Whole Lotta Shakin’ Going On
If it’s true that without struggle, there can be no progress, then Wal-Mart Stores Inc. and Whole Foods Market have ample reason for optimism.
Beyond question, the pioneering retailers, residing on opposite ends of the supermarket seesaw, have seen better days. Far from their glory days as impervious players of their respective niches, Whole Foods’ stock price declined by a full one-third — 33 percent — in 2015, and is down 8 percent so far this year. Meanwhile, Walmart’s stock price has fallen 27 percent over the past 12 months, and the mega-retailer is expecting “relatively flat” net sales growth for fiscal 2017 (calendar year 2016), per its most recent Q4 earnings.
As is widely known by now, both chains are immersed in massive campaigns to overhaul operations and reinvigorate their slumping brands. Interestingly, while many of the specific elements of their individual turnaround plans take direct aim at the counter-weaknesses of the other — i.e., Walmart’s shuttering its Express small-format stores/Whole Foods’ readying to open the first of its 13 compact 365 stores; Whole Foods’ heightened focus on efficiencies/Walmart’s aiming for a more tailored neighborhood assortment; Walmart’s elevated emphasis on higher-quality fresh and free-from foods/Whole Foods’ quest to tout greater value and shed its lingering high-price perception — the shared element of the two chains’ restoration platforms is fresh produce.
Indeed, as the single most influential department for grocers to flex their quality cred and fresh superiority, produce is unsurprisingly a top priority for the big Ws to recapture lost dollars from shoppers who’ve fled to competitors — many of which have splendidly risen to the occasion to steal their bifurcated pixie dust.
But after admittedly floundering for far too long with its all-important fresh produce offerings, the Bentonville, Ark.-based giant will “continue to push forward with our Win in Fresh initiatives, including testing new layouts, reducing inventory while improving in-stocks in both food and consumables, and exceeding expectations in our urgent agenda items,” according to Walmart U.S. President/CEO Greg Foran, during a recent investors call.
Among the mission-critical initiatives to that end is a push to hire hundreds of “fresh operations managers” over the next three years to train staff on how best to present and maintain fresh produce. With 30 newly hired field managers now in place to oversee 10 stores each, the chain is also making another beneficial change for its front-line operations with the recent addition of fixed- and flex-shift employee scheduling.
Meanwhile, Whole Foods’ produce shakeup entails a revamp of its controversial, albeit shortlived, “Unrated/Good/Better/Best” Responsibly Grown rating system, which will go by the wayside come March 31 in favor of a single rating standard. Rolled out over the course of 2015 for both conventional and certified-organic produce, the chain’s at-a-glance ranking aimed for an additional level of transparency. It also stands to reason that Whole Foods’ three-tiered scorecard was adopted to help it meaningfully differentiate itself from the onslaught of newcomers now encroaching mightily on its native organic turf.
To gain entry, suppliers were required to pay a fee to subscribe to an online portal to fill out lengthy questionnaires, followed by another series of queries, before they could obtain ratings, which were in turn posted beside displays with prominent Responsibly Grown signage. Before long, organic growers rallied against the program, which seemed not only to devalue the already complex USDA certified-organic requirements, but also largely overshadow them.
Whole Foods took the concerns to heart, and after making initial tweaks last July, is on track for a full-on revamp by the end of this month.
“Based on feedback we’ve received as the program rolled out, we recognize the need to simplify how we communicate its value to our customers,” Edmund LaMacchia, global VP of perishable purchasing, recently penned in the retailer’s Whole Story blog.
In addition to using a single grade, Whole Foods will update its prohibited-pesticide list and grant a Responsibly Grown rating to all certified-organic produce and floral through January 2017. It will also add support and training to help acclimatize growers to its new food safety regulations and traceability requirements.
Although it’s too soon to say whether their plucky produce plans will pan out as productively as anticipated, both Walmart and Whole Foods have been formidable forces in an industry that’s increasingly better poised to beat them at their own games. While I’m admittedly undecided about which outcome I’m betting on, one thing’s for sure: There’s clearly a whole lotta shakin’ going on with both.