Fresh food “critical” to driving Walmart sales, market share, new CEO says
Fresh “is a really challenging part of any business because there are multiple things that you have got to get right in order to be good at fresh,” but if you nail them, fresh food can help drive store trips and increase sales, Greg Foran explained at an informal meeting with investors in New York.
He acknowledged that Walmart’s fresh selection currently is not perfect, but said the company is taking strides to improve its quality.
While visiting Walmart stores nationwide during his first eight months with the company, Foran said consumers often told him that the produce they bought at Walmart “looked good yesterday,” but when they opened the fridge the next day “that apple or that strawberry or that mango was not good enough to eat.”
In responses, he said, “we’re looking at what we do from procurement and transportation perspective and there has been real work done” to “get closer to the field” so that produce arrives in stores more quickly and lasts longer when consumers take it home.
The retailer also is training staff to better manage the quality and flow of inventory so that food on display is fresh and plentiful, but also not so excessive that it cannot all be sold before it goes bad, Foran said.
“We’ve given our store managers control of an important share of the merchandise space to ensure localization and ownership” to better ensure product mix matches consumer needs, he said.
"We want them to have fun with that; we want them to drive sales as a result of this” and make niche and produce “hero departments,” added Judith McKenna, the firm’s COO.
In addition, Foran said, “We started to reduce the price of products nearing expiration dates to give value to customers and to reduce shrinkage. We estimate this markdown initiative alone is delivering a retail run rate savings of over $500 million annually.”
Improving assortment
Walmart also wants to improve the assortment of its merchandise, including fresh foods, by using shopping data.
“We’ve lost some of our muscle in building a customer relevant assortment and we’ve been slow in using data to help achieve this,” but in the next 18 to 24 months the retailer will establish “consumer decision trees based on data about how our consumers shop,” Foran said.
The decision trees will help Walmart identify which brands consumers are loyal to, which can be substituted and which ones deleted, he explained. From there, the retailer will consider price points, the role of private label and seasonality to determine the best assortment.
Improving display and experience
Making “simple and sensible changes to how we lay out produce” and display fresh food in stores can substantially improve sales, said Foran.
He complained that some recently opened stores “are not quite as good as ones we had opened in previous years” with problems ranging from poor lighting, incorrect temperatures and convoluted or tight aisles.
However, he lauded a Las Vegas store’s decision to hire more people to better curate merchandise and tweak the layout of produce to increase the percentage of produce in baskets from 25% to 45% in “just four short months.”
The retailer also hopes to improve the shopping experience at stores by the holidays by investing in employee training to ensure stores are clean and inviting and that consumers can navigate through them quickly, McKenna added.
Better access
Walmart also hopes to expand access to its fresh food by expanding its grocery home shopping and pick-up services, Foran said.
In Denver, the retailer tested allowing consumers to order products online and pick them up at the store as a way to compete with ecommerce websites. This year it will expand this service to stores in Phoenix, Ariz., and Haynesville, Ala., Foran said.
McKenna said the expansion is still in the test phase, but it is very well received by consumers.
Finally, Walmart will look for ways to improve prices across food and other products without sacrificing quality, Foran said. He added that these initiatives combined “will reset the legacy we inherited from Sam Walton” to lead “the next revolution in retail to save our customers money, so they can live better anytime, anywhere.”
