Charles Redfield didn’t waste time in his role as head of Walmart’s U.S. food division. He recently restructured management to have three new senior vice presidents who oversee one specific area such as meat, bakery, in-store deli and produce.
“The bottomline is we have to get better, faster,” Redfield told suppliers at the Bentonville-Bella Vista Chamber of Commerce WalStreet Breakfast held at Sam’s Club headquarters in Bentonville on Tuesday (March 15).
The new managers report directly to him. He also separated duties, putting one person in control of adult beverages and one person over packaged foods, saying they have been told to get the assortment right, buy great items while also taking costs out of the system.
Redfield said at the same time Walmart is investing in three primary areas to help turn the ship around: people, stores and technology. He said the wage increase for hourly workers was necessary but that alone doesn’t fix Walmart’s problems. Redfield said stores needed new tools and processes to create better assortments, on-shelf availability and improved values for customers.
He reminded suppliers that Walmart has invested in MC40 devices for store workers that replaced the outdated Telxon device. The MC40 provides easier access to inventory and ordering data. He said the top-shelf inventory strategy begun in Walmart Neighborhood Markets late last year was successful and is now being carried over to supercenters. He said the strategies are working, but it takes time to roll them out to 4,500 stores.
This past weekend Redfield said he visited stores in Farmington, N.M., and Amarillo, Texas, and was quickly reminded that while the strategies are gaining traction there is still a long way to go to the proficiency finish line. He said this year 3,300 stores are getting produce area makeovers and that takes time and money. Reiterating that fresh food is a traffic driver and the first impression maker for stores he said “we’ve got to get better at it.”
Part of the issue is that for too long, he said, Walmart has treated the food business like general merchandise, but they are two different animals. Redfield said Walmart has studied its competitors and continues to work on revamping its food supply chain. Admitting that there are assortment gaps at Walmart compared to some of its grocery competitors, he said improving the store appearance is for naught if they don’t have the right fresh items that customers want.
Redfield said Walmart is using outside data to help them find the gaps in their merchandise. He told suppliers that a good strategy to follow is work with Walmart on new items without fear. He shared a story of how one new pizza supplier worked together with Walmart to study the market and craft an item that resonated with consumers – Sasquatch frozen pizza.
He said the Walmart merchant worked with Milwaukee-based Palermo to study trends in pizza. They looked at crust innovations and even goofy ideas like fried-pizza on a stick before rekindling an updated version of the 1990’s big foot pizza. The team went to Lowe’s and Home Depot and measured the sizes of typical household freezers and then designed their packaging to fit easily. He said at that point the two sides sat down to talk price.
“This important thing here is that this supplier didn’t say no at any time during the process. ‘No’ stifles innovation,” he said.
The end result is a 3-pound pizza that will feed an entire family that sells for just under $10. Redfield said the product went from idea to shelves in five months, which is warp speed in retail. He said the innovative item is selling well in a category that had pretty much stalled out over the past two years as more items converted to fresh offerings.
During the question and answer phase, Redfield was asked if the new Must-Arrive-By-Date requirements will have any material impact on the customers. Redfield said Walmart was behind the curve prior to recently updating the MABD protocol. He said the retailer over the past few years averaged getting 76% of the items they order within four days. Globally, he said, the benchmark is 90% of ordered items received in one day.
Walmart recently outlined the new policy as moving to a one-day and 95% on-time fill rate in food and consumables, from the previous three-day 90% threshold. Redfield said suppliers and Walmart have to work together on this.
“We have to get the stuff we order. If we do and we can get it out on the floor then sales should go up, benefiting both sides,” Redfield said.
He reiterated that Walmart also has the responsibility of making sure it gets product from the backroom to the floor. He said the customer will also benefit if stores are stocked with the products they want.
Redfield was also asked to provide reasons behind the new food sensory lab under construction at Walmart’s home office. He said despite being the world’s largest grocer, the retailer does not have a “strong food culture.” He said being close to corporate headquarters the new sensory lab should help foster a food culture, and suppliers and merchants can more effectively work together on innovative new products, branded and private label.
“Too many of our merchants are not foodies and they need to be. This sensory lab will provide better experiences. Many of our suppliers have them and it should facilitate new product development. It should hopefully be open by shareholders week (early June),” Redfield said.
He said the job before him is a “big one” but he’s confident the game plan laid out by Walmart U.S. CEO Greg Foran will work as Walmart continues to invest heavily for the future. Redfield spent several years working at Wal-Mart-owned ASDA in the United Kingdom which he said is light years ahead of U.S. retail in terms of online grocery shopping. That said, Redfield believes the U.S. consumer is adopting online grocery shopping habits much faster than they did in the UK when it was first offered 18 years ago. For that reason he said Walmart will quickly roll out the online grocery shopping with in-store pickup option throughout the back half of this year. The service is now active in 20 markets and users are adapting to it well, he said.
“We think we are in a great position here,” he said.
In other retail news the, U.S. Census Bureau announced Tuesday that retail and foodservice sales for February totaled $447.3 billion, rising 3.1% year-over-year, while they were down fractionally from the prior month. Total sales for the December 2015 through February 2016 period were up 2.9% from the same period a year ago.
Walmart has forecast mostly flat U.S. sales growth for this year.