competitors, Volvo, just set a company sales record powered by its popular EX30 electric SUV. While demand is down for EVs, plug-in hybrid sales are up more than 50%, with many of those vehicles qualifying for tax credits. 

We are looking at cars. What type would you consider for your next vehicle? Are you sticking with gas, taking a chance on electric, or something in between? Well, the Biden Administration would like you to drive something a little bit cleaner, but electric vehicle sales are not growing as fast as they hoped. In fact,  is saying that nearly two-thirds of potential car buyers are unlikely to purchase an EV for their next vehicle. So, Ben Tracy went to Detroit to find out what people might be interested in instead.

Hybrid Demand at Ford

At this Ford plant in Dearborn, Michigan, they make the best-selling vehicle in the country, the F-150 pickup truck. Every 53 seconds, we have a truck come off this assembly line. Courtney Reeves is a production manager. She says on this day, one out of every seven trucks rolling off the line is a hybrid. 

Increasing Production

And what was that like a year ago?

A year ago, it was one out of ten.

One out of ten? So a 30% increase?

Correct. So the consumer is really demanding this product.

Hybrid Vehicles Make a Comeback

Hybrids, which run on both battery power and gasoline, are suddenly hot again. Sales had been falling since 2014 but started to rebound in 2020 and spiked last year. Hybrids now make up 9% of new car sales compared to about 7% for electric vehicles.

Featuring a hybrid max power train, they hit the sweet spot for consumers who want to save on fuel costs or lower their emissions but don't yet want a fully electric vehicle because of concerns including price, range anxiety, and evolving battery technology.

Electric-Curious Consumers

So hybrid is the safe space for the electric-curious?

Hybrid is a very good space right now for the electric-curious. We actually see hybrid as a bridge from gas to electric.

Ford's Strategy

Andrew Frick is president of Ford Blue, which makes the company's gas and hybrid vehicles. He says Ford now plans to quadruple hybrid production in the next five years.

When it comes to your truck, you can power it up six ways to Sunday.

Pro-Choice Campaign

In a new ad campaign, the company is positioning itself as pro-choice: gas, power boost hybrid, or all-electric. The power is yours.

Customer Preferences

I assume there's some customer data that is showing you that people did not want to feel like they were being forced into an electric car?

Yeah, we see customers obviously wanting to make the right choices for themselves.

Adapting to Demand

Is it fair to say you're basically going to make whatever car people are willing to buy?

We want to cater to our customers.

Anybody want to jump in the back?

Regulatory Push and Emissions

The Biden Administration has used regulations to push automakers to rapidly electrify their vehicles because, in the US, transportation is the top source of planet-warming emissions. Over its lifetime, an EV produces 50% less CO2 than a gas-powered vehicle. A hybrid cuts it by 25%. So decarbonizing the American auto fleet would not happen as quickly.

Leading in EVs

We want to lead in EVs, full stop.

In 2022, we talked to General Motors CEO Mary Barra as the company said it would stop selling gas-powered vehicles by 2035.

Is this change to all EV inevitable at this point?

I think it's inevitable.

Challenges and Delays

I think any automaker that made an announcement saying they would be all EV by 2030 or 2035 has to be seriously rethinking that right now. Eric Tingwall with Motor Trend says EV prices are dropping, and sales are still growing but at a slower pace. Automakers, including Ford and GM, have postponed certain EV models and battery plants, calling into question President Biden's goal of 50% of new car sales being electric by 2030.

Does that seem possible at all at this point?

Possible, maybe. Likely, almost certainly not. I think the long-term future is electric. The near-term future is hybrid, plug-in hybrid electric, and some gas vehicles as well.

Barron Trump: Growing Up in the Spotlight

"Sometimes you need to fight back I discuss with him I teach him what is right what is wrong he doesn't have a social media yet he's not interested and he's all into sport"

Mother of Barron Trump Says

 

Are you aware that Donald Trump had a son named Barron probably not and that's because Baron Trump has always been shielded from the public eye despite that he has been Making Waves among the Great and Mighty my son is a wonderful young man he took a meeting with a Russian lawyer not a government lawyer but a Russian lawyer it's called opposition research or even Research into your opponent he is a man of so much intelligence and Brilliance that Elon Musk though he was once against Donald Trump's administration had something to say about him what has the Tesla CEO revealed about the young astute man could he be the next great inventor of our time or possibly planning to take up a leadership position like his father join us as we unravel the peculiarities of Donald Trump's son Baron Trump.

 Barron Trump Education Journey 

Some other astonishing facts no one knew about him number one a unique School Journey Baron's academic path combines a variety of encounters from numerous Elite institutions and settings one of the most prestigious private schools in New York City Columbia grammar and Preparatory School in Manhattan was where he started his studies Baron completed his Academic Year in Manhattan when his father was president after the academic year ended Baron moved to Washington DC with his mother Melania Trump and enrolled in St Andrews Episcopal School the educational ideals of the Trump family were well aligned with St Andrews which aims to know and Inspire every child within an inclusive community committed to great teaching learning and service the family relocated to Florida when President Trump's term ended in 2021 and baron enrolled in the esteemed College Preparatory Oxbridge Academy Oxbridge Academy's director of advancement Scott Siegfried forly welcomed Barron navigated his academic career through this up until his recent graduation and here is a surprising fact at the ceremony Barron towered over every other guy whatever the situation Baron handled changes in schools and locals with great grace.

Barron Trump Brings Joy to Family 

Agility he's very good at that number two Melanie's miracle baby not quite a year following Melania and Donald Trump's marriage little Barron was introduced to a life of luxury and distinction however neither the couple nor the outside world had anticipated his arrival in numerous public remarks and interviews Melania referred to Barron endearingly as a miracle baby his pregnancy was unexpected and unanticipated Barron's entrance caught Donald Trump off guard however he acknowledged that he was happy to be a father again though he had not expected his son to arrive he talked kindly of Barron calling him very special and a great little boy Melania often draws attention to the happiness and joy that Baron has brought into their lives highlighting the close relationship that unites them as a family Donald's admiration for his brain and Charisma further reinforces Barron's favorable impact on the Trump family the Family Treasures the recollection of Baron's unexpected pregnancy and subsequent birth they were grateful to have a new member join the family have you ever had a miracle baby you can also name him Baron number three Barron is trilingual Barron who is Young is a fluent trilingual speaker.

Barron Trump Languages Expertise 

Donald Trump's children speak a little French but Barron speaks even more fluently his quest started with an attempt to pick up the Slovenian mother tongue of Melania at 5 years old Baron could have easy conversations with his mother and grandparents because he was fluent in Slovenian Melania enthusiastically emphasized Barron's linguistic abilities in a 2009 Interview With People magazine Baron showed uncommon multilingual fluency at such a young age speaking English and Slovenian fluently by the time he was 3 years old not only that but he was studying French, he is a young man with excellent language skills as seen by his early and remarkable competence in numerous languages.

Baron Family Bonding 

Number four bonds tightly with his nieces and nephews, he is the youngest child of former president Donald Trump and Melania Trump born on March 20th 2006, he maintains some normally throughout his early years despite their family being in the public eye Barron was protected from the media during his early years while growing up in Trump Tower in New York City mainly because of Melania she strongly emphasized active parenting to give her son a quiet secure upbringing, Barron relocated to Washington DC after his father was sworn in as president however Melania continued to hide him from heavy public scrutiny throughout this period to provide him with a life that was as normal as possible this made it possible for Baron to grow up in remarkably regular conditions because of his age Barron has a strong relationship with his nieces and nephews, ultimately Donald Trump eldest sibling is 29 years older than him as a result Barron is younger than his brothers and closer in age to his nieces and nephews 10 grandkids ages 4 to 17 have been welcomed into the family by their father Donald Trump Kai the 17-year-old granddaughter of Donald Trump is the oldest of these grandchildren and is less than two years younger than her uncle Baron this allows Baron to connect with his nieces and nephews on a generational level by engaging in Pursuits and hobbies that mirror their common experiences he builds a bond with them that goes beyond conventional family responsibilities number five the story behind his name people are always intrigued when they hear the name Barron for the first time why then did the trumps give their son the name Barron Donald has a Fascination for this specific name although he hadn't used Barron for his other Sons he had always thought it sounded good however he still chose to call his last son Donald Trump Jr when Melania had her child she already had a bond with the named Baron but amazingly Donald changed his mind at the last minute he said he was having second thoughts this time and that Baron was a name he had always loved but never dared to use he considered going back on his decision disclosing this Twist on the Oprah Winfrey Show Melania who had been referring to her unborn child as Baron during her pregnancy insisted that it was not acceptable to take it away from her as she had already been attached to it so in the end they chose Baron that's not all however the name originates from Trump's well-known Alias John Baron which he often used as a real estate agent in the 1980s .

Elon Musk Moves SpaceX & X Headquarter California to Texas

Elon Musk says this is the last straw and he is moving his businesses out of California.  The disagreements between Musk and Newsom are not new reports show Elon Musk was already making plans to move away before Newsom signed this bill, but he'd already moved Tesla to Texas three years ago in the economic expert I spoke to says this is not good for the local economy. Elon Musk moving the headquarters for his companies, SpaceX and X, from California to Texas. This comes after the state banned school to inform parents about their child's gender identity change. 

It's the first law like it across the nation, signed by Governor Newsom on Monday, the tech billionaire wrote on his platform X this is the final straw because of this law and many others that preceded it, attacking both families and companies. SpaceX will now move its HQ from Hawthorne, He also says X will move from San Francisco to Austin, Texas. Tesla headquarters were already moved from Palo Alto to Austin in 2021, after Musk criticized California tax regulations. 

Corporate business expert Mitchell Lee says it may not make a big impact on the state, which touts having the fifth largest economy in the world. But the loss could be felt in local economies like San Francisco, which has already taken a hit by the loss of corporations downtown, for example, with fewer high earners comes fewer crowded restaurants for lunch. I'm thinking now about the mom and pop shops. 

Even the chains that employ people at minimum wage. But Musk is not the only one. There's a growing trend of corporations leaving California as cost of living goes up. In the last several years, a couple of hundred businesses have left California. those businesses have relocated in Texas. What's unique in this situation is a big corporation leaving because of a difference reasons. In another post, Musk wrote, I did make clear to Governor Newsom about a year ago that laws of this nature would force families and companies to leave California to protect their children. In a response on X, Governor Gavin Newsom shared a screenshot from Donald Trump, implying Musk begged Trump for support for his tech projects. 

It reads in part, I could have beg, and he would have done it in a witty response, Newsom writes back, you bent the knee, insinuating Musk was just appeasing Mr. Trump for financial gain. There's no word on a timeline for a move, but it's likely certain factories will stay put. Like Tesla's Fremont factory did after the headquarters moved to Austin and the governor's press office headquarters moved, the company expanded in California. 

Amazon's New Low-Cost Strategy: A Game Changer for Third-Party Sellers?

Amazon Against Temu: Chinese Products Delivered to the US Directly from China

Amazon just announced that they are going to compete directly against Temu with a brand new low-cost option of unbranded goods shipped direct from China and Amazon FBA sellers are going to be screwed. Basically, Amazon's going to offer the exact same service that Temu does, selling cheap generic Chinese products that take about 7 to 11 days to be delivered to the US directly from China.

Amazon's New Competition: Direct Challenge to Temu 

So in this video, I'm going to give you my take on exactly what is going on, the implications on the third-party Amazon seller community, and what you must do right now to prepare yourself as an e-commerce seller. But I'll say this upfront: right now it's not looking good.

Implications for Third-Party Amazon Sellers

So first off, what exactly is happening and what are the details of what's going on? Well, for the past two decades, Amazon has focused on the speed of delivery by selling cheap stuff that arrives quickly. Amazon has built the most expansive and optimized fulfillment network in the United States, capable of delivering almost any product imaginable to consumers within 2 days. There are roughly 180 million Americans who are Amazon Prime subscribers, which is at an all-time high as of this year.

Understanding the Shift in Consumer Preferences

But we're in a recession and right now Americans care more about saving money than the speed of delivery. That's where sites like Temu and Shein have been destroying Amazon's market share. Now, in a prior video, I reported that Amazon's revenue from apparel is down 30% year-over-year and tens of millions of Americans have started shopping on Shein and Teemu instead.

Temu and Shein: The Rising Threats

If you aren't familiar with these two PL platforms, Teemu and Shein are Chinese-owned e-commerce platforms that ship products directly from China with no middleman. The shipping takes longer, but the prices are lower. For example, this floor mat here on Temu is $16, but an identical floor mat on Amazon is being sold for $40. Now, is getting a product in 2 days versus 11 days worth paying 40x for the product? Well, Americans are speaking with their wallets and saying no. They're willing to wait a week to get their stuff if they can save money.

Temu's core strengths are household items and electronics, whereas Shein specializes in women's clothing and accessories. Together, these two Chinese companies are decimating Amazon sales.

Amazon's Strategic Response

But last week, Amazon declared war on these two Chinese platforms by opening a new online store for low-cost products shipped directly from China. According to their announcement, the rollout is going to occur in stages. To start, Amazon is going to first focus on branded clothing and household items priced less than $20 and weighing less than a pound. As we speak, Amazon is rounding up and encouraging Chinese factories to sign up for this program where Amazon will ship the orders directly from China and arrive in 9 to 11 days.

Compared to 1 to 2-day Prime shipping, 9 to 11 days feels like forever. But like I said already, Americans are speaking with their wallets and care less about delivery speed. According to Statista, Temu was the most downloaded e-commerce app in 2023, surpassing Amazon with over 120 million downloads.

Economic Factors and Market Dynamics

Meanwhile, according to GWS Magnify, Temu had 82.4 million active shoppers on its app in September of 2023, up from only 4.6 million the prior year. By comparison, eBay only drew 40 million online shoppers that month, while Temu ran neck and neck with Walmart, which had 85.5 million online users. While Amazon was still number one with 142 million monthly users in September, Temu already has more than half of Amazon's traffic after just 2 years.

Tax and Import Advantages for Chinese Sellers

But here's where the story gets worse. Once Amazon starts selling cheap unbranded stuff direct from Chinese sellers, it's going to be hard for third-party sellers in the United States to compete. As of right now, Chinese sellers do not have to pay import duties or taxes on the products they sell because of the "de minimis" rule. This rule states that products can be imported into the United States without paying taxes or tariffs as long as the package is worth less than $800. 

Second, selling direct allows Chinese factories to bypass the middleman altogether and ship directly to consumers in the United States. When Temu first launched in 2022, only a handful of the same Chinese suppliers on Temu were selling on Amazon. However, as of this past December, there is roughly a 10% overlap between Teemu sellers and Amazon sellers. Thanks to this new Amazon program, it's about to become 50% or more. Chinese sellers already make up over 50% of the top sellers on Amazon. Who knows, it could reach 75% or more once all of them start shipping direct from China and not have to pay taxes.

 

The Future Landscape for Amazon Sellers

Right now, if you search for the same product on both Amazon and Temu, you'll find that many of them are exactly the same except Temu is many times cheaper. I already showed you the foam floor mat earlier, which was 40x cheaper. Well, I just did a search literally right now, and this neck fan here is $23 on Amazon but only $6.95 on Temu. 

Strategies for Third-Party Sellers to Stay Competitive

If the products being sold on both platforms are the same, why are Amazon's prices higher? It's because all FBA sellers on Amazon have to pay referral fees, import fees, duties, tariffs, and Amazon's hefty FBA fees. Just this year alone, Amazon introduced a slew of new fees and increased the rates of FBA. For example, Amazon now forces all sellers to pay an inbound placement fee, so basically you have to pay a fee of between $0.21 to $6 per unit for Amazon to accept standard and large bulky products into their warehouse. This fee is supposed to reflect the cost of distributing inventory to multiple fulfillment centers. In addition, they announced a low inventory fee. In the past, you only had to worry about having too much inventory in stock, but now you will pay hefty fines if you have too little inventory as well.

The Importance of Branding and Customization

By the way, if you're enjoying this video so far, make sure you sign up for my free six-day e-commerce mini course below that will outline exactly how you should start a profitable online store today. Now, how do you avoid these fees? You have to pay for Amazon warehousing and logistics. This service allows you to waive your placement fees by holding your products in Amazon's third-party warehouse where they are drop-shipped on demand directly to a fulfillment center. So basically, Amazon is forcing everyone to use their end-to-end logistics services now, and the fees all add up to a lot of money. Compared to a Chinese seller paying a couple of bucks to have a product shipped direct from China with no taxes or fees, a third-party Amazon seller importing from China and then selling on Amazon has no chance of matching prices.

 Targeting High-End Customers

Then finally, there's the Amazon factor. Temu and Shein are hurting Amazon right now, so Amazon will be incentivized to show off these brand new cheap products to fight back. Can you imagine paying money to advertise your Amazon listing only for Amazon to display cheap unbranded Chinese products under your own product for one-third the cost? Well, this has already happened in the past with Amazon's own branded products. Now the price difference is going to be more dramatic. Sure, Amazon has said that the new El Cheapo Mall will appear in its own section of the Amazon website, but do you really think that Amazon's going to hide this section from regular Amazon buyer traffic? No way. Remember, Amazon makes money no matter what, whether the sale is coming from you or a Chinese seller shipping direct from China. Do you really think that these cheap Chinese products are not going to show up in regular Amazon search? Not a chance. So here's what's going to happen. A customer will do a search for your product and find ridiculously cheap alternatives right next to your higher-priced listing. It's next to impossible to start a brand on Amazon, so your brand will be pretty meaningless in the eyes of the consumer.

 Building a Strong Brand Outside of Amazon

Now I hate to say it, but US-based Amazon FBA sellers are in big trouble. On one hand, Amazon is charging three-piece sellers placement fees, referral fees, inventory fees, pick and pack fees, and here comes a Chinese seller who doesn't have to pay for any of that stuff, and they have the pricing advantage. I really don't see how this can possibly end well. But the real question is how can you fight back? Well, for many Amazon sellers, they're going to have to rethink their entire product portfolio. If you're selling generic stuff on Amazon right now, you're in trouble. Someone from China will undercut you in price and you will not be able to compete. Instead, you need to think about products that cannot be easily sold from a seller in China. For example, I have a student in my class that sells skincare products. Would you ever buy a skincare product from a no-name company in China at one-tenth the cost? Well, skincare consumers will be less price conscious because who knows what chemicals are in the Chinese formulation. For my store over at bumblebeelinens.com, we've doubled down on personalization. Sure, Chinese sellers can copy every single product that I sell, but what they can't do easily is personalize a custom product for the consumer in a timely manner. We provide custom embroidery, custom printing

Why Walmart is the Best for Groceries in the USA

Walmart Largest US Grocery Chain

Sky-high grocery bills are inflicting pain at the supermarket checkout counter. Food at home prices in 2022 jumped 11.4%, and are expected to increase 5% in 2023. By comparison, prices rose just 0.7% in 2019. In an effort to stretch their grocery dollars further, a growing number of Americans are turning to Walmart. 

The Arkansas-based retailer is America's largest grocer, more than twice the size of its next biggest competitor. One of the biggest drivers for Walmart's grocery business today is, ironically, inflation, as prices have gone up for a lot of items not just food but housing more customers across incomes are turning to its stores. Known for its low prices and massive footprint, Walmart takes in more than 1 in 4 grocery dollars in the US, a 1.5% increase from 2021. 

Walmart's low prices are also resonating with high income consumers, who made up about half of the company's market share gains in food in the fiscal quarter that ended January 2023. Inflation is having an impact, particularly for those that don't have as much money, so we see them behaving in different ways. 

But we're also attracting a lot of new customers to come to our stores, to our app, to our website. Higher income families are shopping at Walmart because they're so price sensitive right now. When we think about the grocery landscape over the next five and ten years, we see increasingly middle America and affluent America shifting some of their shopping basket over to Walmart. 

To boost its customer base Walmart has enhanced its online shopping experience, added robots to its warehouses, and ramped up programs like drone and direct-to-fridge delivery. It's also expanded its late night delivery offerings. As it has gained market share its stock price has continued to climb, but Walmart, along with its rivals, has also faced criticism that it doesn't compete fairly with small, independent grocers. 

You will see milk being sold in place of $1 a gallon, less than what I can even buy for, eggs, you know, anywhere from $00.25 to $0.50 or more less than what I can purchase from. As long as we are not on a level playing field the more we will see grocery store closures across the country, the less opportunity there will be for these consumers. And with inflation, cooling and prices leveling off will Walmart be able to hang on to its newly acquired shoppers? One of its big threats is actually regional grocers like HEB or Publix or Wegmans have really strong fan followings. CNBC looks into Walmart's grocery business to see why even more Americans might be ordering food from the company in the future. 

The first supermarket opened in the US in the early 1900s. Inventions ranging from the shopping cart to the frozen dinner, in addition to the rise of the suburbs, help the format flourish. Following World War Two, supermarkets emerged as the leading food retailer in the US, with the number of stores more than doubling from 14,000 in 1950 to 33,000 in 1960. The format was such an integral part of American culture Cold War propagandists used supermarkets to showcase the advantages of capitalism. 

Tell me, who could possibly afford to buy food in a place such as this? This is just an ordinary food market most everybody in America shops in stores like this from time to time. 40s. 50s. 60s. we had an incredibly robust and diverse market. It's so interesting to me that in the 1950s, independent grocers were about half the market. They were going like gangbusters, like really thriving. But we also had the growth of these chains like Kroger and Safeway. Sam Walton opened the first Walmart in Arkansas in 1962. 

Two decades later, a full scale supermarket was added, creating the chain's first supercenter. Around the same time, Walmart launched Sam's Club, its warehouse store. By the early 2000s, Walmart was the country's largest grocer. Walmart, in its early days, was more of a destination for general merchandise that you needed for your home and your life. It's increasingly become your regular grocery store. In an effort to beef up its e-commerce operations in 2016, it purchased online retail site Jet for $3.3 billion. 

Four years later, the site was discontinued. If you look at the trajectory of our business, it changed when we made that acquisition. Not only did we pick up Mark Lore and a great team, we picked up fulfillment centers, a lot of expertise that ended up paying off. Walmart's competitors were expanding, too. 

Between 1997 to 2000, a fifth of all US supermarkets, 4,100 stores in total were acquired. By 2005 the 20 biggest US grocery stores, including Kroger, Albertsons and Safeway, accounted for more than 61% of total US grocery store sales. And that consolidation continues today. Grocery chain Kroger announced in October 2022 its plans to buy rival Albertsons in a deal valued at $24.6 billion. The US had over 63,000 grocery stores and supermarkets in 2023, employing nearly 3 million people. 

Together with Sam's Club grocery sales were more than $300 billion at Walmart in 2022, compared with Kroger, the nation's second leading grocer that had sales of $109 billion that year. But how did Walmart's grocery segment get so big, so fast? For starters, Walmart uses its deep pockets and grocery muscles to negotiate favorable prices with suppliers. Walmart's scale has always been a huge advantage in terms of its ability to negotiate with suppliers and get really the best terms of any retailer in the industry. 

Based on a basket of 45 identical goods that includes milk, a dozen eggs and a frozen pizza, Amazon Fresh prices were about 28% higher than Walmart's. Target's prices were about 9% higher than Walmart's. Its massive footprint is another part of its success. Walmart has more than 4,600 locations in the US alone, enabling shoppers to purchase goods in store or pick up curbside. 

About 90% of Americans live within ten miles of a Walmart store. They also act like mini-warehouses. More recently, Walmart has been testing a way to automatically fulfill grocery orders, so it's adding automation in the back of stores. It actually made an acquisition of Alert Innovation, which is a company that essentially has a bunch of robots that act almost like a larger version of a vending machine that helps pick different groceries and make it speedier and cheaper to fulfill online grocery orders. 

Even this year, they've talked about investing, I think close to $18 billion or $17 or $18 billion in capital expenditures. A lot of which is going to go toward automation, which should help to drive over time better profitability. Walmart said it expects 65% of its stores to be serviced by automation by the end of fiscal year 2026. Automation could make some jobs obsolete. Walmart, the country's largest private employer, has 1.6 million workers on staff in the US. 

It is also upped its e-commerce game and added convenient shopping options to entice high income consumers. It added same day grocery delivery for Walmart Plus subscribers, advertising that delivery could come in as little as 30 minutes. Walmart has also rolled out multiple delivery options. Drone delivery, which began in 2021 and is available in a handful of markets including Texas and Florida, has made more than 10,000 deliveries as of September 2023. 

An additional delivery option for Plus members is Walmart In-Home, available in 46 markets including Miami and Dallas. The service features a store associate who can deliver groceries to your door, your garage, or even inside your kitchen while you're away from home. Private label brands have boosted grocery sales as well. 

Walmart has four of the five most popular private label brands, including Great Value, which was purchased by 72% of US consumers, according to a 2022 report. You don't want to be in the path of Walmart. You don't want to be in the path of Amazon. Ten years ago, there might have been this idea that, oh, you know, the supercenters are all rolled out. There's no more growth ahead for Walmart. 

But e-commerce is really this next leg of growth. And if you can weave in the automation behind it and keep adding to a simpler and cleaner shopping experience, I don't see why we don't get another leg of growth here ahead for Walmart. And while groceries are considered a low margin business, they also enable Walmart to move customers into high margin discretionary spending categories like apparel and home furnishings. So Walmart doesn't have to really make much in terms of groceries. 

They could even lose money on groceries because part of the strategy is to bring people in and then sell them all the other stuff. Groceries made up 59% of Walmart US's 2022 net sales, followed by general merchandise and health and wellness. Walmart US accounted for 69% of the company's 2022 sales. Another way Walmart dominates its rivals in terms of grocery dollars is by attracting Supplemental Nutrition Assistance Program benefits. 

SNAP is the government program formerly known as food stamps, to help reduce poverty and food insecurity. SNAP provides nutrition assistance to millions of eligible low income individuals and families. Almost 97% of Snap shoppers purchase groceries at Walmart in the past year, spending on average nearly $2,300. More than a quarter of total snap grocery dollars spent in the US went to Walmart that year, compared with about 8% at Kroger and less than 6% at Albertsons. 

But what impact did Walmart's low prices have on smaller, independent grocers? For an independent grocer, the challenge that they're facing right now is that Walmart and a few of the other big grocery chains are going to major grocery suppliers and saying, hey, we're 25% of your sales, and we want you to give us special favors. 

We want lower prices than you give to all of our competitors. We want assorted like marketing dollars to come to us. We want you to organize your packaging to fit our parameters. 

You know, all of these different things. And the suppliers, you know, what's their choice? Critics argue that could create something known as the waterbed effect. If a supplier lowers prices, they will need to make up for that lost revenue elsewhere by charging smaller grocers more. 

Independent grocers account for a third of US grocery sales. Jimmy Wright is the owner of Wright's Market, a 20,000 foot grocery store in Opelika, Alabama. Typically, what you will see is a community where the entry into Walmart is just it just takes most of all the business in the town. 

So even if it doesn't take an independent grocers business completely, it takes it to a level where the store is no longer economically sustainable. The ten largest US grocery chains, including Walmart, Kroger, Costco and Albertsons saw sales of $863 billion in 2022, 24% higher than 2019. One of the key reasons why Walmart wants to be in the grocery business is because people need to replenish their fridges. 

They may not get a new wardrobe, they may not need to buy a toy for their child, but they do need some of those basic items to cook dinner that night, or make breakfast or pack their child's lunch. And those items tend to drive frequency. And that frequency can turn into other sales of other items that tend to be higher margin. And if Walmart can get people to cross the aisle from the dairy aisle to the clothing aisle, that's really where it makes its money.