Published on: October 11, 2011
We got a number of emails responding to last week’s story about Walmart reportedly hiring consultants to help it deal with what has become a persistent out-of-stock problem.
One MNB user wrote:In the past year, I have had the sense that out of stocks are a real problem at Walmart. As a retired consumer goods sales manager who sold to Walmart, my observation is that the there is something amiss in the quality and training of local store managers. Walmart has always prided itself for its culture, and rightly so. They should take a hard look at this, before it becomes an irreversible trend.
From another reader:Doesn’t matter who the company is, there is very basic issues in question here. If you keep dialing down the amount of time you allow your team to perform a task such as ordering and stocking, you reach a critical point where it becomes impossible to do the job right. You cannot keep telling your team to stock faster or more cases per hour, at some point you have reached all you can do. We all have executives and computer wizards who can tell you that the program says it can be done. The real battle is on the sales floor, stocking, ordering, helping your guest, conditioning, the rest of it is in support of that battle. I firmly believe many executives lose sight of that. It always amazes me they have to hire a consultant to tell them this, when they have store managers with the best experience possible that could tell them why they out of stock issues.
Maybe just maybe they should strap on a box cutter, load a few trucks and run some loads, fill a produce rack, unload a semi in the backroom; do all of this at the height of a busy work day or week. While doing all this they should always have the labor goals in mind that they have set for the stores and work within those restraints.
It isn’t just Wal-Mart, too many other companies have to follow suit to stay competitive. Any one who has been in this battle long enough knows the first line to get cut to affect the bottom line is labor.
I know this looks like a rant, but it really isn’t. I love what I do, I find it challenging and rewarding. I have been in the trenches many years, and I know when you cut too much store conditions suffer; in stock position, to much back stock and house keeping.
MNB user Brian Blank wrote:A couple of comments on Walmart hiring outside contractors to walk their aisles looking for out-of-stock items:
First off…just seems to me like Walmart could better hold on to their profit margins by handling this function in-house. Even if each store created one full-time position dedicated to this function, I’m sure that would cost less than an outside consultancy. Walmart is not known for paying Big Bucks, right? Consultants, on the other hand….
But, perhaps they have identified the problem as being something more external than internal, which brings me to my second observation:
The out-of-stock situations at Walmart have not really stuck out to me in my routine shopping (beyond the in-the-moment frustration) because I’ve been encountering this situation on an increasingly regular basis everywhere I go. Stop & Shop and Target especially Target—have both been having out-of-stock issues of late.
Another reader chimed in:Another point that I don’t think they are highlighting is the fact that they “encouraged” their loyal shoppers to experience other retailers and channels when they had their sku reductions couple of years ago. Their focus on efficiencies and streamlining operations led consumers to go elsewhere for those items that WM deemed “unnecessary”.
Now, they are scrambling to bring those items back, look at new item innovations and try to keep the shelves stocked to capture sales. If you want to know why they have been down, I think it’s because their shoppers went elsewhere to get ALL of their items and haven’t come back……lesson here is never give your consumers a reason to check out the competition.
MNB user Todd Ashworth wrote:I find this to report to be somewhat comical. With Wal-Mart being our #1 competitor I spend a lot of time in their stores. A lot of time. I can honestly say that in the last 6 years throughout my Walmart travels (mainly west coast based) I have never counted less than 200 out of stocks in grocery alone. Here in the Boise, ID valley it is in the 300-400 range. This has always been consistent. I find it funny that now they are finally paying attention to it. The fact that they have to hire a broker to tell them that their volume is too great for their capacity is a little scary. That’s my 2 cents.
And, from yet another reader:Here in fact is much of Walmart’s real problem. They have spent millions and millions on consultants on a variety of programs and topics. Many of which, like their STOC program, Project Impact and others have failed big time. One must give them credit for trying to get help to find their way, but at the same time ask why the current management team can figure this out? Is it that they no longer have any Walmart retailers on board, that they have brought in so many people from the outside and change the business model so much that no one knows how to fix it? Maybe next time they will leave some crumbs along the way so they can find their way back. It took the 10 years to get here and to try to stop digging the hole they’re in ,it’s going to take as long or longer to get out.
Couple of more points, the banks are screaming about the government taking away debit cards fees (ah), but at the same time not seeing Walmart lowering the prices, so it is going to their bottom line? Also thought it spoke volumes this week when the extended the 10 cent off gas program. What’s odd is gas is cheaper now then when the first started it, so must be help “sales”, but then again they are not showing how the gift cards are being spent, on product or gas…..
Last, if top management is serious about being EDLP then this holiday season will really be a “truth test” for them, my bet is the will not go EDLP, but need sales more and will do off price, gift cards and all the stuff they have built in and got “hooked” on.
Another MNB user offered:Retail service providers have long been working in-store at Wal-Mart so employing the service isn’t a new idea. Many companies use one of the retail service companies though sometimes off the record. The reason this is news is that Wal-Mart is employing them, signaling they need some objective facts to confirm conflicting scorecards exist within Wal-Mart. The merchants want the shelves full; inventory management wants as little product on the shelf as is necessary to make presentation. Pricing is managed by another department. It will be a major step forward if Wal-Mart leadership can resolve these conflicting scorecard objectives.
Wal-Mart is the poster child but hardly alone. Target has their issues in this area – as do the grocery chains. Isn’t it strange one rarely hears about OOS at Costco? Before someone says “well, they are a different channel”…. Think again. There are some things they do that set them apart in managing in-stock position. Things that can be replicated by Wal-Mart, Target and the grocers. (And it’s not RFID either!)
Regarding the ongoing Netflix debacle, and its decision yesterday to not separate its streaming and DVD rental businesses - a move that had caused an outcry and mass subscription cancellations, one MNB user wrote:Netflix has gotten a attitude adjustment because of a public outcry. Wouldn't it be great if our Government would respond to the public outcry over all the issues the country is facing today?
Good job Netflix for listening. sometimes it is better to make slow nickels then fast dimes who ever said that is probably very rich and very smart. You can't afford to take your family to a movie any more so Netflix has brought the family back together enjoying a movie night at home.
So I still support them as long as they don't try to play a fast one on us again .
I think it is fair to suggest that this is the minority position.
MNB user Brian Anderson wrote:Thanks for your “Breaking News” on Netflix… it reminded me that I needed to cancel my membership. I received an e-mail today from Netflix explaining all about 1 website convenience while defending the price increase. After I cancelled I was asked to take a brief survey, which I did. They gave options to choose from for why you were canceling your membership with no write-in option. There was NO option for being dissatisfied with the price or price increase. The closest they came was “I need to cut back on my expenses.” So, I didn’t choose any of their technical issue related options. Talk about tone-deaf… the survey just screamed “We don’t want to hear it!” when it came to their most recent actions as a company. And to think at one time I thought Netflix was going to save the USPS!?!
From another MNB user:Earlier Reed Hastings sent a self-serving rambling e-mail to his subscribers. We quit Netflix based on the arrogance of the e-mail and the huge price increase. Customer loyalty counts for zero in their model. We won’t be back. We are surviving and prospering using the existing On Demand from Comcast we already had.
An interesting question from an MNB reader:I've always wondered about your exhaustive coverage of Netflix. How does it qualify as a "retailer," exactly?
I think Netflix is a fascinating ongoing case study in consumer marketing and online retailing, as well as an intriguing window into the possibilities of a smart loyalty program. It may not be retailing in the traditional sense, but it is an example of 21st century marketing done extremely well ... and lately, done badly.
Plus, they helped put a traditional retailer, Blockbuster, virtually out of business. Which means that in my book, it is worth covering.
MNB user Steven Ritchey had some thoughts about my analysis of baseball team payrolls seen in the light of who is advancing in the postseason:The fact that the two teams with the highest payroll in baseball are both out of the playoff picture is rather telling. What it tells me is that it doesn’t matter so much how much money you spend, but did you spend it wisely. You have to spend a minimum amount to be competitive. I mean, guys like us would play for a few hundred thousand a year, or less, but a team full of guys like me won’t win many games ( never could hit the curve ball). The Rangers made two very important deals in the offseason, one was quite well known as it was a big deal, the other not so much. Signing Adrian Beltre was a big deal, the trade for Mike Napoli wasn’t, but I shudder to think where that team would be without both of them. Couple that with two smart trades at the trading deadline and you have a team that could go all the way, if things break right for them.
In the Yankees’ minds they were built to win the World Series, but that lineup had too many holes, once you got past the ace, the starting pitching was too suspect, some of the players are getting old. Frankly they’ve made some signings that just weren’t smart. Plus the Yankee mystique is gone. The players who helped build that mystique, the unheralded players like Scott Brosius, Paul O’Neil, Bernie Williams, who realized that the mystique doesn’t help without making plays in the field. For them being Yankees wasn’t enough, they would do whatever was necessary to win. The team I see now, doesn’t have that same grit and determination.
In sports, as in business or in life, sometimes it’s not how much money you spend, it how smart you are about spending it and how all the pieces fit together.
Regarding criticism of my lack of reporting on WNBA scores, one MNB user wrote:In your defense, MNB IS YOUR COLUMN.
You are interested in MLB and NFL. So that is what you report. I understand that! I am a huge NBA fan (although not right now...) and I am not upset that you do not report NBA scores.
Thanks. The thing is, I write about the stuff that interests me, and trust that for the most part, it will interest MNB readers.
Besides...check out this morning’s “Sansolo Speaks.” It is about hockey.
MNB user Larry T. Owens wrote:I don’t know why you make this a weekly post of yours anyway. I don’t go to MNB for sports scores – I go for all the other news. Any fan is going to know the scores long before you post them.
I know. But if I do them regularly, sometimes they give me a window that I can use to draw an example from, or can use as a metaphor.
Besides, I probably would have enjoyed being a sports columnist, but didn’t find that out until late in my career. So this gives me the chance to play around a bit. Same reason I write about movies, beer and wine on Fridays - I get to play around and have some fun, and do things that no other site like MNB would do.
Hopefully, that keeps people coming back. (FYI...I’ve been doing MNB for almost 10 years, and I would not need all the fingers on one hand to count the complaints I’ve ever gotten about sports scores and my various other digressions....)
However, I did get one complaint yesterday, from MNB user Cale Evans, regarding what I thought was a nicely placed “Damn” on yesterday’s site:No need for it in a professional forum.
To be honest, I cannot promise it won’t happen again. I try to limit them to the occasional “hell” and “damn,” and live in terror that I’m going to misspell a word and end up dropping the s-bomb or f-bomb. (Once I accidentally misspelled “shirt”, and got dozens of emails almost instantly. Nobody was offended, but everybody thought I’d want to know so I could fix it it. Proved, among other things, that you were paying attention.)
The thing is, MNB is not your average “professional forum.” I like to think of it as an online version of sports radio, but about (mostly) business ... and sometimes a well-aimed epithet just seems to be called for.
But I’ll try to show restraint.