Pundit’s Mailbag — Wal-Mart Lacks
Store Level Produce TLC
Jim Prevor’s Perishable Pundit, November 2, 2007
The quality and food safety standards of a producer are often dictated by its clients. So if you specialize in export to British supermarkets, with their rigorous standards, you usually know a thing or two about quality.
So we were intrigued to receive this letter following up on our series on Wal-Mart and quality:
I just read your article about the quality of produce at Wal-Mart.
I am an apple farmer from the Hudson Valley region of New York and when they purchase product they require high quality specs. Then when I shop in their stores, the produce is terrible. It has about two days life span when I get it home.
The quality of bananas varies greatly. The displays of the produce are terrible also. It is the store level that needs improvement.
It always has been when it comes to the supermarkets. They receive top quality produce, and then they destroy it when it comes to the stores. It is not stored properly or displayed correctly with refrigeration.
— Helene Dembroski
Dembroski Orchards Inc.
Plattekill, New York
We’ve been running a series on Wal-Mart. Most recently we ran Is Wal-Mart Foolish For Focusing On Small Savings? This piece focused on whether Wal-Mart’s and other’s efforts to import directly weren’t attempts to save pennies at the risk of quality.
Prior to that we ran, Wal-Mart’s Global Procurement Division Gets Special Pass On Quality, which analyzed acceptance procedures for product Wal-Mart imported itself versus that supplied by U.S. importers.
This particular discussion was kicked off with our piece, High Lettuce Prices Strain Supplier Relations With Wal-Mart, and then followed up with an article we called, Wal-Mart Tightens Quality Specs.
We also heard from a Wal-Mart vendor and used his letter in a piece we called, Pundit’s Mailbag — Wal-Mart’s Path of Decreased Store-Level Execution. And all of these pieces built on a series we ran some time ago that concluded with an article entitled, Wal-Mart’s ‘Opportunity Buy’ Policy Reveals Much About The Company.
Helene, though, calls a spade a spade by pointing out that in today’s world where grade standards are available and most retailers buy tough standards and kick anything that is compromised at all — when we find poor quality produce being presented to consumers, it is usually due to poor store level execution.
Wal-Mart is worse on this criteria than most supermarkets. Why? First, rapid expansion strains management. How many great managers does any company have?
Surely one of Tesco’s big challenges as it rolls out will be how does it suddenly pick up thousands of great store-level employees? It is almost impossible.
Second, Wal-Mart has special challenges because it does not have a food-centric culture. Meijer does a better job at store-level because it is a grocery company that has come to handle general merchandise. Wal-Mart is a general merchandise discounter that now handles food.
Wal-Mart doesn’t have the store-level expertise in fresh produce and it doesn’t have the systems that give produce the TLC it really requires.
Those who attack Wal-Mart on grounds that its merchandising isn’t innovative enough have it almost precisely wrong. The key criteria that a produce executive at Wal-Mart must always consider is not if a proposal is appealing to consumers; it is simply this: Is this scalable?
Wal-Mart has slowed down its domestic expansion. If it uses the breather to focus on enhancing store-level execution, it will be a very profitable pause. If it does not, it will continue to struggle, and produce procurement will be pushed to impose even tougher standards with no consumer gain at all.
Many thanks to Helene for sharing her experience.