When the chief executive of the world’s largest retailer, Walmart, reports that “…many consumers are still struggling…” it is time to sit up and listen. To be sure, Mike Duke was referring to Walmart customers in the US at that moment, not ASDA customers in the UK, but he had plenty to say about global aspects of the business during the second quarter results presentation. And it was all about delivering in some form or another.
So Walmart’s US consumers are trading down, heading for own label canned goods or lower-priced detergents. Meanwhile, Walmart has bought 147 Netto discount stores in the UK, to open a new front in Walmart’s price war for some of Europe’s most fickle and price-sensitive customers.
As Walmart sets out to integrate the former Netto stores into its existing ASDA operations, what can potential recruits expect when applying for advertised logistics vacancies? Make no mistake about it: nothing is left to chance in hard discounter operations, even if they can look a bit dog-eared at times.
With 1,500 or fewer SKUs in a store, stock management is tighter for a number of reasons. First, the stock held in-store is already on the shelves: feast or famine, store staff spend more time on the sales floor than in the stock room, because that is where the stock is.
Second, discounters sell a higher proportion of products straight off pallets to reduce handling for high volume lines. Pallets are both cheaper than roll cages, which discounters use for mixed loads of small facings, as well as being very stable in transit.
One effect of tight stock management is a more relaxed view of out-of-stocks among discounters, since lines can and do sell through more frequently in the smaller outlets. While full-price supermarkets would not tolerate a gap on the shelves for more than a matter of hours, discounters might see a dry grocery or a non-food line drop out for days at a time until a full load arrives at the distribution centre.
To describe Walmart as anything other than a tight ship would be unfair, it is just that the German discounters manage to sail closer to the wind with shorter lines of communication.
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