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Column: 5 reasons Walmart is winning with food

The big box retailer is quickly making gains in grocery in the U.S.

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As Walmart delivers its strongest comp sales growth in grocery in the U.S. for five years, we highlight five factors underpinning its success in this area.

1. Priority for the leadership

When Greg Foran was appointed CEO for the U.S. business three years ago, he brought a very different mindset to the retailer. With extensive experience in fresh food retailing, he knew the importance of the category in setting shopper perceptions across the entire trip and driving store traffic. He quickly assembled a new team around him that prioritized improving the fresh food experience in-store, and cascaded his vision across the entire organization.

2. Fresh look department

Walk into a remodelled Walmart and the changes at the front of store are clear. A new angled layout in fresh produce, along with lower fixtures, market style trays and chalkboard signage create a new feel within the department. At high level, bold category signposting and a new visual identity add an element of personality. Store teams have also been given more autonomy to merchandise products and are encouraged to have fun in driving sales.

3. Supply chain and process improvements

Walmart has also invested in its fresh food supply chain and in-store processes. The aim has been to improve freshness and quality perceptions, while also reducing wastage. Farm-to-store lead times have been shortened, with a focus on moving product quickly out of its distribution centres to improve the shelf-life for its customers. In store, basic shopkeeping disciplines have been re-introduced. New routines have been put in place for overnight stocking, markdowns and the rotation of fresh food, with store teams benefiting from specialist training.

4. Value investments

Walmart continues to invest significantly in improving its value proposition. In the U.S., this amounts to a multi-billion dollar investment over several years. This is being funded through productivity and efficiency improvements and a focus on the cost of goods. Being the lowest cost operator is at the heart of the retailer’s operating model and its goal to drive price separation in the market. Walmart has also made major investments in its private brands program, opening a culinary and innovation centre. This is helping it to work more collaboratively with its suppliers, lead on innovation and improve the success rate for NPD.

5. Grocery e-commerce rollout

Over the last two years, Walmart has accelerated the rollout of grocery e-commerce pickup. Around 900 stores currently offer the service, with the number expected to exceed 1,000 by the end of the year. This has been a crucial element of Walmart’s goal to improve access to its food proposition and offer greater convenience. The acquisition of Jet.com has also brought a new dimension to the business, providing Walmart with the ability to reach new customer groups including younger, urban-based shoppers.

Stewart Samuel is program director with IGD, a global grocery and food industry research firm

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