Wal-Mart realigns small-store format management, adjusting ‘on the fly’

Significant internal corporate changes in management and structure within the Walmart U.S. division is an obvious sign that execs at Bentonville-based Wal-Mart Stores are serious about maximizing better comp sales through their small store formats.

Small formats, also known as Neighborhood Markets and soon-to-be more mini conveniences stores, are seen as a major growth engine for retail giant Walmart U.S., according to Mike Moore, the new president of small formats. Moore was one of seven speakers at the Emerging Trends in Retail Conference at the University of Arkansas Center for Retail Excellence on Wednesday (Oct. 8) in Fayetteville.

“We are putting a lot of time and money into small formats with 498 stores already open and a strong push of new openings in the fourth quarter,” Moore said.

Moore unveiled his new management team which he said were strategically chosen to specialize on the small formats in a manner similar to the 1988 rollout of supercenters.

He said the team is lean with five senior vice presidents that report to him with specific duties. The team, which had its first meeting this week, are: Larry Mahoney – logistics; Marc Lieberman – vice president of small formats; Brian Hooper – real estate; David Norman – operations over the West; and Glenda Fleming – operations over the East.

“We are opening so many new stores that there is a high number of brand new store managers. I needed strong operational support to help carry out that training in the day-to-day details. Marc has managed Neighborhood Market operations for years. David has a rich grocery background (with) Wal-Mart and Kroger and a strong passion for the business, while Glenda, an electrical engineer, has 25 years in store operations and thoroughly understands processes. They are great teachers,” Moore said of the group.

The Neighborhood Market was the brainchild of former Wal-Mart CEO David Glass who Moore said took a photo of a grocery store and a pharmacy and drew a red circle around the two and labeled the two as one format.

“He wondered if consumers would shop this new format, so we built some of them,” Moore said. “Today, the small format stores are just one of several formats that show promise as we continue to test convenience stores and pick-up grocery in Bentonville.”

He said real estate and logistics are also different for small formats, which is why they have their own designated executive. In areas like marketing and merchandising the small format team relies on the mother ship, Moore said.

NEW REGIONAL MANAGERS
Moore also announced five new regional managers for the small format stores. These were split into two districts – West and East – previously handled by market managers for supercenters. The regional managers are: Paul Stone, West; Randy Green, Southweast; Nick Berkeley, Central (recruited from ASDA); Paul Lewellen, Southeast; and Kaitlin Wolfe, East.

He said Lea Jepson joined the realignment team as senior director of merchandising for small formats. She works directly with the merchandising teams at Wal-Mart, the same category managers who purchase for supercenters.

Moore said this week he received at least 24 requests from suppliers for meetings about Wal-Mart’s small formats. He assured the crowd it’s not that different but there is a small team of veteran managers looking out for Neighborhood Markets that in that past hierarchy system sometimes got overshadowed or overlooked because the supercenters make the most money. 

“We are committed to making Neighborhood Markets the best grocery shopping experience possible. We are really focused on front-end store experiences with our expanded services and we continue add hours revamping the service desk and the pharmacy areas,” Moore said.

He said they are ingesting tons of customer feedback and making adjustments in the next store opening, tweaking the displays, layouts, counter heights and other store aspects. Moore said the redesign on the service center came about after the Neighborhood Market opened in Centerton, but before the Siloam Springs store opened 45 days later. He said the new design was complete and included in the Siloam Springs store, and will be tweaked in the 485 store openings in the coming months.

“We are making adjustments on the fly. Our CEO Doug McMillon has challenged us to fail fast and fix it quickly,” Moore added.

MINI-C-STORES
Another area where Wal-Mart is circling the wagons is with fuel stations, where they have not previously existed by the partnership with Murphy USA. Moore said fuel is important to Wal-Mart shoppers and it is adding fuel stations and now mini convenience stores at these fuel stations positioned outside of supercenters and Neighborhood Markets.

Moore said he managed a supercenter in Missouri that had a mini convenience store in the fuel station and customers used it. The new supercenter in Springdale has a mini convenience store in its fuel station, something Moore said is gaining traction.

“These formats don’t take sales from the supercenter,” he said, adding that they often add sales that may have been lost to convenience stores.

He said the Walmart To Go in Bentonville is not likely scaleable because of costs related to its large covered awnings and spark lighting, but the mini C-stores in conjunction with fuel stations do fit within the budget.

It remains to be seen if these fuel depots and small stores will also serve as pickup sites for programs such as site-to-store. Moore said Wal-Mart doesn't think in shopping channel terms. But it is  focused on trying to reach customers with various formats.

GAME PLAN
Moore said the game plan he shared with his new management team this week is Retail 101. It focuses on clean stores, taking care of customers, and managing inventory. Moore promised Neighborhood Market managers would be maniacs when it comes to “fresh” – produce, bakery and deli – areas in the stores.

“We have added hours in these areas because we know it’s important to customers and they will judge us based on their experiences. Checkouts are also important, an area where we will aim to improve customer experiences,” Moore said.

He said shoppers will see more demos that entice “building a basket,” and grand openings will feature “retailtainment” that harkens back to the early days of Wal-Mart.

Moore said when Wal-Mart hosts Wall Street analysts Oct. 15, there will be more announcements regarding small formats.