BENTONVILLE — Recent leadership changes at the world’s largest retailer could signify a focus shift.
Following four quarters of decreased same-store sales, Walmart is turning additional attention to its online presence, said retail consultant Carol Spiekerman, CEO of new market builders in Bentonville. Same-store sales are based on sales in stores open for the previous 12 months.
“Walmart really has been focusing a lot on the in-store experience and the stores themselves,” she said.
Walmart president and CEO MikeDuke told shareholders at the June 4 annual meeting that the retailer’s online presence is a priority to become a truly global company.
“That says to me, enough about the stores. Let’s starting looking outside,” Spiekerman said.
Leading that effort will be Eduardo Castro-Wright. He is moving from his position as president and CEO of Walmart U.S. to the same role for Global.com and global sourcing.
Walmart spokesman David Tovar said Castro-Wright leading that sector will give the company the competitive advantage as it works to become more global. He said in the next few months that plan willbe put in place.
Global.com and global sourcing is based in California and is directed to widen the retailers e-commerce footprint in new and existing markets and improving the productivity loop on a worldwide scale.
Tovar said Walmart is in 15 countries, but only has online platforms in three: the United State, United Kingdom and Mexico. He said the look of e-commerce varies by country.
A research note by Kantar Retail states, “Placing such a senior executive in a newly created CEO role of both divisions underscores theretailer’s increased focus on developing Walmart’s scale in these two areas.” Kantar Retail is a retail insights and consulting business based in Cambridge, Mass.
Castro-Wright will retain his position as Walmart Inc.’s vice chairman.
In a statement released after the changes, he said the move allows him to be closer to his wife who is recovering from a heart transplant surgery.
The Kantar Retail note states the unusually detailed explanation of his move to California, at age 55, “appears to indicate an easing toward retirement.”
Bill Simon, 50, was promoted from executive vice president to president of Walmart U.S. He began his new role immediately after the June 29 announcement of leadership changes. Castro-Wright will transition to hisnew role through Aug. 1.
Tovar said Simon is a strong leader ready to step into the top position for Walmart U.S.
“If he hadn’t been ready, we couldn’t have moved forward,” he said.
The Kantar Retail note states Simon’s promotion suggests a reinforcement of the retailer’s traditional operational leanings.
Tovar backed that assessment saying Simon has three priorities: increasing store traffc, making products relevant to customers; and price leadership.
Chief merchandising off - cer John Fleming, 51, submitted his resignation July 2. He joined the company in 2000 after spending nearly 20 years with Target Corp.
Tovar said none of the changes had to do withperformance and Fleming has wanted to spend more time with his family.
“It was a good time to make the change,” Tovar said.
Sales Dip
Spiekerman said smaller retail stores and chains like Walgreens and dollar stores are moving ahead of Walmart in urban markets.
Walmart recently gained approval to move into the Chicago market, but how those stores will look is still a question, Spiekerman said.
Kantar Retail reported Thursday that nationally, retail same-store sales gained 3.2 percent in June.
Two of Walmart’s competitors, Target and Costco, saw increased same-store sales. Target increased 1.7 percent and Costco 4 percent.
The report excludes Walmart numbers because the company only issues sales quarterly.
The most recent Walmart U.S. same-store sales numbers showed a first quarter 0.8 percent decline. That number was filed June 4 with the Securities and Exchange Commission.
Castro-Wright said at an analyst and investor meeting following the June 4 shareholders meeting the first quarter results showed what he qualified as “mixed performance” with sales falling short of expectation and an “outstanding” profi t performance.
Walmart U.S. first quarter operating income was $4.6 billion compared with $4.4 billion a year earlier.
Castro-Wright cited three main reasons for the sales shortfall: the economic environment, other retailers becoming more price competitive, and self-inflicted. He described self-infl icted issues as miscalculations as the company’s product reduction plan was implemented. Wal-Mart cut its inventory throughout 2009 and early 2010.
The stock keeping unit, or SKU, rationalization and Walmart’s Win, Play, Show strategy stocked stores in major brands and categories that sell well; had a smaller number removed some products from the shelves completely.
SKU helps retailers track sales and customer spending patterns and control inventory.
Tom Schoewe, Walmart executive vice president and chief financial officer, said at a conference June 15 the company is still evaluating product selection.
“I would say on balance, that has gone well,” he said. “There were, however, some examples of times when we thought we could take a product out of the assortment and somebody would substitute something that was left over and we made a mistake.”
Schoewe said 300 to 400 items in grocery alone had been returned to the shelves.
One reason companies reduce choice is to make more room for store brand products, according to the 2010 Nielsen Retail Assortment Survey.
“Success lies with oft ering the right mix of products, not the greatest or fewest number of products,” according to the report.
Wal-Mart in March 2009 launched 1,200 reformulated Great Value products and introduced new packaging for the entire line.
A June report by KantarRetail states the Great Value brand has a 74 percent conversion rate, meaning that three-quarters of shoppers who are aware of the brand have purchased it.
Other Walmart brands include Equate and Sam’s Choice.
The report also states that on average, 60 percent of Walmart grocery shoppers, compared with 54 percent of all shoppers, cite lower prices as the reason for buying private brands.
Tovar said the Walmart has rebranded several house brands, but branded merchandise is still very important to the company.
“We can do both. We can ofter both,” he said.
Business, Pages 19 on 07/11/2010