by Terrie Ellerbee/associate editor
Walmart is always making headlines. Always.
Recent ones have focused on its struggle to keep fresh items in stock. I would argue that the problem stretches into center store, too.
General merchandise aisles seem to be fine, since there’s no shortage of boxers, Barbie dolls or bullets—well, maybe bullets.
What is giving Walmart fits today is grocery, the piece that founder Sam Walton knew would bring customers into his stores more often.
The company’s current problems can be traced back, in my opinion, to the SKU rationalization attempt Walmart made back in 2008, 2009, just as the economic crash was really roiling, back when ridiculously bad news was reported day after day after day.
Listening to executives with the company back then, it seemed legions of upscale shoppers were for the first time crossing the threshold and entering Walmart stores.
“My dad built Walmart for times like these,” Rob Walton, son of Sam and chairman of the board, said in 2009.
Walmart’s desire to capture and appeal to this new upscale shopper led to “Project Impact,” an attempt to declutter its aisles and tidy up its stores. SKU rationalization was, I think, an attempt to cater to an audience that Walmart didn’t understand.
To put it bluntly, Walmart got above its raising.
Two things bring people to Walmart: the lowest price and the widest variety.
With price, smart shoppers know to be wary. Most husbands can tell you what a package of cheddar cheese costs, and they darn well know the best price when they see it.
But when shoppers could no longer find their favorite brand of trash bags or ketchup, they left Walmart stores far from delighted.
Ironically, though, Walmart’s rationale probably was correct to a certain extent. Think of consumer behavior since the “recovery” began. Shoppers today in many ways can be grouped together on one end or the other of an imaginary dumbbell. “Value” shoppers are going to dollar stores or limited assortment stores like Aldi or Save-A-Lot. It isn’t assortment they are looking for. It’s the rock bottom price, pure and simple. It doesn’t matter what the label says.
On the other end, well-heeled shoppers are doing fine and have become much less timid about spending money. They can choose the priciest box of trash bags on the shelf because they can afford it, but they also can afford to shop elsewhere, and they do.
That leaves the middle, the very shoppers who handed Walmart its success since its humble 1962 beginnings. Those are the shoppers left standing in the aisle looking at an empty shelf wondering what went wrong—wrong with Walmart, wrong with their job, wrong with the economy, wrong with the world.
On the economic ladder, those in the middle find themselves between the lower rungs—knowing one little slip will land them there—and grander heights that they believe more and more are impossible for them to reach.
The middle matters. Smart grocers did not forget that.
If Aldi doesn’t have the assortment, Whole Foods Market is unaffordable, and Walmart can’t be counted on to have the products they want or the people to serve them, then consumers will happily shop the local grocery store.
These are the retailers who are close to their customers. They understand that ALL shoppers, no matter their station in life, want value. These grocers don’t make promises they can’t keep. They don’t react to temporary conditions but instead proactively care for their customers.
They don’t get above their raising.