FEATURE24 February 2011

Spend money. Deliver better


Walmart’s investment in a new global customer insight team stands to significantly boost its understanding of consumers and hand it greater leverage in dealings with suppliers, making sure the right products are on the shelves at the right time and at the right price.


Walmart’s topline fourth quarter sales growth of 2.5% to $115.6bn, reported this week, is an acceptable result masking a more worrying trend in its US business – seven straight quarters of declines in comparable store sales. Bill Simon, the retailer’s US chief executive is disappointed, but he said: “I’m confident that we can improve sales throughout the rest of the year.”

That confidence is partly based on research. “We spent the last six months analysing our [stock] assortment and presentation and delving into customer insights about their shopping habits and their preference,” said Simon. And that’s just for starters.

Earlier this month Walmart announced the creation of a new global consumer insights team, led by Cindy Davis (pictured). Davis was previously senior vice president of membership and marketing for the company’s discount online shopping site Sam’s Club and as such “she understands the importance of putting the customer at the centre of everything we do, and the power insights have on business decision making,” said her boss, Sam’s Club CEO Brian Cornell.

Walmart has long understood the importance of consumer research – one doesn’t get to be the world’s largest grocery retailer without knowing what customers and potential customers want and expect of you – yet its consumer insight capabilities have lagged behind those of competitors like Tesco and Kroger, who’ve made huge gains by getting to know their shoppers through loyalty card data analysis partnerships with Dunnhumby.

Natalie Berg, global research director for Planet Retail, suggests Walmart has not kept pace with its competitors’ advancements in this area because of its strong cost-control ethic, which helped establish the company’s reputation for offering “extreme value on well-known brands”.

A Gartner analyst expects the consumer insights team to help Walmart spot global trends across multiple product categories early and respond with new products, merchandising and marketing programmes

It has made good use of its Retail Link system, which provides data about what is going through the tills – but that’s not the same as customer insight, Berg says. The new customer insight team, she believes, is a sign that Walmart really needs to understand its customers “to make sure they get the right product on the shelf at the right time”.

“Walmart has taken its eye off the ball,” says Berg, distracted by a well-intentioned rationalisation of the SKU range. They “picked away too much” while attempting to clear shelves of unpopular product lines, meaning shoppers have struggled to find the brands they want, and so have taken their entire shopping baskets over to the competition. Hence the decline in the US store business.

A key part of the retailer’s US turnaround plan is to deliver “the broadest and most relevant assortment possible at the lowest price in the market”. This includes a “continued focus on adding merchandise back on the shelves”, the company said.

One would expect the relevancy part of the assortment equation to be handled by the consumer insight team. Gartner analyst Don Scheibenreif says Davis’ people will “help the company spot global trends across multiple product categories early and respond with new products, merchandising and marketing programmes”.

But Scheibenreif also expects the consumer insights team to hand Walmart – already a notoriously tough negotiator – greater leverage in its dealings with suppliers, to haggle for better prices that should more than offset this new investment in its research capabilities.

“Advanced analytics offer cross-category insights; coupled with technology-enabled trend-spotting, these could potentially become Walmart’s proprietary insights, which help the company know more about consumers than consumer goods manufacturers do,” says Scheibenreif.

That’s reason enough for US CEO Bill Simon to be confident for the future.