Pundit Interviews

Pundit Letters





Perishable Pundit
P.O. Box 810425
Boca Raton FL 33481

Ph: 561-994-1118
Fax: 561-994-1610


email:
info@PerishablePundit.com

a

Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur



Room For Improvement At New Wal-Marts

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.




A Merchandising Tool That Works:
The Box

 

Stemilt has explored creating a carton in the past for everyday apple and pear shipping that would be decorative and striking on display, but the cost has always been too expensive to merit the effort. However, recent advancements in printing that have reduced costs allowed Stemilt to make the new cartons the standard.

Stemilt’s black carton with gold, white and cream accents will contain the company’s premium grades of conventional apples, and Stemilt will pack its select grades of conventional apples and pears in the gold and cream carton.

The cartons are handsome, and the color scheme is what is being used on many high-end gourmet food products. The design tie-in with the farmer both emphasizes that part of the Stemilt mission statement looks to generate returns back to the land and it ties in with consumer trust for farmers.

And, without a doubt there are places in the industry where they will be shown off. Some independent retailers are exceedingly innovative merchandisers, and they will use everything that looks good to make beautiful displays. Wholesale markets still have displays on the street, and buyers and executives walking through distribution centers and back rooms get influenced every day.

Just maybe, the packer and shipper’s own employees perform better when they have real pride in every box they ship because it is a beautiful package.

But as printing technology has changed and more beautiful and meaningful cartons are available, many chain retailers have not kept up. In order to achieve uniformity and consistency of design, chains are not taking advantage of the opportunity to increase sales by emphasizing seasonal variations and encouraging a connection between the consumer and the land.

In addition, change itself is often a motivator for purchase. If a consumer walks in and sees that this week there is a beautiful waterfall display of a produce item, and if the store uses these types of display to communicate excellent value, exceptional taste or a seasonal peak, the consumer will react. Then next week the department can emphasize a different item in a different way.

You can’t get the full effect of change if all you do is move stuff around on the same racks. You need to change the actual floor plan and thus physical appearance of the store every week.

And by the way, this is not just true of produce departments; variety in all departments can increase consumer interest and sales. Dairy departments tend to be these massively boring straight walls down the side of stores. The eyes glaze over at their predictability and uniformity.

Stemilt is making a good point for the industry here: Shippers can make much nicer cartons than ever before for a reasonable price. Now retailers need to step up to the plate and come up with plans to use this new merchandising tool.




Putting Starbucks And McDonald’s
Into Perspective

Ever wonder how quickly Starbucks has grown or how big McDonald’s really is? Here is a great graphic to put things in perspective.


Mail to a Friend

© 2017 Perishable Pundit | Subscribe | Print | Search | Archives | Feedback | Info | Sponsorship | About Jim | Request Speaking Engagement | Contact Us