Pundit’s Mailbag — Wal-Mart’s Short Term Mentality Hurts Produce
Jim Prevor’s Perishable Pundit, November 9, 2007
As Tesco as been on everyone’s mind, we’ve also been running a series on Wal-Mart. Most recently, we ran Pundit’s Mailbag — Wal-Mart Lacks Store Level Produce TLC, which featured a producer/consumer explaining the quality is good at purchase and bad at store level.
Prior to that we ran, Is Wal-Mart Foolish For Focusing On Small Savings? This piece asked if Wal-Mart’s and other’s efforts to import directly weren’t putting quality at risk.
Wal-Mart’s Global Procurement Division Gets Special Pass On Quality assessed acceptance procedures for product Wal-Mart imported itself versus that supplied by U.S. importers.
High Lettuce Prices Strain Supplier Relations With Wal-Mart was the piece that initiated this thread, and we quickly followed up with an article we called, Wal-Mart Tightens Quality Specs.
We also published a letter from a Wal-Mart vendor under the title Pundit’s Mailbag — Wal-Mart’s Path of Decreased Store-Level Execution. These pieces all 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.
Today another longtime Wal-Mart vendor and a much esteemed eminence on the marketing side of the business wanted to applaud one of our letter-writers:
Ditto the Wal-Mart vendor from Pundit’s Mailbag — Wal-Mart’s Path Of Decreased Store-Level Execution. An old-time produce man for whom I had a great deal of respect once told me, “You can save your way to profits or you can sell your way to profits.”
With just a little consideration to these concepts you realize that the former has a finite end while the latter is truly limitless.
I saw the same philosophy of saving occur at Winn-Dixie some 15 years ago. I even had an employee tell me that they had cut the night cleaning staff. And now, while emerged from bankruptcy, they struggle to regain just a little of what they lost.
While it may be true that Food Safety/Traceability will take us down the road of “all packaged” produce departments, it will not change the perishable nature of our business nor will it replace the need to have “someone on the floor” of the department who recognizes that one bag of spoiled grapes can ruin the perception of freshness in an entire display. Or, by some remote possibility, a customer might want to ask a question.
The point about Winn-Dixie is telling. The Pundit remembers a day when we would sit with baited breath wondering if the mighty Lincoln Meena would give us some small portion of Winn-Dixie’s order for Chilean fruit.
One of the things that Bruce Peterson was remarkably good at is knowing what was truly important. At the stage Wal-Mart was in, when he was building the produce department, he knew that the key risk for such a rapidly growing organization was being out of stock.
The whole system he designed was focused on securing adequate product, not buying things at the absolute cheapest cost possible.
Now, Bruce is gone, but perhaps more important, the growth has slowed, so the focus is on other things.
The risk, though, is that top executives outside the produce department will press for efforts to save money via procurement because that is so much more certain than pressing for improved results through increased sales due to enhanced marketing efforts or improved customer service.
Wal-Mart has become so gimmicky that its actions in produce can be seen as an outgrowth of overall short-term thinking.
This is a company that, until yesterday, was all about being the “buying agent for the consumer” and providing “every day low prices,” yet now the company is putting up a “Secret Website” with special deals for those “in the know,” and The New York Times reports that Wal-Mart has already started to offer “…door-buster discounts…three weeks before they are traditionally unveiled on the day after Thanksgiving.”
This doesn’t sound like the actions of a company any longer dedicated to the long term development and maintenance of an image as a retailer that always and every day delivers the lowest prices. It sounds like the actions of a company desperate to meet year-end numbers.
And desperate companies, as with desperate people, do desperate things — in many cases things that hurt long-term results.