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!