Can Walmart stop its downward spiral in grocery?
Walmart’s well-established problems with inventory management took on a new dimension last week thanks to a leaked memo, which indicated that the grocer is struggling to implement processes to boost grocery sales and stop its perishable grocery items from wilting, molding and rotting on the shelves. According to a New York Times article, the "urgent agenda memo" sent to Walmart store managers nationwide was leaked by a store manager unhappy with understaffing.
The memo instructs Walmart managers to discount meat and baked goods that are approaching their expiration dates to increase the possibility they will sell, as well as to remove expired items and place new stock in the backs and bottoms of coolers.
The memo, according to the Times, also discusses the need for employees to assess the quality of fruits and vegetables along a "Would I Buy It" scale to determine if the products have grown rotten or moldy and should be taken off the shelves. The introduction of Walmart’s internal "Would I Buy It" scale is referenced in an earlier Times article from 2013 about the store’s difficulties keeping fresh produce on the shelves.
Some have argued that Walmart has not been staffing its stores adequately and simply does not have the number of employees required to implement the strongly worded memo, which reminds managers that sales are their number one concern.
Walmart reported an uptick in comp sales for the first time in seven quarters on the company’s Q3 earnings call last week. On that call, CEO Doug McMillon recounted having recently visited store locations in Asia, as well as a more local trip to Chicago, and detailed his experiences.
"Our fresh food in Japan looks great," said Mr. McMillon.
"A customer stopped me to thank us for the value we’ve brought to his community and it was interesting for me to see some of the similarities and differences of our fresh food offer compared to what I’d seen in Japan," Mr. McMillon went on to say. "We are learning across markets and can do even more of that to improve our fresh offering in all of our markets. It’s a key point in our enterprise strategy going forward."
Mr. McMillon also mentioned a Chicago Walmart customer requesting that the grocer add more organic produce.
"She was right; we needed more," said Mr. McMillon. "Interactions like this often remind me how similar our customers are around the world. Everyone is interested in getting quality products at a value."
- Walmart Memo Orders Stores To Improve Grocery Performance – The New York Times (tiered sub.)
- Walmart Strains to Keep Aisles Stocked Fresh – The New York Times (tiered sub.)
- Update: Wal-Mart’s Third Quarter Reveals Near-Term Concerns And Questions – Seeking Alpha
- Wal-Mart Stores’ (WMT) CEO Doug McMillon on Q3 2015 Results – Earnings Call Transcript – Seeking Alpha
How does Walmart’s execution in fresh foods compare to its competitors’ in the grocery space? What steps will Walmart have to take to get its grocery department functioning correctly?