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As President of Walmart Central, Michael S. Moore oversees stores in the Mississippi River Delta, Central Plains, Texas, and Midwest regions. His presentation last week as part of the Bentonville Bella Vista Chamber’s WalStreet speaker series provided a big picture overview of how Walmart is merging old and new to form a fresh vision for the future. (in addition to the links to other sources, noteworthy items from the presentation may be accessed by clicking on the italicized, bolded links).
Although Mr. Moore reviewed a few tried-and-true values that have served Walmart well, invoking “Mr. Sam” as he talked about VPI (value producing items), the importance of store manager mentors, and the company’s relentless focus on the customer, he clearly aimed to dispel the myth that Walmart's go-forward strategy is little more than a trip “back to the future.”
Re-org for Relevance
Funny enough, Macy’s CEO, Terry Lundgren, recently used those four words to describe how that retailer’s radical 2009 reorganization is garnering customer-centric closeness similar to what it enjoyed over 50 years ago with far fewer stores. Several major retailers, including Macy’s, Walmart, Walgreens, and Best Buy, have undergone significant organizational and process revamps designed to complement corporate merchandising mandates with store-level insights. Mapping out each retailer’s unique structure is a daunting task, made more difficult as tweaks and updates occur (many of which are announced internally).
Mr. Moore’s counterparts are now Rosalind Brewer, who heads the Eastern division and Michael Bender, who heads the Western division; however, the company’s current structure and players have undergone several key changes since Walmart first announced the formation if its GBU’s (geographic business units) in early 2010. Later in his presentation, Mr. Moore stated that Walmart has also brought back its weekly merchandise meetings in order to review tactical and strategic merchandising initiatives and align senior level field teams with the retailer’s home office merchants. These, and other cross-functional processes, have been revamped by integrating technology that will enable them to work in “real time.”
Sway to the Stores
The upshot is that, no matter how complicated or disparate each retailer’s org chart may be, retail’s behemoths are bent on amping-up agility, leveraging localization, and bringing empowerment back to the stores in order to make it happen. Nothing less will do at a time when price transparency, enabled by the Internet and mobile apps, is an everyday reality, and a moving target, for retailers.
No wonder Mr. Moore identified price leadership as a “mandate” rather than something Walmart merely “strives for,” with “consistency across the broadest possible assortment” as the overarching goal. Walmart is promising that its customers will save money on every basket, every day (“trip consistency”) and not just on high-volume items. The action alley arteries may be clogging once again, but they won’t be the only place where bargains will flourish. Walmart’s recently-announced ad match price guarantee — 90 percent of which, Moore notes, will be executed at the register — will clean up any anomalies, further reinforcing customer’s confidence that Walmart is their “agent.”
If price transparency promises to cause pain for any retailer engaged in high-low price shenanigans, rising fuel costs will spank those who run out of stock. Although consumers aren’t stocking up like they used to, and fill-in trips are becoming the norm across all retail sectors, customers are more acutely aware of items they are unable to check off their abbreviated shopping lists when the cost of filling up their gas tank is pushing their budgets into the red zone.
Mr. Moore identified improved shelf availability as the “biggest item of discussion” at Walmart. In fact, after his WalStreet presentation, he was heading to a meeting to address that very topic. Moore noted that a scorecard is attached to out-of-stocks that Walmart isn’t crazy about; however, the company is addressing that with technology that has already made in-stocks rise “dramatically.” Walmart has also partnered with an “outside vendor” that is conducting anonymous in-stock audits on over 1,000 items during peak shopping times and this was one of a few times that Moore mentioned supplier intervention as a welcomed addition to the vigilance, signaling the ongoing shift to a more cooperative relationship between Walmart and its suppliers.
Back to the Future Fishing, Fabric, and Firearms
Mr. Moore underscored the supplier collaboration opportunity by touting Walmart’s cooperative effort with Pure Fishing that led to a display overhaul in which rods and reels were situated above eye level, clearing room for a larger assortment of additional supplies on the shelving below. Walmart’s recent reinvestment in fishing equipment, along with firearms and fabric, has provided fodder for skeptics who dismiss the moves as round two of retro (the first round being the reinstatement of thousands of SKU’s and the seemingly visual reversal of Project Impact).
Are we really ready to believe that the world’s biggest retailer is fresh out of ideas and dumpster-diving for inspiration? I find Walmart’s willingness to revisit and revise time-tested ideas refreshing at a time when short attention spans and shiny object syndrome are rampant in retail.
If you myopically focus only on the obvious angle —that these three categories are core to Walmart’s loyalist customers — you’ll miss several, more subtle points that I think demonstrate a lot of marketing savvy:
- All three categories are shopped by enthusiasts.
- All three are high-engagement, “touch and feel” (his words) categories that keep customers in the store for longer periods of time.
- The mix of the three categories engages male and female shoppers.
- Once core items, such as a fishing rod or a gun (a high-ticket item, by the way) are purchased, a steady stream of accessory and replenishment item sales naturally follows and those visits will drive sales in other categories (notice how the three f’s are situated toward the back of the store?).
- All three categories are uniquely suited to the in-store environment rather than online.
The last point helps explain Walmart’s recent move to minimize the presence of consumer electronics in its stores, even as competing category killers fall by the wayside and as Best Buy seeks to strengthen its sea legs. Why should Walmart support space hogs in stores when the endless online aisle and site-to-store can do it more efficiently? Why not let someone else run the showroom?
. . . and Flowers
Outdoor living was another category cited as a blow-out opportunity. Plants and flowers “give another reason” to go inside (speaking of lures) and making use of outside real estate makes sense as Walmart accommodates its newly-broadened assortments.
Let Me Retailtain You
Last year, I wrote about how retail is ripe for a round of retailtainment since, thanks to waves of optimization and clutter-clearing, shopping online has become far more exciting than your average trip to the supermarket. I wondered who would take up the mantle. According to Mr. Moore, Walmart now sees “retailtainment (as) a fun way to create sales” and he cited NASCAR, hunting season, and even Mardi Gras as marketing event opportunities.
In a reference back to store-level empowerment and “letting managers run their own business,” he told a great story about a manager in Houston who hired a beret-sporting guy on a bicycle to pedal around inside the store, ringing a bell to summon shoppers seeking hot loaves of French bread. That one pavlovian pearl of an idea took lukewarm sales of 100-150 loaves of bread per week to over 1,000 loaves.
Mr. Moore spoke about how differences between stores, separated by as few as five or six miles, can warrant assortment changes (and I'll throw in that, in urban environments, you're talking blocks). Instead of making localization the locus; however, he once again framed the discussion around fostering store-level empowerment. Through Walmart's corporate return sheet program (RSP), stores are currently given 30-percent “leeway” to pull items from a “cafeteria” program of items that may not make sense for national rollout. Doing so allows Walmart to be “the same where it’s important and different where it matters.”
No additional rollout details have been provided since U.S. Chief, Bill Simon teased at the potential for Walmart to open “hundreds” of Walmart Express stores in the coming years. When one question from the audience poked at a rumor of up to 8,000 locations, Mr. Moore quickly retorted that he hadn’t heard that number and that Walmart will test various configurations, “some with pharmacy, some without” and some with or without fueling stations. As I called out in recent blog article, the days of defined rollout projections are over for the most part and retailers are reserving the right to change their minds and course correct.
When asked who suppliers should contact for store-level placement and regional buying opportunities (that coveted 30 percent of local wiggle room mentioned earlier), he cautioned against attempting to do “one-offs” at the store level and, in a surprisingly open gesture, gave out his email address, saying that he would point people in the “right direction.”
All in all, an enlightening morning of myth busting!
Want to explore what these and other retail dynamics mean to your retail positioning? Contact me directly at email@example.com