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Room For Improvement At New Wal-Marts
Jim Prevor's Perishable
Pundit, August 22, 2006
This past weekend, I checked out the opening
weekend of not one but two Wal-Mart Supercenters in Miami Gardens,
Florida, about an hour
from my home.
Wal-Mart promoted these stores as being heavily focused on international
products, and I thought it was interesting that Wal-Mart opened two
supercenters in one city, less than five miles from each other, on one
day. So I took the family and convinced them this was a great way to
spend a Sunday (fortunately, they were supercenters, so I could bribe
the kids into thinking this was a treat with toys and McDonalds).
As far as opening weekends of supermarkets and supercenters go, I
generally don’t like to be too judgmental, as what you see is not the
way the store will really operate after a while. But if I were a
Wal-Mart exec, on one hand I would be thrilled so many people wanted to
try our stores. On the other hand, I would also be very disappointed in
the execution on the ground.
Every perishable department was out of stock of massive amounts of
product. You had gaping holes of two and three feet at a spot in produce
and meat. You could not buy a quart of milk because the rack was empty.
Big massive cases to hold rotisserie chicken and secondary displays of
bananas became junk bins as people abandoned all kinds of junk in these
empty cases.
I’ve worked plenty of grand openings and know how difficult and
unpredictable they can be. But Wal-Mart is very experienced at this, and
it is really unacceptable to let a store look like these brand new
stores did.
In some cases, you need to bring in staff from other stores for a grand
opening and have replenishments ready. Wal-Mart’s vaunted logistics
abilities should make this quite possible.
In other cases, you need to have a plan for the unavoidable. For
example, it is highly predictable that you won’t be able to produce
enough rotisserie chickens to satisfy this above-average crowd. Fine. So
you put up a sign explaining that, and if this likely event transpires,
you figure out what are you going to put in that giant hot case by the
cashiers that normally will hold rotisserie chicken.
You don’t let it just become a junkyard. If you won’t have staff during
the grand opening weekend to keep restocking the secondary banana
display — a full 32 cashier lanes away from the produce section — then
figure out what you want in that rack during that weekend. You don’t
leave it with six hands of bananas and every item someone discards
before they check out.
Beyond what I hope and expect are short-term operational issues, the
food offering at these stores was formidable. (From time to time, I’ll
probably run item checklists of interesting items and brands I see in
different departments, both at these Wal-Marts and at other stores I am
always visiting, to illustrate the scope of the perishable offerings.)
Many consultants are barking up the wrong tree when they tell retail
clients all they have to do to compete with Wal-Mart and its
supercenters is increase variety. The variety offered at these stores
was extensive in every perishable department. Sure the mix was different
than a good supermarket, with fewer specialty cheeses, for example, but
more grab-and-go items than any supermarket in competition with these
stores.
Still, not all was good.
First, as far as this international food thing went, it looked like no
one sent the memo to the various perishables departments. This area is heavily
Caribbean, and I saw no evidence that the mix had been changed more than
infinitesimally to accommodate this customer. Beyond this, several
departments seemed to raise real issues in my mind.
PRODUCE:
PROCUREMENT- OR CONSUMER-DRIVEN?
Produce was very troubling to me, as it appeared
that Wal-Mart’s produce selection was now more procurement-driven than
consumer-driven.
Quality was good and, out-of-stocks aside, variety was good. But
Wal-Mart is supposed to function as the buying agent for consumers, and
it appeared that, all too often, other factors were influencing product
choice.
In the early days of produce being sold in Wal-Mart Supercenters, the
Wal-Mart name had little brand equity with produce consumers. Bruce
Peterson, now Senior Vice President/ General Merchandising Manager for
Perishables, made a conscious decision to carry top brands and use their
equity to convince consumers that Wal-Mart was a good place to buy
produce. This happened to fit in with the Wal-Mart tradition of selling
branded products for less and, since Wal-Mart is now the biggest seller
of produce in America, I think it is reasonable to say it was a
brilliant decision.
But now, decisions are obviously being made for other reasons. Far too
often, I saw signs that big vendors were given more lines just because
it was convenient to procure that way. Perhaps because the price was
best. But there is no way that the brand mix I saw in that department
was determined by asking what would consumers most value on each item.
It is easy to let this habit slide. But it is dangerous territory.
Wal-Mart, especially, has to be careful. The general merchandise
offerings bring so many people to the store that even mediocre product
mixes will sell a lot. But the day the consumer is not the Number One
driver of each and every procurement decision, Wal-Mart will lose
something priceless. And, one day, it will start impacting the results.
DELI HAS
PRODUCT BUT NEEDS STRATEGY
Wal-Mart’s deli in both Miami stores had an
astounding array of products — far more than the typical deli at Publix
or Winn-Dixie. And it offered innovative products, especially in the
grab-and-go area, including nifty things such as desserts that fit in
the cupholder of your car.
Three things in the deli really came across: First, the store
branding was inconsistent and confusing. Some things were branded
Wal-Mart Deli and others Prima Della, but it was not clear why. I guess
Prima Della is supposed to be upscale — Wal-Mart executives tell me it
cuts on par with
Boar’s Head — but that was not explained to the
consumer. There was no signage or any other way for consumers to know
that, and, besides, what is wrong with the pizzas and other items being
marketed under Wal-Mart Deli? Are they low quality? It is not like there
were two lines at different price points. The branding is confused.
When it comes to service deli meats, Publix, the big competitor here, is
a Boar’s Head deli. Publix sells its store name brand cheaper and has a
few specialty lines, such as
Hebrew National, but it is much clearer
positioning than the Wal-Mart case, which has a big assortment of
brands.
There is actually a great opportunity for Wal-Mart to explain the
advantages of each brand it offers and what values each one of these
lines offer consumers. Not being committed to one brand should let
Wal-Mart select the best Genoa salami, the best pastrami, the best ham,
etc., at each price point. But if Wal-Mart did this, there was no
indication of it. There was no signage at all, no way for a consumer to
position anything.
There was a nice line of salads, such as Asian Chicken Salad, marketed
under the FRESH brand, which just added a third mystery label to the
mix. The salads are cryptically made by TFF in Salinas, which I assume
has something to do with
Taylor Fresh Foods, but these items
would sell better labeled as part of an integrated department branding
strategy than just having this random label thrown into the department.
Second observation: The department has a bizarre, almost
schizophrenic feeling to it. There are really nice products, like an
imported Parmigiano Reggiano, a hickory-smoked sun dried tomato turkey
breast, a section of upscale gourmet sausages in beautiful black
packaging and slices of
Eli’s Original Cheesecake, positioned
between pre-made sandwiches such as one would get in a vending machine
or at the least expensive convenience
store. Then there was a variety of microwaveable burritos and
handheld foods.
The deli department was a hodge-podge. It was as if the department had
not really been merchandised at all. The sections for different usages
should be clearly defined, with products organized in a way that appeals
to the wildly different clienteles. A little merchandising and that
product mix could sell a lot more.
Third, Wal-Mart should really abandon some of the half-hearted
service efforts. Case in point: They had a nice selection of
pre-packaged wet salads, but the non-descript label, Wal-Mart Deli, did
not do the product justice.
A half dozen wet salads were also displayed in the bowls in the service
deli, and it was a sorry looking display; each salad was just dumped in a mournful
bowl obviously showing it had to come from some bucket. The quality also
was suffering as the product sat out there to languish, and the staff
was too busy to service anyone anyway.
This treatment of wet salads hurts image and sales. Wal-Mart should just
go with prepackaged salads. My Publix in a ritzy beachside neighborhood
of Boca Raton manages just fine with all prepackaged.
BEEF
BRANDING SHOULD EQUAL CHICKEN/PORK
Meat seemed an area where a little branding would
make a big difference. The chicken and pork were heavily merchandised in
branded packages from Tyson and Perdue, but Wal-Mart left the beef in
unbranded packages positioned between the chicken and pork. The beef had a generic appearance, despite the black plastic containers for the
case-ready product.
BAKERY DOES WEDDINGS: IS THAT THE MESSAGE?
Bakery was the most consistent in presentation and
branding, with the exception of one pile of snack cakes that were just
packaged goods and not fresh-baked and thus didn’t really belong in
bakery to begin with. Virtually the only signage in all the perishable
departments was prominent signage in the bakery, saying Wal-Mart makes
wedding cakes.
I haven’t seen the statistics on sales for such products at Wal-Mart,
but to me it seemed like a distraction. Is that the most important
message for bakery to promote? If they can sell that kind of
product, it made me question why the commitment to floral wasn’t
stronger as it consisted solely of bouquets in buckets in both stores.
SEAFOOD
NEEDS TO BE COMMUNITY-FOCUSED
The seafood department would have been a nice
little department if this wasn’t supposed to be a “store of the
community” geared toward the local Caribbean population. Carribbean
cuisine is heavily geared toward seafood, but if I took a picture of
this department and told you it was taken in a new supercenter in
Minneapolis, you wouldn’t doubt me for a minute.
Some of the packaged smoked fish, such as Prima Della brand baked
salmon, as well as jarred herring, and packages of smoked nova salmon didn’t seem to contribute to
a fresh fish department. They would probably do better back in the deli.
Overall I had two additional observations:
First, there didn’t seem to be a reasonable merchandising strategy between
departmental offerings. So, for example, the deli department up front
offers a nice selection of fresh hummus and related products in
prepackaged containers. The dairy offers the exact same product under a
different brand in a coffin case in the back.
You can make a lot of arguments for secondary displays, even a second
brand, but to maximize sales, you want sound reasons for your decision.
So that secondary display might be positioned next to the chip aisle
instead of the dairy. I saw a fair amount of evidence of simple lack of
coordination and departmental competition.
Second, a great opportunity was being missed at the opening of these two supercenters. So many people, so many products and nothing, nothing was
really being merchandised to sell. If you didn’t know that you liked and
wanted peeled Thai coconuts or hot fried okra or baked salmon or red
velvet cake or soy milk or a pre-cooked roast, there was nothing in
either of these stores that would even attempt to educate you or
convince you.
What a lost opportunity.
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