Inside This Issue - Opinion
A revitalized Walmart emerges
December 13th, 2010
by David Pinto, Editor
It’s virtually inconceivable that the mass retailing community has largely stopped taking Walmart, a half-trillion-dollar company, all that seriously.
But that’s just what’s happened over the past three years, as one competitor after another has found it increasingly easy to compete with a retailer that once brushed rivals aside like so many fleas on an otherwise preoccupied dog.
Similarly, it’s hard to believe that a supplier community that once routinely opened offices in Northwest Arkansas simply to get closer to its largest customer had so far reversed itself as to openly complain about the treatment it receives at the hands of the world’s largest retailer.
Now, both those situations are about to reverse themselves. Retailers that found Walmart a less than impregnable competitor will now have to rethink and readjust go-to-market strategies that have been working so well of late.
And suppliers that had become frustrated at the indifference accorded them of late, treatment that had become the norm in Bentonville, are optimistically coming to recognize that Walmart is once again learning to respect the role they have traditionally played in the retailer’s success. Indeed, love is apparently right around the corner.
The catalyst for this reversal of form is Bill Simon, the recently named chief executive of Walmart’s domestic operations. With newly empowered operating and merchandising staffs, he has launched, or is about to launch, the following key initiatives:
• A return to the Everyday Low Price (EDLP) policy that was at the core of Walmart’s legendary transformation from a regional discount chain into the most powerful retailer the world has known.
• A renewed emphasis on providing complete product assortments, especially as those assortments relate to the women who are Walmart’s core customers.
• A pledge to restore the retailer-supplier partnerships that once served as a pillar of Walmart’s success but had been allowed to deteriorate to the point of indifference in recent years.
• A concerted effort at local marketing, with the object, long since discarded, of providing neighborhood Walmarts with those items local customers demand.
• A new commitment to being in stock on products across the store, a commitment that will put much of the burden for delivering those products to the stores on the supplier community.
• A return to meaningful, rather than gratuitous, promotional activity, with “action alley” once more being utilized to add excitement to stores, which had become devoid of excitement.
• The resurrection of the item merchant. Store associates and buyers will once again be challenged, as Sam Walton once challenged them with his Volume Producing Items (VPI) program, to discover exciting products and bring them to Walmart shoppers. Walmart staffers will be supported in this exercise by a new attitude, one that encourages individual initiatives and allows for the possibility of failure. Most significantly, individual buyers, rather than committees, will make key decisions on individual items going forward.
• Targeted growth will become a critical component to the company’s strategy going forward. Specifically, the retailer will emphasize growth in same-store sales, geographical growth that will turn on an already announced program to open smaller stores in small rural communities and inner cities, and growth in Walmart’s online business. An initial step in the latter direction was the retailer’s stunning announcement, made in mid-November, that it would no longer charge for shipping.
• Finally, the much analyzed and frequently derided win-play-show program, one that emphasized some products and product categories at the expense of others, is dead. In its place will come a return to what is being termed category leadership, an effort to add excitement and entertainment throughout the store by giving shoppers what they have always expected from Walmart: the certainty that the products they have come to buy will be on the shelf at the right price.
This return to the concepts that made Walmart successful in the first place has, at its heart, this new emphasis on category leadership, one which turns on those core competencies that were once routinely taught at all levels throughout the company. To that end, competition will be viewed more critically, customer preferences will be considered more seriously, strategic planning will get more attention, individual items will become more important, promotional planning will play a more critical role in merchandising, and speed to market with new, exciting and different merchandise will once more emerge as a core competence. Behind it all, say people inside Walmart, three- and four-foot modulars will become the retailer’s essential merchandising vehicles.
In total, that’s an ambitious strategy, one designed to correct past mistakes, mend fences, repair frayed relationships, reenergize associates who had become indifferent to the company and its programs, and return Walmart to its halcyon days, a time when every initiative, every new project, every innovative program had the potential to change the retail environment.
Ambitious as it may be, those within Walmart and those within the mass retailing community who have thus far been exposed to Bill Simon, his vision and the teams he has assembled to execute that vision share one opinion: He means to get it done.