Wal-Mart’s top merchandisers share insights

In a rare panel discussion held Thursday (May 16), four senior management merchandisers for Walmart U.S. spoke candidly about the importance of communication in the busiest company on the planet.

The senior vice presidents participating included: Michelle Gloeckler, home business; Scott Huff,consumables; Gary Severson, hardlines and Ashley Buchanan, snacks and beverages. Tom Jensen, marketing professor at the University of Arkansas, served as the moderator during the hour-long discussion held at the “Shop” retail conference at the University of Arkansas on Thursday.

LOCALIZATION
There is hardly a hotter topic these days than “localization” with Walmart harkening back to the “store of the community” focus by bringing in more products unique to neighborhood areas. Gloeckler said having the right merchandise in stock is a very local thing.

“I can’t tell you how I hear it, when I go to Arizona and the stores are overrun with lawn mowers and there no lawns to mow. Grass seed and gardening plants in general have to be sourced with locality in mind. It would do us no good to have fire ant repellent in Minnesota, but it’s a must have in Louisiana,” she said.

Each store has its own Facebook page and after the long winter each store site posted a customized message as soon as the spring plants arrived.

Severson said fishing has been a somewhat expensive partnership to do on a store-by- store basis, but well-worth the effort.

“We have to keep abreast of what is happening in the local waterways in any particular area to make sure we have the right bait in stock. Sometimes we have big data to help and in other products categories, we don't,” Severson said.

Buchanan added that for his team, localization means figuring out what the customers want making sure it’s on the shelf. Gloeckler said Walmart.com is a great testing ground for small to medium size suppliers for home products. She said the supply chain is easier to maneuver with online offerings.

“The top sales item of Walmart.com each week will usually end up with a 2,000-plus store count … the next new modular,” she said.

STORE EXECUTION
Stores with sparsely stocked products have been widely discussed in the media in recent weeks, and the panelists were asked to elaborate on how their merchandise teams work with store operators to improve in-stock percentages that keep customers happy.

Gloeckler previously worked in operational management and gave two examples of how the home office lay-out center was making the job of store operators to complicated.

“We were having stores display 88-cent spatulas and spoons on individual pegs, these displays looked awesome in the lay out center, but totally required too much labor. We opted to dump into a bin and put one 88-cent price on the assortment. A similar miscue happened with $2.88 throws, that we sell a ton of. We asked that they be stacked by color, but again not in-line with store efficiency models. Now you will see them in dump bins with the $2.88 price on there,” she said.

She said the customer is No. 1, and the store operator is No. 2.

“As merchandisers and home office operations we have to think about in-store efficiency, because we can make it impossible for our store associates to keep up,” Gloeckler added.

As item counts go up, she said it is imperative to keep store efficiency models in mind at all times. Huff said managing the level of inventory in the building is a critical component to the overall store execution.

“Our associates can’t touch inventory more than once, or the labor metrics quickly deteriorate. It puts store operations out of balance and execution slips,” Huff added.

Severson said one major gaffe in the past has been ordering late, putting pressure on suppliers to fulfill in a rush and potentially missing the modular window. He said a concerted effort has gone toward doing a better job in replenishment orders that helps to ensure the product gets to the floor in the optimal time window.

Buchanan said his team has redrawn modulars that better match demand. He said when they took a deep look inside they found displays where 25% of the product wouldn’t make it through the weekend, which meant workers had to spend too many hours restocking.

He said the now the metric is that 85% of the display needs to sell out within two weeks, which is much better store efficiency models. Huff said the retailer will invest in more labor when sales justify it, likewise declining sales will meet labor reductions. He said it is a delicate balance between inventory and the labor necessary to make a store run optimally.

“Our store managers can tell you at what level those labor and inventory efficiencies breakdown, They have it down to a science,” Gloeckler said.

HEIGHTENED TRANSPARENCY
About 18 months ago, Wal-Mart decided to integrate syndicated data from Nielsen and NPD Group into its business processes after several years of going it alone. The merchandising executives said the data has brought a whole new level of transparency to the retail universe.

“It helped us quickly get up to speed, but it has also helped our competitors. Historically we have always done very well in flea and tick repellant, and this year everyone, even retailers who have never sold it before has it. Competition can see what your doing and how well you are doing it,” Huff said.

Severson adds that having the big picture that syndicated data provides, such as market share and price competitiveness, has helped the retailer engage better with its suppliers.

“I don’t have Nielsen Data but in about half of my categories I have NPD data. It has helped us identify gaps in our assortment, measure market share and it brings a transparency that is needed.

“We had one category that running positive comps that we thought was doing fine, but it turned out we were losing market share, which brought up a whole new conversation,” he said.

Gloeckler said she was skeptical of the data at first, because she does not have it in all of her product categories.

“We found QVC and HSN was a fierce competitor on really high end household appliances, that do best in an extended air-time demonstration. This includes $300 blenders and high-dollar vacuums. It was a blind spot to me, until we got the syndicated data. I may not offer those products in store, but Walmart.com is a whole new ballgame and we are doing some of that because we want those sales too,” she said.

The merchandisers said the future is bright and changing all the time as technology becomes more integrated into daily routines. They said it is a market share game, as there is no indication of increased consumption coming anytime soon.

“We will continue to build trust in our low price strategy, in hopes that customers will want to save money where they can,” Buchanan said.