Walmart executives believe winning at omnichannel is the retail giant’s best chance for continued success. That was a central theme at Walmart’s recent Supplier Summit held in Rogers Tuesday and Wednesday (Feb. 26-27).
Several hundred suppliers attended the annual event to hear from Walmart’s top executives who overall seemed pleased with the company’s comp sales growth, while also noting there is more work to do. Talk Business & Politics received transcripts from the summit, which is the basis of this report.
Walmart CEO Doug McMillon set the tone for the event thanking suppliers for their role in the retailer’s success which boasts 18 consecutive quarters for positive comp sales for Walmart U.S. and 12 consecutive quarters for Sam’s Club.
McMillon said Walmart launched 2,800 new brands last year and the company’s eCommerce sales growth rose 40%. He said rightsizing the retailer’s international footprint continues and the company has made big strides in employee education as well as sustainability with the ongoing Project Gigaton.
Part of Project Gigaton deals with shortening the supply chain and McMillon said the retailer is looking to double locally-sourced foods while also helping people save money and time. McMillon also spoke of the Walmart ecosystem which he explained as the global representation of the business.
Some of the metrics McMillion outlined for suppliers to focus on this year included stronger execution of filling orders on time and in full. He said innovation can supply Walmart great new items and they need to be more sustainable.
McMillon said suppliers need to engage with Walmart on the omnichannel experience that customers are demanding whether that be in a broader online assortment or providing accurate and timely data to enable search and drive sales.
Greg Foran, CEO of Walmart U.S., spoke pragmatically about the retailer’s challenges. He said “close” is “not good enough” today and the days of “staking high and letting merchandise fly” are over. He described the need for ambidexterity at Walmart stores saying they have to be great fulfillment centers and performance centers as consumers will shop in store, in their car and on their sofa.
Foran asked suppliers to concentrate on stepping up order fulfillment. He said in-stock levels are not even close to where they need to be and 5% out of stock at Walmart’s scale translates to 5,000 orders, which breaks trust with customers.
He explained in-stock has a ripple effect with pick-up and grocery delivery being impacted as well. Online grocery raises the bar for stores that also act as fulfillment centers, said Foran, who also said as online grocery grows the pick rate — number of items picked by personal shoppers for consumers — continues to grow. He said a store he recently visited had a pick rate of 80% or 4 out 5 items.
Foran told suppliers packaging should be designed for impact and efficiency with large fonts that are easy to read, easy to find and bar codes which also are prominent on the packaging. He added the digital content provided from suppliers also needs to be revamped up with clear specifications and accurate ratings. He said Walmart must do a better job in this area. As Walmart is stepping it up, he asked suppliers to do the same.
Steve Bratspies, chief merchandising officer at Walmart U.S, spoke briefly on the goal for precision retail and the direction Walmart is headed. He said Walmart is winning, and coming off a great year, the retailer will keep investing for the future. He said Walmart can’t win without supplier partnerships which sets them apart from competitors. He said supplier partnerships help ensure both sides reach their full potential.
“We will never slow down as we’re moving faster and more efficiently” to better serve customers wherever they are, Bratspies said.
He added omnichannel is “here and now” offering a level of convenience never seen before. Bratspies said Walmart will operate with precision as it is changing the way it thinks about delivering superior customer service and exceeding expectations. He said stores have to do things differently to become efficient fulfillment centers and the retailer will continue to adjust and align as needed. Bratspies said averages don’t work for Walmart at its large scale. He said Walmart is aiming for precision and will be identifying gaps standing in the way of its success.
Bratspies said the gears which must run in sync for precision retail include: Customer loyalty, store efficiency, supply chain, data systems and sustainability.
Bratspies also outlined Walmart’s path to precision retail success. He said the everyday low price strategy is non-negotiable as the retailer will do what it takes to win on price. He said Walmart will also deliver a broad assortment of excellent items to give shoppers ample shopping choices. Walmart will also use its scale to reset the cost structure where applicable, helping to deliver on low prices. Lastly, Walmart will continue to accelerate its omnichannel customer experience.
Walmart also gave out several awards to its suppliers at the annual event. The following suppliers received special recognition during the summit:
• Food suppliers of the year: Kettle Cuisine, Rio King, Shearer, Smithfield, and Unilever.
• Consumable suppliers of the year: Freshpet, Unilever, PG, and Slimfast.
• General Merchandise suppliers of the year: Classic Fashion, Goodyear, Bissell and Sony Playstation.
* E-commerce suppliers of the year: Coleman, Lego, PG Sterile, Lenovo and Shark.
Suppliers recognized for the biggest impact include: Niagara Water for positively impacting American jobs; Unilever for diversity and inclusion; and Fruit of the Loom for sustainability.