The year of localization

by Eric Schroeder
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CHICAGO – Wal-Mart Stores, Inc., which earlier this month “recommitted” to its promise of providing fresh produce, also is planning to incorporate store-specific modulars across key food categories, said Duncan Mac Naughton, executive vice president and chief merchandising and marketing officer.

In a June 12 presentation at the William Blair Growth Stock Conference in Chicago, Mac Naughton said the Bentonville, Ark.-based company sees “a real opportunity” in taking regional food brands and building modulars within Wal-Mart stores. Modulars are displays organized in a self-contained section.

“This is really the year of localization,” he said. “My goal (in food) is to have actually store-specific modulars across the key categories, and we’re making great progress there. In consumables, we really take a cluster approach. If you think about food, it’s very local, very neighborhood based, and very regional.

Using ice cream as an example, Mac Naughton said Wal-Mart looked at Nielsen Co. data and found 110 regional brands of ice cream that the company didn’t sell before.

“This is really resonating with our customer, and making it come to life for us at stores,” he said. “So we’ll have over 3,500 store specific modulars. So not only do we get the regional needs, but we also get the holding capacity on the fastest selling items, so you make sure that you have an in-stock as well as the right products for our customer.”

Mac Naughton also iterated Wal-Mart’s commitment to delivering “fresh” products.

“If you talk to customers, there are two areas that they think about food — they want great meat and they want great produce,” he said. “Absent to that, you’re likely to miss some of the rest of the food shop. So we made a great commitment here, and what you can see is they think about it really from farm to fork, if you will.”

To follow through on its commitment to deliver fresh products, Wal-Mart is working with local growers, Mac Naughton said.

“We’ve placed our buyers and our sourcing agents in the field so they can work closely with our local farmers, and we’re also buying directly from them,” he said. “We’re consolidating it from a supply chain so we can add more freshness and more deliveries to our store, so we give more time in the customer’s refrigerator for better value and better freshness and better quality.”

He said Wal-Mart has spent a significant amount of time training store associates to understand what good produce looks like and what customers should expect when they see it. Additionally, the company is conducting weekly audits with a third-party audit firm that looks at every store, every week, across the fruit and vegetable category.

“If they pass, they pass, if not, they fail, and they get a scorecard, and our operators get store by store specifics,” he said. “So we’re making a difference for our customer.”
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