Skip to main content

Cleaner, Faster, Friendlier

4/28/2008

There was a time not so long ago when clutter was king at Wal-Mart. Tall shelves filled with inventory defined departments that were identified by small signs. Palletized displays filled the aisles and suppliers created all manner of eye-catching promotional displays to drive sales of their brands at off-shelf locations, while clipstrips were used extensively to drive impulse purchases. There was an emphasis on retailtainment and in-store demonstration events were encouraged. Clutter communicated value, encouraged shopping throughout the store and led to increased transaction sizes. Clutter, although it wasn’t called such at the time, was a good thing.

Not anymore. Clutter has become the enemy at Wal-Mart and the fight against it is being waged on many fronts, with significant implications for branded product suppliers and the companies who provide products and services to help them execute merchandising initiatives. At first, efforts to eliminate clutter and consequently improve the in-store experience were focused on basic operational considerations. Wal-Mart eliminated shelf risers that held excess inventory as a means to improve customers’ visibility throughout the store, in addition to improving the retailer’s return on assets. That change gave stores a cleaner look while new sign packages that aided navigation made the process of shopping faster. Improvements to the checkout process implemented last year made the entire experience friendlier as wait times were reduced.

While those changes were significant and impacted the experience, more significant changes are yet to come as Wal-Mart moves forward with a strategy to save customers money so they can live better in an environment that is clean, fast and friendly. One of the ways that will happen is by providing a store experience that is easier to shop and where the emphasis is on the Wal-Mart brand. Elements of this strategy have already been seen in a number of prototype stores with modern color schemes and prominent department signage where aisles have been cleared of feature displays and dump bins filled with impulse items. Because such displays have long been a fixture of Wal-Mart’s merchandising strategy, their elimination creates a dramatic effect on the store environment.

That was the case two years ago when displays were eliminated from the main aisles at a prototype in Plano, Texas. Then, last fall, drive aisle displays were eliminated from another prototype in Highland Village, Texas. More recently, a new supercenter northwest of Little Rock, Ark., near the community of Maumelle, opened with a similar clean-store strategy. There are anecdotal reports of the strategy being employed elsewhere and a series of 20 additional stores featuring the clean-store look are scheduled to open in the coming months in markets throughout the United States as Wal-Mart looks for additional insight into customers’ perceptions of the strategy and the impact on operations and sales.

The concept of fewer displays in stores, or the outright elimination of pallet promotions in main drive aisles, would likely take years to roll out to the entire chain, given Wal-Mart’s size and the significance of the change. Fewer displays would also create a ripple effect on the firms that design and create the displays, as well as the merchandising service companies suppliers often hire to ensure that once displays have arrived at their intended locations other aspects of in-store execution are handled properly. Although it is a bit counterintuitive, the elimination of secondary displays could result in the services of merchandising firms becoming more valuable.

“Those changes make the shelf exponentially more important than ever before,” said Brian Baldwin, senior vp, Wal-Mart team leader with Acosta Sales and Marketing. That’s because secondary merchandise locations always served a dual purpose. They helped create excitement in the store and were used to create a value proposition, but they also served as a form of safety stock, since many product categories in Wal-Mart achieve a rate of sale that makes keeping them in stock on a typical shelf a real challenge.

“Suppliers have to make sure the shelf is right all the time,” said Ken Drish, vp of business development with Crossmark. “If you are getting display space in stores, it is even more important to make sure features are being properly executed. And if you are not, then the shelf position is even more important.

Companies such as Acosta, Crossmark, Advantage Sales and Marketing, Premium Retail Services and others are traditionally thought of as merchandising service organizations, due to the nature of the services they have historically provided. However, as Wal-Mart’s strategies have changed and technology has advanced, the capabilities provided by these companies and the caliber of people employed have also been upgraded.

“One of the key things our manufacturer partners are looking for is to help bring education about their products all the way down to the store level so associates can understand the benefits of a specific brand,” Baldwin said. “All our associates are equipped with tablet PCs, so with that technology we are able to execute education initiatives as well as other services more efficiently than we were ever able to do in the past.”

Acosta is also working with a third party on a predictive analysis capability so its employees can get to out-of-stocks before they occur. A similar capability was also recently developed by Premium Retail Services. “So much of the merchandising industry has been built around out-of-stocks, but it tends to be reactive in nature,” said Pat Lockridge, vp of business development with Premium Retail Services.

As a result, during the time it takes to retrieve data and dispatch a person to the store to take corrective action, the retailer’s automatic replenishment system may have resolved the situation. “What we have done is built a demand based merchandising system that essentially forecasts phantom inventory and lets suppliers forecast where out-of-stocks are likely to occur so merchandising efforts can be deployed in a proactive, rather than reactive, manner,” Lockridge said.

With or without a decision by Wal-Mart to reduce or eliminate secondary displays, the nature of work provided by merchandising service companies was already changing. The skill sets required of people performing in-store work are more advanced these days. They use the latest technology to perform increasingly sophisticated tasks on behalf of suppliers that feed into Wal-Mart’s experiential objectives. That may mean improving the speed to shelf of new items, aiding in the assembly and maintenance of new fixtures and customer communication programs and ensuring the successful execution of new product launches for which the window in which success must be demonstrated has been narrowed.

In addition to the changing nature of in-store work and the potential for fewer displays, another major adjustment for suppliers regards what displays actually look like. Wal-Mart has begun the process of implementing a style guide that requires displays to feature Wal-Mart branding and the increasingly familiar “Save money. Live better.” tagline in addition to the supplier’s own branding message. Going forward, the goal is to carefully regulate all manner of communications of displays including font size, the placement of brand logos and the colors used.

It is an alien concept for many of Wal-Mart’s suppliers who for years enjoyed an almost Wild West atmosphere when it came to the creation of displays. That’s why the publication of a style guide last fall was an unsettling development for many in the supplier community, since the only concerns previously involved compliance with shelf or pallet specifications and ensuring that displays were sufficiently sturdy to withstand the rigors of the s

X
This ad will auto-close in 10 seconds