Walmart’s grocery biz is driven by demand, not by do-gooding
Through a special arrangement, presented here for discussion is a summary of a current article from the Spieckerman Retail blog.
Walmart has earned some praise in the mainstream press for democratizing organics, particularly from a price perspective. But Charles Redfield, Walmart’s EVP of its U.S. food division, said it still boils down to supply and demand.
On the supply side, it takes three years for a farmer to transition a field over to organics, so expanding assortments takes time, Mr. Redfield said in a recent presentation to the Bentonville Bella Vista Chamber’s WalStreet supplier group.
But it was the demand side of the conversation that revealed what could be considered a contrarian strategy, given other retailers’ recent moves. For example, Target and CVS have both taken a somewhat dictatorial stance on emphasizing healthier options. Target put major suppliers on notice and changed up assortments, while CVS eliminated tobacco in its stores and backed its decision up with an anti-tobacco crusade. Both moves were supported by shifts in consumer sentiments to some degree, but the magnitude of the changes that these retailers implemented veered toward shaping behavior, not just responding to demand.
Walmart has found success on the value side with two-for-a-dollar fruit pies as well as a three-pound “Sasquatch” pizza for under $10.00, Mr. Redfield said the company still “over-indexes on belly-fillers.” Clearly, Walmart isn’t wagging any fingers
Mr. Redfield made it clear that Walmart will lean into organics, natural, gluten-free, non-GMO and other movements only to the degree that its customers support them.
His overall presentation detailed the many investments Walmart is making in in-store presentation, sourcing, and its overall organizational structure to “grow and win for the long term.” Walmart will launch a “sensory food lab” prior to its upcoming shareholders’ meeting to help shift from simply selling a lot of food to instilling a true “food culture” within the organization.
Walmart also hasn’t wavered in making price leadership its top priority. Today, shoppers can easily validate retailers’ price claims online, and, according to Mr. Redfield, they “check it a lot.”
To what degree should organics expansion be driven by consumer demand versus pushed to support do-good ambitions? Does a healthy-for-you positioning work for or against retailers?