story by Kim Souza
ksouza@thecitywire.com
Criticism of Walmart U.S. stores was pointed during a conference Wednesday in New York City. The company needs to improve shopper experiences, fresh food quality, check-out speed, store in-stock levels, pricing, worker engagement and have cleaner facilities. But instead of a union leader, this criticism was coming from Greg Foran, the CEO of Walmart U.S.
As promised eight months ago, Foran sat down with retail sector analysts Wednesday and provided an update on what he considers necessary fixes to the retailer’s flagship business. Ruled by his core principle to tell the unvarnished truth, Foran did not mince words. He told the analysts that he’s made 116 unannounced store visits across the country over the past few months and spent time with night stockers, produce handlers backroom managers, and call centers listening to complaints and evaluating operations.
Foran said there are some bright spots in the retailer’s fleet of some 4,500 stores, calling out four stores in Boise, Idaho, as models for others to follow. He told analysts if they wanted to see where Walmart store operations are headed they need to visit Boise.
He said too many times the back rooms are a mess overrun with inventory and the markdown cadence must be improved in the “fresh” categories. One single action recently applied to reducing prices as the expiration date approached is slated to generate $500 million in cost savings this year.
Foran said stores are cluttered with too many modular and merchandise displays which is being dealt with. He said store managers have been given more leeway in store merchandising as a way to promote broader engagement among store labor. He cited recent changes made in a Las Vegas supercenter that focused on improving the fresh food experience, cleaning the store, and adding back labor where it made sense.
“In four short months the store saw a jump from 25% to 45% of baskets purchasing produce, because the store made simple changes to their processes,” Foran said.
He said these types of improvements happen one store at a time and any given day Wal-Mart is only as good as a single store serving a single customer. Foran said this year is dedicated to improving store experiences for the customers, but the retailer is in no way taking its eye off of prices.
Wal-Mart was criticized by an Wolfe Research analyst who said to Foran that Wal-Mart’s price leadership is vanishing. The researcher suggested that rather than spend time on improving store experiences would it not be easier and more effective to just lower prices.
Foran responded that just focusing on lowest prices has not been enough to win back consumers who found the experience was lacking. He also said there are opportunities in price leadership but the retailer has lost some of its muscle for quick reactions in the past. He said the “Everyday Low Price” strategy is what works best and that is what Wal-Mart wants from its suppliers, as opposed to short-term promotional pricing.
He shared several areas his team is focusing on this year to improve the customer experience:
• Improving assortments of fresh and private label which is expected to take about 18 to 24 months. This requires more training for produce handlers and better price spreads on Great Value private label products.
• Teaching and training store workers, empowering more of them with shared data via technology applications used in stores.
• Cleaner stores with faster check-out times, which will be monitored on a regular basis.
• Better work flow on moving merchandise from back rooms to the floor.
• Faster and more convenient locations for online pickup orders inside the store, which is also be monitored.
“Our job at the Bentonville home office is to serve our stores, and let’s be frank we have slipped away from this. We have to empower our stores to make decisions,” Foran said.
He said store managers once juggled eight to 10 daily reports which now have combined into one with a dashboard component on a iPad that can be taken out into the store as most store managers rarely sit behind a desk. Foran said late last year Wal-Mart gave its store managers the discretion of matching online prices and more recently the retailer is adding department managers to supercenters, jobs that were eliminated in year’s past when the retailer went too far in cutting costs. He said managers are now more involved in floor space, modular design and merchandise configuration for their individual stores, giving them and their employees more sense of ownership.
Careful not to trample on predecessor programs, Foran told analysts that Project Reboot, a recent attempt by Walmart U.S. to revamp its sagging electronics department did not go far enough. He said the attempt to reallocate space did not garner the desired results. In addition he said some departments like electronics have become so cluttered with signs that it’s hard for workers to see shoppers just three aisles over. He said the excessive signage is coming down so shoppers and workers have a clear line of sight across the store.
Foran said there would be critics who don’t think there is enough new with Wal-Mart, but that is not the case. He said the principles he governs with date back to Sam Walton and Jack Shewmaker, who taught him a lot about store operations when he was coming up through the ranks at Woolworths in New Zealand.
He told the analysts that he’s not working for a better Wal-Mart just this quarter or next, but he’s aiming for a better Wal-Mart for the next two decades or more and that requires store operations be in tip-top shape across the entire U.S. fleet.
This priority on Wal-Mart store operations seems to be in sync with what consumers said in an informal poll conducted by The City Wire. Consumers from Arkansas, Texas, Oklahoma and New Jersey responded to a survey that asked where Wal-Mart needs the most improvement
• 60% said more checkers, a shorter checkout wait-time;
• 20% said cleaner, more organized stores, wider aisles, fewer empty shelves; and
• 10% more accurate pricing.