Reporting from Bentonville: key insights from Walmart Day One

Date : 06 June 2013

IGD is in Bentonville this week to cover the annual Walmart Associates and Shareholder event. It’s a key week in the Walmart calendar, bringing together media, analysts, shareholders and associates for an update and celebration of everything Walmart. Today we attended a session at Sam’s Club as well as several presentations with key Walmart Execs.

Key Insights from Day One

1. Sam’s Club: Sensory Labs transforming new product assessment

Sam’s Club is Walmart’s warehouse club format (with turnover of $56.3bn in 2013). In a session designed to update on the new product development process, Charles Redfield (Chief Merchant) outlined how important merchandising is for the business, stressing that both value and differentiation are key. Sensory Labs

To help improve the process for product formulation, a new Sensory Lab process of customer tasting is now in place, which is giving the business greater insight into product attributes and helping the teams identify the "key drivers of liking" for customers.

Bryant Harris, Vice President for Fresh Grocery and Angela Herbert, Sam's Club Corporate Chef and Senior Product Development talked about the new process, which actually builds on Asda's experience of customer tasting (as part of the Chosen by You relaunch).  Key statistics include:

  • More than 6,000 taste panels have been held since 2008
  • The team can hold two panels per day, covering 1,700 items last year
  • Last year 80% of products met the minimum required level but only 15% made it into Sam's Club
  • If a supplier is willing to offer a product as an exclusive, then Sam's will share more information and work with the supplier to make further refinements

2. Commitment to increase US sourced products

This session included Walmart's Senior Vice President for Walmart Home, Michelle Gloeckler. Walmart has made a commitment to source an additional $50bn from US produced products, which is being done by growing both new and existing US based suppliers.

For Walmart's sourcing process this is about taking cost out of the supply chain, sourcing more locally and being much more responsive to customer trends. It also gives greater flexibility and responsiveness in the supply chain, and more flexibility to respond to sales; which as Michelle notes means not sitting on inventory that would otherwise have been sat in containers.

3. Commitment to hire US war veterans

Walmart has recently announced its "Welcome Home Commitment", which aims to recruit 100,000 veterans over the course of the next five years.  Working closely with the White House, it is trying to make the hiring process as simple as possible.

During a panel session, which also included two veterans who now work for Walmart, BG Gary Profit, U.S. Army (Retired) and Senior Director, Military Programs commented that "This is not philanthropy this is good business", with core values from the military well suited to Walmart's culture.

Since starting the initiative, 200,000 have applied and it has hired 300 veterans "in the last 8 or 9 days".

4. "Powered by Walmart"

This is Walmart using its global size and scale to source more efficiently and better serve its customers. During a session including Gary Maxwell, Senior Vice President, Global Process, Walmart outlined how best practice is being shared and how efficiencies are being delivered.

For example, Asda's methodology for assessing On Shelf Availability (OSA) has been adopted in the US leading to significant improvements in availability and is being rolled out to other markets.

Additionally, the team is looking to develop strategic partnerships with key suppliers. An example that was given was the launch of Coke Zero Cherry, which was launched in all Asda stores in the UK – the first time ever a retailer has developed an exclusive partnership with Coke.

5. International business update

This session heard from three key figures in the Walmart international business;

  • Enrique Ostale, President and CEO, Walmart Latin America
  • Dave Cheesewright, CEO of EMEA Region
  • Ann Bordelon, SVP and CFO of Asia Region

Enrique provided an overview of Walmart's Latin American business, which now includes over 4,000 stores in nine markets. One of the key trends being seen is the growth of smaller formats, and Walmart is well placed to capitalise on this growth, including its Express format.

Dave Cheesewright then updated on Walmart’s largest international region, namely EMEA (including Europe and Canada) which accounts for a little over 50% of international sales. This includes the International Procurement and Logistics (IPL) business which sources, transports and converts products (primarily produce) and now operates in 23 countries, with Dave "excited about the opportunities to leverage".

Ann Bordelon provided an update on Walmart's businesses in China, Japan and India, with the latter "such an exciting market" and a great opportunity for the future. Across the region Walmart is also looking at simplifying operations and driving productivity, and gave an example of beef sourcing in Japan, where through cooperation between markets and divisions, is now delivering a 25-30% price advantage.

Click here for a larger version of the Sensory Labs image. Source IGD.

Click here for highlights from Day Two.