Wal-Mart exec discusses store layout challenges as online retail grows

Big box stores like Wal-Mart spend a lot of time planning and tweaking physical store layouts to compete with smaller discount chains like Lidl and Aldi as well as strong grocery competitors such as Kroger or H-E-B.

David Scogin, vice president of store layout for Walmart U.S., said his team of around 340 people work on the details around story layouts from design, footprints and new prototypes while also looking to optimize category and department spaces. Scogin spoke to about 150 suppliers on this topic Thursday at the Wal-Street Breakfast event held at Sam’s Club headquarters in Bentonville, and hosted by the Greater Bentonville Area Chamber of Commerce.

As more sales in some categories gravitate online, Scogin said Wal-Mart is looking how to configure space. In 2015 when he returned to the U.S. business from China he walked a store with Walmart U.S. CEO Greg Foran who wanted to see the backroom of the deli department.

“He (Foran) asked who was responsible for designing the sink for handwashing and the surrounding layout. He quickly pointed out that because the soap was mounted on the wall beside the sink there was an a stain on the floor from where the soap had leaked because the employee had to move their hands toward the sink in order to wash them. He suggested we move the soap directly above the sink to avoid the spills and wasted soap,” Scogin explained.

He said this granular level of detail was repeated in each store to find waste and inefficiencies and then turning those losses into opportunities. He reiterated that the work to shape up the stores was directed from the top downward.

SPACE PLANNING
When it comes to deciding how much space a category gets, Scogin said the retailer employs science and art to arrive at the answer. His team looks at several key performance indicators when allocating space. The indicators include comparable sales, customer traffic, average ticket, and average number of units sold.

Scogin also said they measure sales per square foot, sales per linear square foot, days of supply and a sales index number which is calculated by Scogin’s team.

The sales index number is a function of space productivity measurement using square feet and sales info. For adult beverages the sales index was 162 for Store No. 5331, but 120 when applied to a cluster of similar stores. Scogin said this shows Store No. 5331 sells more adult beverages in less space than other stores in its cluster. It just so happens Store No. 5331 is located in Phoenix near a golf course. He said the demographic shopping the store buys more adult beverages than the average store and this is the information his team looks at when deciding how much space to allocate to certain categories.

He said the boxed pudding category was recently examined and space was taken away from this category and given to other baking items such as Marshmallows and candy baking chips.

“I don’t know when the box pudding category had last been looked at – likely years,” he added.

This next year Walmart U.S. plans to remodel 500 of its stores, something Scogin said happens every 7 years. He said during remodels, his team has the chance to tweak modular displays and redraw departments that bring those stores in line with newer locations.

Apparel is one area getting a makeover. He said lower profile displays and modulars are going in and the dressing room has also been re-configured. The supercenter at Elm Springs Road in Springdale has had this apparel makeover. He said merchandise in intimate apparel has been reduced by 20% but the department looks like it has more stuff because of the way it’s laid out.

Other changes made in stores over the past couple of years include:
• Angular displays in fresh produce with low profiles;
• Re-configuring electronics to look more like a store of the future with low table-like displays;
• Expanded baby department foot print and moving the strollers to the floor from the higher displays they used to be mounted upon. The baby section is also laid out by age;
• New lighting over the deli and bakery areas; and
• Added fresh refrigerated floral case at the front of the store.

He said some of the changes were made in anticipation of Lidl opening more U.S. stores. Wal-Mart’s research found Lidl was doing a good job in fresh floral, adult beverages and bakery which prompted some of the changes in Walmart U.S. stores.

“We are pleased with how our stores are performing against deep discounters and stores in close proximity have been given flexibility to lower prices to compete. If you go to Store No. 1 in Rogers you might see eggs for 25 cents a dozen, that’s not the price at my store near Pinnacle Hills,” Scogin said.

An Aldi store is located near Store No. 1 in Rogers.

SERVICE PLAYS
Scogin said services like pickup for online orders have pushed the retailer to rethink how customers can have a better overall experience. He said not that long ago pickup for general merchandise orders was located in the back of the supercenter. But that is being moved up front, facilitated by pickup towers in more than 100 locations, growing to 200 next year, with drive-thru stations being built in parking lots or at the side or back of stores.

He said in one store the retailer is experimenting with pet grooming services and in other stores restaurants are located in the front as are eye clinics. When asked about stores of the future and what that could mean for consumer packaged goods companies who often sell to the middle of the store, he said space will likely shrink, but he was quick to say Wal-Mart doesn’t make such decisions quickly.

“If we had looked at what the statistics were showing five years ago on greeting card sales, we could have likely scrapped that category. But we still sell a lot of cards and this is a high margin business which is important to the overall box,” he said.

He was also asked about how self-checkout was impacting impulse buys of confectionary products like candy and gum. He said sales went down initially but the retailer is now doing a better job relocating candy above the self checkout stations. Scogin said 60% of the retailer’s U.S. sales are via self-checkout. As good as it is for some, he said his 80-year-old mom in Slidell, La., told him if her store ever quit having manned checkouts she would move her business elsewhere.

“We have to be careful how we proceed with self-check, scan and go and other technical services because we don’t want to alienate our elderly shoppers, while also giving others what they want,” he said.