Walmart EVP discusses plan to grow grocery sales
Through a special arrangement, presented here for discussion is a summary of a current article from the newmarketbuilders blog.
With majors such as Target and Kroger on one side and oodles of digital upstarts on the other, Walmart faces a daunting challenge in grocery, a make-or-break business for the retailer even as it must also manage a multitude of other categories.
At a presentation at Bentonville Bella Vista Chamber’s WalStreet supplier group in mid-March, Walmart Food EVP Steve Bratspies said Walmart has enjoyed a 20 percent compound annual growth rate in food over the past 20 years. Mr. Bratspies identified several calls to action for continuing and improving upon the trend.
1. Win in fresh
Consumers are eating more fresh foods, but even if that weren’t the case, getting fresh right is the cornerstone of any fully functioning grocery business. Fresh drives trip frequency, which, in turn should amp up sales in higher-margin categories. Mr. Bratspies cited new bakery technology and the introduction of new deli brands as steps in the right direction for Walmart, yet he stated that a "share gap opportunity" exists in fresh nonetheless. He outlined four elements that will frame Walmart’s win-in-fresh framework: assortment and presentation, customer experience, systems, and processes.
In terms of processes, Mr. Bratspies paid particular attention to sourcing, reiterating the need for supply chain transparency and simplification along with the opportunity to leverage local sourcing and respond to market-specific competitive dynamics.
2. Re-energize the center of the store
Mr. Bratspies cited a couple of the consumer preference dynamics that fall into what he identified as "underdeveloped categories" in the center store: dietary needs and organics. (Premium frozen products and adult beverages were also in the mix.) Organics, in particular, have sparked a heated competitive battle, with Walmart once again redefining the retail value proposition and transforming a niche for the well-to-do into an accessible staple with mass appeal.
Mr. Bratspies spoke of the need to manage the space in Walmart’s stores as "the precious asset that it is" and candidly stated that, even though most people would assume that Walmart understands the impact that various category adjacencies have on its business, for the most part, it doesn’t.
3. Expand physical-to-digital integration
To Walmart’s great credit, it was one of the first retailers to snap out of the "bricks are dead" doldrums and leverage its physical scale as a key differentiator. The next challenge, according to Mr. Bratspies, will be to solve the "dysfunction" between online and in-store once and for all, with the ultimate goal of unifying the Walmart experience, regardless of whether customers are shopping in-store, online, or via their mobile devices.
How would you assess Walmart’s strengths and weaknesses currently in the grocery category? How should the retailer position itself in grocery against other majors such as Target and Kroger as well as the emerging digital start-ups?