The Idea: Six years ago, Walmart eliminated a number of seemingly lower profile brands, which decompressed their assortment, and made room for higher priced items. They wanted to clean up their stores, attract new consumers, and grow the size of their basket. However, they went too far, cut too deep, and alienated the core consumer who was looking for great everyday prices on the broadest selection of items. Recently, Walmart announced to investors that their profits would drop by as much as 12% next year, as they had transformed their stores, raised wages and reduced inventory challenges. And yes, once again they will be eliminating underperforming or duplicative items in their stores. But this time it will be much more precise.
Critical to Walmart’s long-term health is improving the shopping experience in their 4,600 U.S. stores. Today’s consumer demands great pricing, convenience, quality, and an enjoyable shopping experience. Either delight the new consumer or face the consequences.
Walmart’s plan, according to CEO, Doug McMillon, includes various efforts to scale back their inventory by eliminating items lacking differentiation and dropping underperforming products that take up too much space. One of the reasons this decision was made was because of Walmart’s new focus: They are doubling the width of their aisles from four feet to ten feet, improving the in-store look and the feel. More room for the customer means less shelf space and less clutter; companies’ brand presentations must be even more impactful, compelling and infectious to the shopper.
What are the Walmart rules?
Rule #1: Be Malleable and Radically Different: The future of Walmart is driving more out of their larger supercenters, bolstering their on-line business and increasing their smaller footprint stores. The best, most productive brands offer a clearly defined Good-Better-Best product assortment and provide options to the widest group of consumers, including people looking for both premium products and the lowest everyday price.
Tomorrow’s items must be truly differentiated, not substitutable with other competitors, conveys a compelling contagious message and screams “supreme value.”
Does each of your items have a clear job description and stand for something?
Since almost half of U.S. households earn less than $50,000 a year, offering attractive value is not a choice. If you want to maximize your brands, you must not ostracize large groups of consumers simply because of price point. I suggest you re-evaluate and recalibrate your value statements across all your product lines, offering multiple price options.
Does your current “Good – Better – Best” position still hold up? Are you sure? Have you benchmarked your competitors lately? Embrace the duality of attracting both today’s value and growing premium consumer.
Rule #2: What’s Next?: Walmart is looking for the next generation of shelving experiences that improve the productivity of the category, and connect with both boomers and millennials. This includes offering ideas on how to brand the store with exclusive new products, innovative shelving fixtures or category rationalization models that simplifies the assortment in smaller format stores.
Are you malleable, radically different and assessing what’s next?
And are you clear on your organization’s next move?
