Wal-Mart Stores Inc. executives have a simple solution for strengthening their position in the retail landscape.
Keep things simple.
Both Wal-Mart U.S. President and CEO Greg Foran and Wal-Mart U.S. Chief Operating Officer Judith McKenna pointed to a simplified approach as key to improving the retailer's domestic performance. Multiple challenges face Wal-Mart as it competes with other retail and grocery chains and online retailers.
Not getting overwhelmed by it all is critical, McKenna said during a recent presentation with investors and analysts.
"Retail isn't rocket science, but sometimes it's easy to get distracted by the number of things that are going on," McKenna said.
Foran and McKenna, who combined to mention variations of the word "simple" at least 15 times during their April 1 presentation, offered some insight into areas they would like to see improvement. Much of the focus seems to be on eliminating unnecessary work at the store level.
Information available to managers and the manner in which that data are distributed will change. Technology upgrades like iPads for managers are intended to make analyzing data easier. Select stores have the technology now, with the goal of a continued rollout in the U.S. All store managers in the United Kingdom use iPads, the company said.
Instead of distributing what McKenna called "80 surface reports," the retailer is condensing the information given to managers so that it includes more relevant and customer-focused data. Additional emphasis is being placed on a single performance report focused on data intended to gauge shopper feedback related to how clean, fast and friendly a particular store was during a shopping trip.
"It can get more complex; actually we've made it as simple as possible and made it things that the store associates are really passionate about already," McKenna said.
Stocking is another area where Wal-Mart is seeking to make less complicated. Decreasing the amount of inventory being held at the back-end of stores should eliminate confusion on when and where stocking should take place.
Department managers are being added back into stores, a move aimed at helping improve communication with the home office and between hourly employees and those in charge of running stores.
Foran said he believes the job of Wal-Mart's home office in Bentonville "is to serve the stores who in turn serve customers."
"Sam Walton founded our business based on this principle. But to be frank, in some recent years, we have slipped a little away from this. We have recently undertaken some important activities to simplify our organization and empower our stores, our associates in our stores to make decisions, but [there is] more to do. So that, in a nutshell, is what we have learned."
Wal-Mart U.S. generated $288 billion in net sales last year, according to the company's annual report. That accounts for about 60 percent of Wal-Mart Stores Inc. sales. The division posted same-store sales improvement of 1.5 percent for the fourth quarter of its 2015 fiscal year, the highest mark in nine quarters.
Foran, who has been on the job for eight months, noted that changing mindset and approach rapidly is difficult with 4,500 stores and 1.3 million employees. That's why when it comes to merchandising the retailer will, in some cases, lean more heavily on individual stores to make determinations on what sort of inventory is carried in a particular market.
"Retailing is a simple business. We buy some merchandise and we sell it," Foran said. "Our ambition is clear. We will grow sales. We will improve the core operations by running great stores. We will leverage by integrating digital and physical in ways only Wal-Mart can and we will continue to invest in our associates. We've got a lot of work to do, but I'm very confident about our future."
Pricing is another area where Foran wants to see a more simple approach. Wal-Mart has elected not to create a pricing system tied to a customer loyalty system, instead maintaining its focus on its "Everyday Low Prices" philosophy. Wal-Mart continues to ask its suppliers to look for ways to cut costs to help keep prices low.
"I'm not into gimmicks," Foran said. "I'm into simplicity and sharing that we negotiate the very best price and we then pass that price on to our customers."
Simplifying things for workers is ultimately aimed at making life easier for Wal-Mart customers, said Carol Spieckerman, president of retail strategy firm newmarketbuilders. Wal-Mart's focus on simplification is another component of its efforts to reclaim dollars now being spent at the growing list of retail, grocery and online competitors.
"The overarching premise is that simplifying processes equates to simplifying customer experience which is one big reason why customers will decide to shop with Wal-Mart in the first place," she said. "At the end of the day, complexity is the enemy of agility and execution."
Business on 04/08/2015