BENTONVILLE, ARK. — Wal-Mart Stores, Inc. generated many headlines June 3 with the announcement it is testing a concept with such companies as Uber and Lyft to deliver groceries to consumers. But also a part of the presentation with financial analysts was the retailer’s discussion about its progress selling fresh foods in its stores around the world.
The challenges in fresh facing the company range from sourcing, distribution, merchandising and delivery. Each component is critical to the success of the overall endeavor and the company’s leadership is focused on improving its performance in each segment of the supply chain.
|Greg Foran, president and c.e.o. of Walmart U.S.
“ … There’s no doubt that size actually can work against you on fresh,” said Greg Foran, president and chief executive officer of Walmart U.S., during the June 3 presentation with industry analysts. “If you try and do everything — if we go out and decide that across the country, we’re going to do an amazing deal on limes, we are probably going to skin everyone out of limes …
“We tend to operate more locally there. And it just means you need to be a bit ambidextrous. If you are talking about dry grocery or you’re talking about general merchandise, when you want to use scale to your advantage, you build and place the appropriate infrastructure. When you are dealing with fresh food, whether it’s meat, fruit and veg, seafood in particular, you need to be a little bit more circumspect and think about seasonality and growing regions.”
Mr. Foran said he is reasonably happy with Wal-Mart’s performance in grocery overall and fresh, in particular. He noted that there are isolated areas with issues, citing heavy deflation in beef as an example. But in such broader terms as fresh produce and meat, in general, he said the business is “tracking along nicely.”
|Neil Ashe, president and c.e.o. of ecommerce and technology for Wal-Mart
“One of the things I like is that when you want to sell fresh food, there is a chain of events,” said Neil Ashe, president and c.e.o. of ecommerce and technology for Wal-Mart. “And what Greg and Steve and the team are doing is breaking down that chain — from the specs, to the sourcing, to the way we handle logistics; some of the speed with which we get it to the store, how we staff the store, how we teach people how to call, how you manage throws. And what I’m watching is a methodical process to put all the pieces together to drive it.”
The methodical approach Mr. Ashe referenced is not isolated to the retailer’s U.S. operations, said David Cheesewright, president and c.e.o. of Wal-Mart International.
|David Cheesewright, president and c.e.o. of Wal-Mart International
“ … You are seeing us look to develop a much more harmonized approach to produce sourcing across the globe,” he said. “We are looking at harmonizing the protocols there. That will allow us to move product between countries and make sure that we have the best product at the best prices in a fairly seamless way across the globe.
“You have seen us leaning in some countries to build the infrastructure. So China would be a great example where we’ve invested a fair bit in building a national chilled and freezer network. That gives us huge advantages versus the competition there in terms of making sure the product gets to customers safely and at the right quality, which is a big deal in China. And then, not dissimilar to the U.S., we’re spending a lot of time in terms of our store operations making sure that we have people who truly know how to handle projects.”
Conquering the last mile
At the retailer’s annual shareholder meeting on June 3, Doug McMillon, c.e.o. of Wal-Mart, announced the company’s latest effort to improve grocery delivery to consumers with its tests with services like Uber, Lyft and Deliv. The tests will take place in select markets, with Uber in Phoenix and Lyft in Denver. These efforts are in addition to a test currently taking place through the company’s Sam’s Club business unit that involves the firm Deliv and the delivery of general merchandise and groceries for business members in Miami.
Consumers who use the new delivery service in the select markets may order on-line, choose a time period for delivery and pay a $7 to $10 charge on-line. The retailer requests a driver from one of the services and alerts the consumer that the order is on its way.
“So, it’s Wal-Mart-branded, and the delivery providers are service providers,” Mr. Ashe said during the June 3 presentation. “The fees are Wal-Mart charged to the customer based on existing delivery prices. And then we obviously have a relationship with Uber, Lyft, and the others to provide on the backend.
“…we’re trying to satisfy for the customer those things she needs on a regular basis, and we’re trying to do that better than anyone else. And so we’ve created the ability for her to order those whenever it’s convenient for her … We introduced pickup because that flows perfectly with what many people have identified. The two things that are necessary for customer satisfaction are: you get what you want, and it shows up when you expected it to.”
Mr. Ashe added that the company’s arrangement with the delivery services is not exclusive.