Walmart is Back!

At Walmart Old School is the New School

Back to the future, déjà vu, whatever you call it, Walmart this week removed any lingering doubts about the future direction of the U.S. stores division under the leadership of new president and CEO Bill Simon. 

The company is keen to restore sales momentum and frayed relationships with its supplier community, and to address those goals a group of senior level executives reportedly met with the entire merchandising team in the Walmart home office auditorium this week. They spelled out priorities that, according to notes from an anonymous source widely circulated among suppliers after the meeting, sounded like the company's traditional approach to business relationships and operational strategies.

Simon, Walmart president and CEO Mike Duke, former president and CEO Lee Scott and Walmart International president and CEO Doug McMillon participated in a panel discussion where the key takeaway was that autonomy has been returned to merchants to run their business. In addition, buyers need to listen to and collaborate with suppliers, have fun, take thoughtful risks and recognize there is power in assortments.

The messaging is a departure from the leadership of former stores division president and CEO Eduardo Castro-Wright and former chief merchant John Fleming. Castro-Wright in late June was reassigned to lead Walmart's global sourcing and Global.com business, and Fleming left the company a few days after Simon was promoted from his COO role. Castro-Wright and Fleming took the stores division in a new direction by reducing product assortments and eliminating promotional displays in the name of reducing clutter to enhance the customers' shopping experience. 

Some of the strategies, collectively referred to as Project Impact, were effective. Improved labor scheduling that reduced checkout lines, and supply chain efforts that reduced inventories worked well. But sales suffered as Walmart stores lost promotional intensity and suppliers who had grown accustomed to the collaborative approach of prior regimes grew increasingly alienated by the command and control style of Castro-Wright and Fleming. 

Mike Duke reportedly told the buyers, "You are officially unleashed to run your business."

That's welcome news to the company's suppliers as evidenced by the pace at which word of the meeting and those anonymous notes spread. 

Reprinted from article on RetailingToday.com

Where Are My Pants?

click to enlarge. Image via WSJ.com

The Wall Street Journal reports today that Walmart is progressing in its efforts to incorporate RFID (radio-frequency identification) devices into its inventory. The technology, which allows for monitoring of individual items within a supply chain, is state of the art, but comes with some privacy concerns.

Starting next month, the retailer will place removable "smart tags" on individual garments that can be read by a hand-held scanner. Wal-Mart workers will be able to quickly learn, for instance, which size of Wrangler jeans is missing, with the aim of ensuring shelves are optimally stocked and inventory tightly watched. If successful, the radio-frequency ID tags will be rolled out on other products at Wal-Mart's more than 3,750 U.S. stores...

Robert Carpenter, chief executive of GS1 U.S., a nonprofit group that helped develop universal product-code standards four decades ago and is now doing the same for electronic product codes, said the sensors have dropped to as little as seven to 10 cents from 50 cents just a few years ago. He predicts that Wal-Mart's "tipping point" will drive prices lower.

"There are definitely costs. Some labels had to be modified," said Mark Gatehouse, director of replenishment for Wrangler jeans maker VF Corp., adding that while Wal-Mart is subsidizing the costs of the actual sensors, suppliers have had to invest in new equipment. "But we view this as an investment in where things are going. Everyone is watching closely because no one wants to be at a competitive disadvantage, and this could really lift sales."

Wal-Mart won't disclose what it's spending on the effort, but it confirms that it is subsidizing some of the costs for suppliers.

Proponents, meanwhile, have high hopes for expanded use in the future. Beyond more-efficient recalls and loss prevention, RFID tags could get rid of checkout lines.

"We are going to see contactless checkouts with mobile phones or kiosks, and we will see new ways to interact, such as being able to find out whether other sizes and colors are available while trying something on in a dressing room," said Bill Hardgrave, head of the RFID Research Center at the University of Arkansas, which is funded in part by Wal-Mart. "That is where the magic is going to happen. But that's all years away."