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The Most Terrifying Words In Retail

by Robert Hetu  |  June 12, 2015  |  1 Comment

What are the most terrifying words in retail? “There is nothing here to buy”.  The speaker of these words was none other than my spouse last night in our local Walmart.  So I was glad to hear comments from Walmart CEO Doug McMillon, that I characterize as getting back to the basics.  In particular adding items to the assortment that are new and exciting, as well as better blending of art and science.

McMillon described the balance between art and science that makes a merchant successful and noted that as the company grew ever larger over the years the science side of the merchandising equation had come to dominate decision-making. “You can manage a category to death,” McMillon said. “We need to be creative and do something people don’t expect by getting after items that will surprise and delight shoppers.” (www.retailingtoday.com)

Although I would argue that it was more the mechanics and statistics than real science that has caused the bland assortments we see today from many retailers. This is what I characterize as the difference between assortment rationalization and optimization that I espoused in last year’s research Retail Assortment Rationalization Falls Short; Optimization Delivers Sales and Profits. However this is only one part of the problem.

Getting back to the visit at our local store last night, why exactly was there “nothing here to buy”?  Admittedly my local Walmart is the most poorly run and poorly stocked Walmart store I have ever observed so I do not want to paint with too broad a brush. We stopped in on our way home to purchase a couple of mundane items, namely cat food, tea bags and coffee.  I found her empty handed as I wondered over to where she was standing, having just picked up a prescription (the impetus of the visit).    Partially to blame was the narrow assortment, but more importantly it was empty and disorganized displays.  When she went to the appropriate spots the shelves were empty of the particular products we were looking for.  This was not at the end of a busy Saturday, it was a slow Thursday evening at 8:00 PM.  All across this store the same scene was repeated.  I wish I could say this was not the normal situation in our local store however I would be lying.

Execution of customer basics has to include the fundamentals of having the right product, in the right place, at the right time, for the right price. As such its not just assorting but functions such as demand forecasting, replenishment, supply chain, plan-o-grams, task management, scheduling and of course pricing.  As Walmart doubles down on its core EDLP strategy we will see how it performs on the pricing front.  This was one of the keys to its success (along with supply chain) and something that other companies have not been able to copy.  In the digital age where consumers have access to price matching information in the palm of their hand it will be interesting to see if EDLP is a winning future strategy.

Unfortunately for us and Walmart we had to make another stop on the way home, where we found a great selection, full shelves, and a fair price at a regional grocery store chain.

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Category: merchandising-process  pricing-policy  retail-trends  

Tags: assortment  consumers  customer-analytics  customer-centricity  merchandising  price-transparency  pricing  prodcuts  retail  satisfaction  stores  walmart  

Robert Hetu
VP, Analyst Retail
7 years at Gartner
29 years IT Industry

Bob Hetu is a Research Director with the Gartner Retail Industry Services team. His responsibilities involve tracking the technology markets and trends impacting the broad-based retail merchandising and planning areas. Mr. Hetu is an expert in the areas of brand, vendor and assortment management, merchandise planning, allocation, and replenishment. Read Full Bio


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