Walmart Strains to Keep Grocery Aisles Stocked

Walmart, the nation’s largest retailer and grocer, has cut so many employees that it no longer has enough workers to stock its shelves properly, according to some employees and industry analysts. Internal notes from a March meeting of top Walmart managers show the company grappling with low customer confidence in its produce and poor quality. “Lose Trust,” reads one note, “Don’t have items they are looking for — can’t find it.”

Walmart is addressing the grocery concerns with measures like a new inventory system and signs that will help employees figure out what is fresh and what is not, Jack L. Sinclair, Walmart United States executive vice president for food, said in an interview. Brooke Buchanan, a company spokeswoman, said Walmart felt its stores were fully staffed.

Before the recession, at the start of 2007, Walmart had an average of 338 employees per store at its United States stores and Sam’s Club locations. Now, it has 281 per store, having cut the number of United States employees while adding hundreds of stores.

“In its larger supercenter stores, Walmart can’t keep the shelves stocked, and that is driving customers away,” said Terrie Ellerbee, associate editor at the grocery industry publication The Shelby Report, in an e-mail.

She traced the problem to 2010, after Walmart reduced the range of merchandise it carried in an attempt to make stores less cluttered. Customers did not like the change, and Walmart added merchandise back, but with declining sales then, it did not add back employees, she said. “Without enough labor hours to get those items back, not to mention to do routine stocking, shelves were left bare,” Ms. Ellerbee said.

Walmart charged into the grocery market about two decades ago, realizing that frequent trips by grocery shoppers could help improve traffic. Grocery made up 55 percent of Walmart United States sales in 2012, which was flat from the previous year. The company’s grocery prices are usually about 15 percent below competitors’, according to Supermarket News.

Grocery has also been a centerpiece of its corporate responsibility strategy, as the company has trumpeted its support from Ms. Obama in selling healthy foods in underserved, low-income communities.

At the event with Ms. Obama in Springfield, Mo., the company said it had saved customers $2.3 billion on fresh fruits and vegetables in two years.

Ms. Obama’s office said that Walmart “has been a strong partner” on the healthy-food front. “There’s still more to be done, but we look forward to continuing working with Walmart and others,” said Sam Kass, executive director of Let’s Move!, Ms. Obama’s anti-obesity program.

Yet growth has been slowing, analysts say.

“They’re still growing share and aisles at a tremendous rate, but not at the rate they were, in part because many of the established operators that are left today are pretty strong,” said Mark Hamstra, retail and finance editor of Supermarket News.

Walmart does well in dry goods, but fresh food requires more manpower to stock and rotate goods, involves more waste and is a higher-cost operation, he said.

According to the notes from the Walmart meeting last month in Orlando obtained by The New York Times, while Walmart has 20 percent of the market share in dry grocery, it has 15 percent in fresh (areas like produce, meat, deli and bakery).

Safeway customers are 71 percent confident in its fresh produce, the notes said, while Walmart customers are 48 percent confident in Walmart’s produce. In the interview, Mr. Sinclair of Walmart said he did not know where that data came from, but that “we believe that we can improve the perception of quality of produce for Walmart customers.”

Article source: http://www.nytimes.com/2013/04/04/business/walmart-strains-to-keep-grocery-aisles-stocked.html?partner=rss&emc=rss