Partnering with Walmart

There are no shortage of articles on Walmart in today's press. Some are positive, but many are written from a viewpoint of fear. Here are some interesting facts from a recent article titled "The Elephant in the Room" by Greg Buzek, which was printed in the May 2007 RIS News. The article paints the picture of just how large and dominant Walmart is in just about every category. For example, the article notes Walmart's average monthly revenue is $28.3 billion, which is greater than Federated's average annual revenue. Retail Forward predicts in 2007 18% of every food dollar will be spent in a Walmart store, and that includes restaurants. Overall, Walmart is the number one super center, grocer, drug store, electronics store, office supply store and furniture store.

So, if you are a Walmart supplier, or if you want to be, the key question is how do you partner with an organization as large as Walmart? The answer may be your organizations ability to analyze point of sale data. Walmart has invested heavily into information systems and a trading partner portal called Retail Link. As an approved Walmart vendor, you can access near real-time data on how your products are selling and stocked at every Walmart store. The trouble for many vendors is the complexity of extracting the data and then analyzing it can be a huge challenge. We work with vendors that have pulled 100 megabyte plus files from Retail Link only to realize they have no suitable tool to analyze the data. If you are in this category, the first thing to realize is Retail Link was designed to give you access to the data, but it was not designed to help you analyze data. For that, you need to invest into tools capable of doing difficult data crunching. Data files of this volume require a database and sophisticated reporting tools. Most vendors tell us this is a good candidate for outsourcing due to the cost of acquiring the technology and the engineering complexity.

Analyzing Walmart data is a key success criteria for vendors because Walmart expects vendors to proactively partner in avoiding out of stock situations and increasing sell-thru. The first thing to do is engage an outside service for POS analysis. Walmart data files are large and will require a good database to store and analyze. You will want to capture and store history, so you are going to need a good amount of disk space. Next, make sure you have access to good reporting tools. A spreadsheet is not going to cut it. You simply cannot analyze sales and on-hand data from over 3,000 stores in a spreadsheet, in any reasonable amount of time each week. Unless, of course, you have unlimited time. After you have the tools in place, start with the three most important measures: unit sales, on-hand, and sell-thru at a store level. If you can get a handle on these three performance indicators, and then put action plans in place to improve, you are well on your way. Monitor these each week and get to know which stores are having sell-thru issues. Look for patterns in the data, like chronically out of stock stores, or very slow selling items. Finally, communicate with your buyer(s). Our experience has shown they are very open to vendor initiated conversations. Especially when the vendor has quality reports with accurate data from Retail Link.