The changing food segment is too big for Wal-Mart Stores to get wrong. Groceries and consumables comprised 56% of Walmart’s U.S. sales last year. But consumer trends and points of sale continue to change and Walmart U.S. is just one of many retailers scrambling to better connect consumers of varied demographics.
It’s no longer just about stacking products high and selling them cheap, because while price still matters that’s just part of what consumer’s expect, according to Steve Bratspies, executive vice president of food for Walmart U.S.
Bratspies spoke to a room full of suppliers Wednesday (May 20) in Bentonville at the Wal-Street Speaker Series, an event of the Bentonville-Bella Vista Chamber of Commerce. He explained some of the work going on behind the scenes at the nation’s largest grocery/retailer.
One of the hottest buttons in grocery today is “fresh” and Bratspies said Walmart U.S. is doubling down in this area “to get better in the fresh business.”
“People are eating more fresh food in their diets today. Sometimes it’s intentional but in others it’s more natural and has evolved over time. We are going to continue to see significant growth in the fresh food business for the foreseeable future,” Bratspies said.
He said Wal-Mart has expanded its global sourcing offices so it can provide fruits and vegetables year-round to its U.S. shoppers. The retailer has staffed up in San Antonio, Texas, so it can focus on how to compete with H-E-B in fresh. Bratspies said store workers are being trained and retrained on how to handle fresh products with the primary rule being if they wouldn’t buy it then it’s not suitable for customers.
“We are there so we can get the fresh business right and better compete with H-E-B who does fresh extremely well. We are investing resources in this area,” he said. “We are doing it in Michigan for categories like asparagus. We have people in the fields making sure we get the best possible product to put in our stores.”
He said the local food initiative is also strong and Wal-Mart continues to work with farmers across the country to supply local product when and where it can.
Fresh is more than just fruits and vegetables – it’s also deli and bakery where Bratspies said there is an intense effort to clean up the departments. He said there also is much planning behind the scenes so that when a baker reports to work in the morning they know how much French bread to bake that day.
Last year, Wal-Mart began to highlight fresh baked bread loaves in its store for $1. The bread is often displayed near heating trays featuring rotisserie chicken placed near the check out area. The bread has become a big seller for the retailer. That is also an idea it poached from H-E-B who offers fresh, warm bread baked daily at its stores in Texas for $1 per loaf.
He also spoke of the supply chain changes, upstreaming and field offices that help to get product to the stores more quickly so it has a longer fresh shelf life.
CENTER OF THE STORE
But getting “fresh” right is just part of the job. Bratspies said the retailer also is working to re-energize the center of the store to better serve consumer wants. He said clean and concise labels are a big deal with customers who now more than ever want to know what’s in the product and where it comes from.
“Clean and transparent labels are a must these days. You can look at products on Wal-Mart shelves and in some of them it would take a Ph.D. in food science to pronounce the ingredients. We must do better than that because we know products with clean and transparent labels are favored by consumers,” he said.
Bratspies also spoke of empty shelves, saying store labor is being re-aligned to have more workers on the floor and less in the backrooms. He said product is supposed to flow through the backdoor and backroom out to the floor and then out the door. But for too long store labor has moved product to the floor and then back out to store rooms when it didn’t sell, he said.
He said the product now will flow just one way and there will be no more shuffling back and forth from the backrooms because the store labor will be working to ensure the shelves are replenished.
“You saw yesterday our store traffic was good (in the quarterly earnings report), but we have got to do a better job converting that traffic into buyers. Keeping the shelves properly stocked should help,” he said.
Bratspies admitted that making the changes to improve store traffic and sales are easier said than done. Aside from clean aisles and properly stocked shelves, the retailer also is looking at category space planning and hopes to do a better job with mass merchandising the center aisles. Product areas Wal-Mart is focusing improvements and expansion include adult beverages, organics, gluten-free and sugar-free, and premium frozen.
SERVICE AND INNOVATION
Another area of focus in the grocery stores will be a “services” desk at the front of the store that clearly identifies where shoppers may pick-up online orders, transfer money or get some other ancillary service. Bratspies said look for more services to be added in the future.
“It’s like turning around a battleship, it takes a while, but the team at Walmart U.S. is focused on improving store operations. The investment in our store worker wages is already helping with the service piece. We know that service has to improve because customers demand it,” he said.
Not changing at Wal-Mart is the retailer’s plan to be a one-stop shop and its focus on the everyday low cost model. He told suppliers they will be asked to work with the low cost model and he urged them to bring their best product innovations to the table because Wal-Mart is buying.