Editor’s Note: In July the author, a veteran retail analyst,generated a huge, heated discussion on Forbes.com when he wrote that he’d visited a Walmart in Pittsfield, Mass. and found it lacking in almost every way: sloppy, disorganized and off-putting for shoppers. In response, Walmart said it knew there were problems at the store, and invited Loeb to revisit once the issues had been addressed. This weekend Loeb went back to see what had changed–and what had not. Here’s his follow-up report.
The store in Pittsfield, #2228, that looked like a third world disaster now has a professional appearance. People were sweeping the floor, the fashion merchandise was arranged in a professional, attractive manner and the intimate apparel area has more space to display merchandise properly.
The new store manager, Leon White, arrived August 28. He told me that he is already beating the figures management expected him to achieve and he is very optimistic about the outlook for his store. The store sparkles and customers appreciate it. This is improvement is just in the nick of time, The Pittsfield store has new competition – BJ Wholesale opened nearby, and now the Walmart store is no longer the only destination for customers in the shopping area.
Unfortunately the home office is not backing Mr. White’s efforts with sufficient merchandise. During my walk-through of the store, I noted many out of stock areas, such as soft home, flashlights, sporting goods, vacuum cleaners, women’s accessories, and health & beauty. There are gaping spaces on many shelves. That is bad, since there is no substitute when sheets, and other goods, are out of stock. If merchandise is not on the fixture, the customer does not know that it may be on order. I think this store, as well as other Walmart stores, where I have seen the same malady, would be more likely to achieve their sales goals every month if they were better stocked. The question that I, as an outsider must ask is whether the reordering system is flawed or whether the store did not reorder the merchandise.
In order to keep its traffic, it is important the store is sharp in appearance and stocked with the merchandise customers may want. Distribution of merchandise has always been one of Walmart’s strength. The expansion of stores from its first stores in Rogers, AR and Bentonville was always in concentric circles with a distribution center planned so that stores would be quickly supplied and in stock when the customer came to shop. Store managers were always proud of their assortments. In Pittsfield the manager was very much aware of the fundamentals of retail and was lamenting his out of stock position. I know that out of stock position of Pittsfield is not unique and I believe it is connected with the total company open-to-buy.
The company now has 158 huge distribution centers that service 4118 stores in the United States. I have been in these centers, and they are a marvel of efficient distribution. Many of these centers are more than 1 million square feet in size. Some have as much as 12 miles of conveyor belts. There is very little delay from the time the merchandise hits the docks for distribution after a supplier has delivered it. These centers were developed when Sam Walton had a vision of serving the whole country by having the distribution of merchandise a key to quick turnover. These centers are backed by a fleet of 6,500 tractors, 55,000 trailers and more than 7,000 drivers.
Expansion of stores has slowed, and I believe the next step for Walmart’s management is to develop a logistic system that will keep the stores in stock. Maybe corporate management is holding back on inventory right now in order to show strong financial controls demanded by Wall Street. However, I do not think that is the case, since it would hurt long-term growth. It is clear to me Walmart has to do something different at the store, and national level, in order to realize is true sales potential and get it’s same store sales growing.
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