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Walmart expands drone delivery program to 4 million households as retail sector slows

Small drones will deliver up to 10 pounds of items to six states: Arizona, Arkansas, Florida, Texas, Utah and Virginia.
Image: Walmart Drone Delivery
A Walmart DroneUp Delivery Hub in Farmington, Ark. Walmart

Despite a nationwide slowdown in retail sales, Walmart announced Tuesday it is expanding its drone delivery program to 4 million customers in six states.

In a blog post on its website, the retail giant said the delivery program, in partnership with the drone company DroneUp, will reach 34 sites in six states by the end of the year: Arizona, Arkansas, Florida, Texas, Utah and Virginia. The goal is to reach 4 million U.S. households, delivering more than 1 million packages by drone annually.

"Between the hours of 8:00 a.m. and 8:00 p.m., customers will be able to order from tens of thousands of eligible items, such as Tylenol, diapers and hot dog buns, for delivery by air in as little as 30 minutes," Walmart said, adding that the drones can carry up to 10 pounds. There is a $3.99 delivery fee.

Walmart is moving ahead despite a steep drop-off in the fortunes of most major retailers in the U.S. Shares in Walmart and Target this month had their worst one-day losses since 1987, plunging by 18 percent and 25 percent, respectively. Meanwhile, in March, spending on durable goods, such as home and garden equipment, toys and electronics, fell by 10.7 percent.

DroneUp hub flight engineers
DroneUp hub flight engineersWalmart

Some analysts are increasingly concerned that, given the slowdowns alongside rising inflation and tighter monetary policy, a recession could be looming.

"The combined effect will be to push the US economy into a significant recession by late 2023, with unemployment ultimately rising several percentage points," Deutsche Bank wrote in a note last month.

"As we found in the 1970s and 1980s, this will be tough, but the only way to minimise the economic, financial, and societal damage of prolonged inflation is to err on the side of doing too much," the bank said, referring to the tools the Federal Reserve uses to cool down the economy.

"Otherwise, inflation will only become more entrenched, inflicting further damage, and requiring even tougher action to remove."