Wal-Mart's fresh produce plan paying off
Aug. 16, 2013
by Monica Watrous
BENTONVILLE, ARK. – A refreshed produce strategy is paying off for Wal-Mart Stores, Inc., which saw a nearly $1 billion growth in grocery sales during the second quarter of fiscal 2014.
In June, Wal-Mart announced a recommitment to providing fresh produce with new initiatives that include weekly produce checks, a training program for associates and partnerships with local farmers. Additionally, the company began offering full refunds on unsatisfactory fruits and vegetables.
Since unveiling the efforts, Wal-Mart said the segment is gaining momentum.
“We’re getting more efficient at transporting the product from farm to shelf,” said Bill Simon, president and chief executive officer of Wal-Mart U.S., during an Aug. 15 call with financial analysts. “We’re executing weekly store audits and equipping associates with additional skills and tools to ensure quality and freshness. We’re also letting customers know about it through our ‘fresh over’ marketing campaign and our new ‘100% money-back guarantee.’
“What’s even more encouraging was that we saw consistently improving comps in produce throughout the quarter, with a high single-digit comp in July.”
While cautious consumer habits nibbled into Wal-Mart’s traffic during the quarter, the company managed a 1.3% increase in net income. The company attributed the weaker performance to higher payroll taxes and gas prices, as well as lower inflation in food, with deflation in dry grocery, frozen, snacks and beverages.
New and exclusive products and innovation are expected to help further improve grocery performance over the coming quarter, the company said. Wal-Mart also is leveraging different formats, including an on-line grocery delivery program that received “high marks from customers” in California test markets. The company also is piloting store-specific modulars featuring regional brands across key food categories.
“Our mission to save people money so they can live better remains critical to customers and to our ability to drive stronger sales,” said Charles Holley, executive vice-president and chief financial officer. “Our plans are aggressive. We are going after sales and investing in price.”