Walmart U.S. sees growth in home
Some onshoring possible
Cecile B. Corral -- Home Textiles Today, 10/22/2012 11:24:46 AM
Bentonville, Ark. - It comes as no surprise that for Walmart U.S., consumables are driving traffic and dominating the merchandise mix. But the trend stands to benefit slower-moving segments of the business, such as home, which in the first half of 2012 has gained traction thanks not only to recent renovations in the area but also to help from its counterparts in dry grocery, food, and over-the-counter products.
During the company's 19th annual meeting for the investment community last week, Walmart U.S.'s evp and chief merchandising and marketing officer Duncan Mac Naughton explained the dynamic.
"Our price investment driving traffic to the box as well as our assortment approach is basically giving us balanced growth. The box is working, and we are seeing that balanced growth across the concepts," he said.
The proof, he said, is evident in several areas, including home.
"Sheets are up 8.8%. That's a 1,000-basis-point acceleration from the beginning of this year, because if you walked the stores you saw clarity for the customer," he continued. "You saw good, you saw better, and you saw best. You saw appropriate colors. You saw sizes. You saw fitted sheets. You saw flat sheets. It's what the customer wanted, and it's working."
Overall, Walmart U.S.'s traffic in the first half of 2012 is up 70 basis points, which translates to 24 million more transactions, he noted.
The company's market share in food, consumables, and over-the-counter categories is up 70 basis points in the first 26 weeks. "This means we are growing three times faster than the market place, so we're executing this strategy and it is working," Mac Naughton claimed.
As the company ramps up its efforts to more closely meet shoppers' demands and preferences, Walmart U.S. has learned via surveys that "price is a big deal" to them, Mac Naughton said. Hence, the company plans to invest $6 billion in retail pricing by 2017, "through product initiatives, logistics initiatives, and cost-to-goods savings."
This investment will be "broad-based," he added, "and will primarily be in food and consumables."
As it relates to home, "on-shoring" is an option that is being explored to support this effort. In a slide titled "Driving cost of goods efficiencies" during Mac Naughton's presentation, a stack of solid-colored sheets and a scented candle where shown as products that could be part of the company's "on-shoring" efforts.
Mac Naughton explained "on-shoring" means "building partnership with suppliers, bringing manufacturing back to the United States -- this makes sense in many of our businesses and we're able to lower costs and actually increase flexibility and fulfillment times."