Welcome to the second installment of The Wal-Mart Weekly -- a new weekly column dedicated to bringing you insight, wit, facts, results, opinions and just a bit of everything else when it comes down to a very hot topic these days: Wal-Mart.Last week I discussed (well, in words anyway) the situation that Wal-Mart Stores, Inc. (NYSE:WMT) has in trying to be perceived as a growth company against smaller but more exciting competitor Target Corporation (NYSE:TGT). Wal-Mart's multiple "black eyes" in the media from 2006 (and now into 2007), plus its staid marketing and non-engaging shopping experience were deconstructed into some component elements. This week, I'll be taking that a little further past Target and will only be in Wal-Mart's backyard after doing some research on two consecutive Sunday evenings at a local Wal-Mart Supercenter.
What did I find out and what was I searching for on these field trips? Read on. I made these trips to find out what it was like to be a regular Wal-Mart shopper -- in addition to discovering what challenges exist inside stores and what triumphs could be found inside the belly of this notorious retail giant. Let's get started.
Groovin' ... on a Sunday afternoon
I've noticed on many, many occasions that the local Wal-Mart stores in my area (quite a few Supercenters) are busier on Sundays than on any other day of the week. Yes, Saturdays are quite busy as well, but Sundays generally take the cake if parking lot numbers tell the tale. So, on the last two Sundays, I visited a local Wal-Mart Supercenter to see what the hubbub was all about.
I visited the auto parts area, the home furnishings area, the clothes areas (kids and adults) and, of course, the grocery area. By far, the busiest part of the store was the grocery side of the Supercenter. I also noticed that the crafts and fabric area was completely devoid of human life. No customers or Wal-Mart associates were to be seen. This is generally the case, so I can see why Wal-Mart would want to rid its stores (most or all) of this category. It commands quite a bit of floor space and the sales likely just aren't adding up. If this happens, the craft crown will probably migrate back to specialty stores, although the prices there will also probably be higher.
Anyway, back to the grocery aisles. I visited the paper goods, household items (coffee makers, mixers) and, of course, the general food aisles, including meat and produce areas. Almost immediately, I gravitated toward food items that I consistently see in the various coupon books and ads I receive in my "junk mail." Items like Honey Nut Cheerios, Fresh Pineapples, Frito-Lay variety packs, Dannon yogurt and lunch meat products by Oscar Mayer. This was the test of all tests -- searching for popular items on the busiest grocery shopping day of the week from my point of view.
Where is everything?
I was astonished to find that Wal-Mart's grocery aisles, while packed with shoppers, seemed barren of many popular food products as evidenced by empty shelves and the disarray of items in almost every grocery aisle.
While not all popular items were out of stock, the remaining inventory was displayed in sloppy fashion. It looked like the end of a day in which hundreds of shoppers trudged through everything in a "fight to the end." It also showed me how disrespectful many Wal-Mart customers are. Items were strewn all over; on the floor, on wrong shelves, etc. Some aisles made me wonder if a mini-tornado hadn't swept through.
Some of the more popular items by General Mills and Frito-Lay were completely sold out, as were some of the fresh produce items. Now, as a retailer that prides itself on (and never fails to remind investors of) its technological prowess, it's surprising to find these items not automatically re-ordered. It's true that I used the worst-case scenario to run my test on -- the busiest shopping day and the more popular products. But, this is what real customers see and experience -- and it's anything but stellar.
Reasons for dismay
Now, I'm not sure how much of the fault here lies with Wal-Mart directly and how much of the mess is caused by the larger vendors. From what I've read and researched, much of the stock on Wal-Mart shelves is handled completely by third-party vendors. Wal-Mart does not take charge of the inventory levels and replenishment ordering for some of the fastest moving product from certain vendors. So it is hard to say where to point the finger here. One thing is certain -- the customer does not care one iota who is responsible for what -- all they know is that their favorite products are out of stock in a retail location that is supposed to be the best at forecasting, predicting and responding to customer demand at all times.
Perhaps the Wal-mart stock folks can't get in the aisles to replenish waiting stock due to so much customer traffic? Perhaps a solution would be for store management to visit grocery aisles on selected busy days, see what's selling out and dedicate more shelf-space to those high-turnover products. Planograms and slotting for certain items is a logistical science in and of itself -- but this is a non-point. At the end of the day, it's all about customer experience: ("My favorites are out of stock.") rather than how a team of planners sets the merchandise planogram in some Bentonville meeting room.
It's all about the customer, not the process or the plan
Constantly reacting to customer demand, choices and changes is what separates good retailers from truly great ones. From my two recent Sunday visits to a local Wal-Mart, I had "barely adequate" impressions as a customer and how this retailer treated me in a "customized way." I'm quite sure the "customer shopping experience" is not what's bringing customers back to Wal-Mart. However, I am quite convinced now that the only thing that keeps Wal-Mart customers returning is the perception of low prices. Yes, in reality Wal-Mart does have the lowest price on many items it sells -- but it sure does not have the lowest price on every item it sells. However, the Always Low Prices ... Always marketing slogan has done its job and made a lasting impression on much of the shopping public: Wal-Mart is always the cheapest... even though that is not the case many times.
I don't frequently shop Wal-Mart, and I'm not bashing it from a biased perspective. I am simply reporting my feelings as a customer shopping one of its stores who cares about the complete experience, from parking to shopping to price levels to stock levels to the conditions of the store to the availability of associates when the need arises.
Stay tuned next Thursday for another edition of The Wal-Mart Weekly, where I will look at a correlation of Wal-Mart's share price over the years based on is quarter-by-quarter (and annual) sales numbers and revenue/profit levels. Why hasn't WMT stock moved in any significant way for so long? I'll try to tackle that issue in the next column. Have a great Friday!
Closing Bell: Economic Catapult for Thanksgiving & Black Friday (WMT, TGT, GRMN, GOOG, MSFT)
Deere up on Q4 earnings performance
Reid Hoffman: LinkedIn will go public (at some point)
Reader Comments (Page 1 of 1)
3-08-2007 @ 5:25PM
William Martin said...
I agree with Brian's observation of his Wal-Marts.MY grocery section is out of name items more than just Sunday. Try any day. I really don't care who is responsible but the buck must stop at the store manager level. He or she should and probably are aware of this if they even care. Try cutting their store profit sharing for starters maybe if it doesn't improve. This is a problem at both of our WMT stores. We're getting a new one opening soon on the south side and maybe it will do better for a while? Billy Martin,Longview,Tex.
3-08-2007 @ 7:23PM
Mike said...
I'd be curious what part of the country Brian's store is in.
My local Wal-Mart is extremely clean, well organized, and pleasant. (I'll admit it IS one of their Texas prototype stores)
3-08-2007 @ 8:29PM
Charles Lewis said...
It is so popular for some folks to criticize Wal-Mart - our store is so superior to the Target in our town. Try returning something to Target that you have lost a receipt for. As just another example, I bought some Target brand (Cherokee I believe ) causal clothes - poor, poor quality. They organize their stores well but quality and price are better at Wal-Mart is my experience. I dropped them from my list and went back to Wal Mart for basic items.
3-08-2007 @ 10:08PM
Brockage said...
I agree with Mike. When I hear about messy stores or empty shelves I always wonder why that's not my experience (mostly at Denver Wal*Mart stores). I will say that one is lucky if one doesn't have to shop anywhere but especially a big boxer on a weekend -- it always reminds me of 24 hours at Le Mans. As to the shutting down of the fabrics section - I agree, it appeals to very few people and the space can be put to better use. Making one's own clothing is a dead art - whether one likes that or not. Lastly, the prices are always low as in a Family Dollar store, whereas in a chain grocery store, a special or loss leader may be lower, but only for that week.
3-09-2007 @ 7:24AM
Jack Schneider said...
Brian for years I sold milk to all the southern Arizona stores. At a very low margin after I paid the driver and paid for the fuel there wasn't much left for the benefits and taxes. Now keep in mind some of these stores were 150 miles from Tucson IE. Douglas and Sierra Vista. They wanted me to serve all the stores seven days e week and fill the shelves. I had to tell Walmart no and I quite serving them. They were a good customer and I sold them $2 Million a year but it cost me almost $3 million a year to do it. I couldn't make it up on volume sic.
3-09-2007 @ 7:43AM
Brian White said...
FYI to all comments so far -- the store I visited (and the store locations where I research) are in and near the Oklahoma City, Oklahoma area.
:-)
3-09-2007 @ 5:29PM
Connie said...
Even though some items are cheaper at another store, the money I save overall is still better.
Walmart is great! They will replace or refund any
item without a receipt. They just scan it. I love Walmart!
3-09-2007 @ 7:36PM
William Martin said...
Please allow me one more comment about grocery items not on shelve at our WMT stores. Maybe the stores in other states hire a higher quality of people who just might still care including keeping the stores clean? I'm not far from from Brian's store so maybe this is a regional problem only? Billy Martin
3-13-2007 @ 1:58PM
Jim P said...
I occasionally shop at a Wal-Mart that is located in south central Florida, and always feel like I need a shower upon leaving the place. Between the crowded and messy store conditions, and the "interesting" customer base, somehow saving a buck loses it's importance.
3-10-2007 @ 5:33PM
Dave Straitjacket said...
Around Christmas there was a brief segment on the news showing a deer that had managed to get inside a Target store. They showed video from multiple Target security cameras as the deer ran through the store being chased by Target salespeople. Eventually, it ran out the front door. Fortunately, I had just purchased a DVR and was able to "rewind" the video and re-watch it to confirm what I thought I had seen. The event occurred at 4:30pm on (I think) a Friday...in the month of December. In the entire video, I saw ONE lady with a shopping cart, then the video showed a shot of the front line of registers...out of about 20, only 2 had cashiers at them WITH NO LINES! This is the difference between Target and Wal-Mart. I've seen more people in Wal-Mart (and more cashiers) at 2am than I saw in that video of Target at 4:30pm...in December....BEFORE Christmas! Perhaps this can provide a little perspective as to why the stores seem messy. "Well shopped" stores can get that way. Having said that, having more associates on the salesfloor can reduce or eliminate the "clutter". I've always said good customer service involves more than just being nice and knowledgeable to the customer...it also involves actually, physically being there for the customer. This explains the death of the fabric department. We've understaffed it for so long, that the customers have given up on us...not the other way around. Listen for this announcement the next time you're in a store: "All associates that can run a register to the front please". That's a red flag that the store doesn't have enough cashiers. In turn, this pulls people off the salesfloor, hurting customer service in the deaprtment, hurting shelf "maintenance", and in the long run hurting our image and sales. People who care COULD stay over the freshen up the departments, but then we run into Wal Mart's stance on overtime - don't get any - so, we're stuck. Leave a mess for customers (and get in trouble with the company) or get in trouble with our company for staying over to clean up. Add to this the constant complaints from customers about...wait for it....the lack of help and messy stores! Is it any wonder why you've mentioned running into "surly" associates before? We can't win for losing. The people on the salesfloor shoulder the blame from customers for the appearance of the store, then get it again from management for exactly the same thing. The only difference is, customers usually complain for about 30 seconds and move on - allowing us to attempt to get back to trying to fix the complaints. Management, on the other hand, will tie us up for an hour in a meeting telling us the same things, not realizing that that hour could have been put to better use actually working the problem.