Mac Naughton ‘Couldn’t Win’ at Walmart: Burt Flickinger

Weighing in on the departure of Wal-Mart Stores Inc. Chief Merchandising Officer Duncan Mac Naughton, retail analyst Burt P. Flickinger III, managing director at New York-based Strategic Resource Group, told Progressive Grocer: "Mac Naughton was in a no-win situation; he was starved by the company's board and executive committee" of the requisite blocking and tackling functions required to run successful retail stores, let alone sprawling supercenters, "with insufficient labor with customer service and stocking shelves," both of which he says are mounting challenges for the planet's largest retailer.

With Mac Naugton's exit, Flickinger says Walmart has done itself no favor. "There is nobody at the top who has his depth or range of knowledge or operating experience with U.S. stores; all of their senior leaders are from the international sector." Moreover, he adds, Mac Naughton "was the operational and merchandising genius behind transitioning Walmart's Black Friday event into a sales opportunity spread over seven days, versus stores being under siege for a 24-hour equivalent day," because of the company's prevailing lack of operating budgets to productively manage a stand-alone holiday mega-event.

In Flickinger's view, "Mac Naughton couldn't win. He was being asked to grow the business from the high command at Walmart, which is slashing labor with insufficient full- and part-time staff. Over a three-year period," he continues, "Walmart has cut an average of 50 people per supercenter, and is now only hiring part-time or temporary employees," which in addition to the obvious, "also equates to lower levels of productivity and, in turn, weak same-store sales."

Further, "What we've seen across both the Canadian provinces and the U.S. is that they've moved too much from night stocking to daytime stocking," says Flickinger, noting that the mostly part-time crews can stock, on average, 300 cases in an eight-hour night shift, while day-stocking crews are lucky to be able to stock 50 to 60 cases."

Making matters worse, he says, is the higher frequency "of day stocking conducted on Saturdays and Sundays, coupled with eliminating Saturday-night stocking altogether in many locations. Productivity could be much higher, but with so many temporary and inexperienced part-timers, the blended productively rate settles at roughly 40 to 50 cases when in most cases, a [veteran] day stocker could stock on average 100 cases on the shelves per shift."

By focusing strictly on controllable expenses, Flickinger says that "store directors know full well that in order to make their numbers," they need to shave from the most meaningful part of the operational pie, "which is cutting expenses with labor and hours."

After years of leveraging its dominance on its large-format supercenter model, Walmart is poised to spend as much as $1.5 billion on ecommerce and digital initiatives in fiscal 2016, along with a greater focus on smaller stores. However, "instead of blaming supercenters for no longer being a winning model," Flickinger believes a more productive, prudent course for the once-unstoppable chain would be to accurately address "the insufficient budgets that are allocated to run large-format stores. Otherwise, they will continue to struggle, regardless of the size of the box."