Photo courtesy Walmart
The changes coming to Walmart produce departments should bolster the company’s grocery reputation and raise the bar for what shoppers expect from non-traditional grocers, analysts said.
Walmart recently announced plans to revamp its produce departments with wider aisles, low-profile displays, new signage, segmented organic offerings and more. The company is just starting to renovate departments with the changes and expects to update the majority of stores by next summer.
The retailer’s willingness to invest in produce stems from the importance of the category to the overall shopper evaluation of a retailer.
“Fresh categories, particularly produce, are critical reasons shoppers (choose) a grocery store,” said Tory Gundelach, vice president of retail insights for Kantar Consulting.
“Walmart needs to keep pace with its produce business to remain in shopper consideration sets," Gundelach said. "Furthermore, since produce is positioned at the front of most grocery stores, including Walmart, it can signal the freshness of the entire store to a shopper.
“The changes should help improve shoppers’ perceptions of Walmart — that said, the changes are most likely not dramatic enough to raise the fresh perceptions of Walmart above most supermarkets,” Gundelach said. “Increased visibility of organic product should resonate with younger shoppers, and wider aisles should help (alleviate) some of the shopper pain point of having store associates picking online orders at the same time.”
Mike Mauti, managing partner of Execulytics Consulting, described the changes announced by Walmart as big news.
“I imagine it will prompt a competitive response,” Mauti wrote in a LinkedIn post. “Since Walmart competes with just about everyone in North America, we could see an effort by many retailers to step up their games as well. The big winner in all of this could be the customers.”
Gundelach expressed a similar sentiment.
“Given Walmart sells the most food of any retailer in the U.S., anything it does has an impact on the landscape,” Gundelach said.
“This will raise the standard for what shoppers are expecting in produce at a non-supermarket," Gundelach said. "Expect retailers like Aldi, Target and convenience stores to take notice. The real question will be if the change is enough for shoppers who shop the retailers who win in fresh — primary regional supermarkets — to consider buying more produce at Walmart.”
Bill Bishop, chief architect of consulting firm Brick Meets Click, noted that the changes don’t necessarily have to convince consumers to go to Walmart instead of other retailers for produce. The changes could be successful even by simply making shoppers more comfortable with the option of adding produce to their basket when they’re already at a Walmart to shop other departments.
“This is a very important move in the right direction for Walmart,” Bishop said. “When you go back over the years, I think Walmart’s emphasis in produce was probably tilting a little too much toward efficiency ... efficiency in handling and keeping costs down, both the way they ship the product in and the way they merchandised it, so I believe a lot of folks began to not necessarily think of Walmart as a place to buy their produce.
“But today, with the changes they’re making and the strategy that’s going to be implemented, I think it becomes much easier to think about Walmart as a complete grocery store, and I think that’s their strategy,” Bishop said. “It’s an important cornerstone for being a complete grocery shop for customers.”
He mentioned that being a one-stop shop for consumers is especially key for Walmart given the ambitions of Amazon.
“They’ve focused very much on winning in grocery in the U.S., and I think that winning in grocery in the U.S. in the store and online is such a strategic objective from the standpoint of being sure they don’t lose out to Amazon that they’re concentrating very much on being sure that they’ve got this strong underpinning of brick and mortar that’s getting only stronger as well as what they’re doing in digital, so it’s hard for me to avoid the conclusion that Walmart will, as a result of a number of these kind of strategic executions, grow further in grocery market share, and that of course will be at the expense of some supermarkets that choose not to — or can’t — keep up, so it’s a fairly serious challenge,” Bishop said.
How well the changes are executed remains to be seen, but Bishop described the retailer as having a solid track record when it comes to implementation of key initiatives.
“One of the things I’ve noticed — and I am going to assume that it’s going to continue — at Walmart is, when they have made operational changes, they’ve added the labor budget to execute,” Bishop said. “If you don’t add the labor budget to execute it, you can’t do it ... I think that certainly up until very recently — and they’re having some operational changes at the highest level at Walmart — but I think they’ve been remarkably good over the last couple of years at upgrading the store experience and matching labor and training of the labor with the skills and upgraded types of services.
“When I think about, for example, going to the section of the store ... where they have a concentration of self-checkouts, where you’ve got a need really for people to be helped when they get stuck in the system someplace, I’ve found that to be there and helpful and available the vast majority of the time,” Bishop said, “so that’s one example of an area where they could either be kind of cautious and conservative on the labor or where they’ll provide a reasonable budget.”
He suggested retailers who compete with Walmart not worry as much about upping their game in produce but in other areas.
“If you’re already fairly good in produce, which many retailers are, it isn’t necessarily that you’ve got to raise your standards in produce, because you’re already pretty good there,” Bishop said. “You have to raise your standards some place else, probably in pricing, maybe in online or digital services, or maybe self-checkout, things that more customers are leaning into as they look for a rounded-out satisfactory shopping experience.”