Walmart Plows Forward in 2Q

A fourth consecutive quarter of same store sales growth at Walmart's U.S. business helped the company achieve a slightly better than expected profit performance.

Second quarter earnings grew 8.3% to $1.18, one cent better than the consensus estimate of analysts and at the top of the company's forecast range of $1.13 to $1.18.  Total company sales increased 4.5% to $113.5 billion, and net income increased 5.7% to slightly more than $4 billion.  The key driver of the improved performance was continued strength of the Walmart U.S. business where same store sales increased 2.2%, within the company's guidance range calling for an increase of 1% to 3%.

"I'm really pleased with the continued momentum we see in our Walmart U.S. stores, and this now marks three consecutive quarters of positive comp trafic and four quarters of positive comp sales," said Wal-Mart Stores president and CEO Mike Duke.  "There's such a clear focus among the leadership team to drive the strategy of broad assortment and price leadership.  We continue to win back customers and attract new ones.  We will not let up on our passion to reduce operating expenses so that we can invest in lower prices.  This is the promise that our customers expect from Walmart and what drives greater loyalty."

Sales at U.S. stores grew 3.8% to $67.4 billion, while operating profits increased 5.3% to $5.25 billion.

"Customers are responding to our continued focus on providing the right assortment at everyday low prices," said Walmart U.S. president and CEO Bill Simon.  "During the quarter, our average comp traffic increase was equal to serving an average of 80,000 additional customers every day of the 13-week period."

"We believe that the improvements in our quality and overall merchandise offerings are key to driving these results," said Sam's Club president and CEO Rosalind Brewer.  "In fact, member engagement scores continue to achieve record levels.  We're also investing in price to deliver greater value on top of these quality improvements."

Internationally, sales increased 6.4% on a constant currency basis to $32 billion and operating profits increased 5.4% to nearly $1.5 billion.  A strengthening of the U.S. dollar had a major impact on the comparisons to the prior year.  On a constant currency basis sales would have increased by 7.2% to $32.3 billion and operating profits would have increased 11.9% to $1.6 billion.

"Every market delivered positive comps, and I'm pleased that our largest markets, the United Kingdom, Mexico and Canada, collectively delivered stable growth, solid margins and expense leverage, despite challenging environments," said Walmart International president and CEO Doug McMillon.

Walmart increased by a penny and narrowed its full year profit forecast to a range of $4.83 to $4.93 from a prior range of $4.72 to $4.92.

Source: retailingtoday.com

Cheers for Walmart at 50

Walmart observed its 50th anniversary in fine fashion this week as its share price hit an all-time high.

Walmart shares closed Tuesday at an all time high of $70.75, nearly 18% above the $59.97 level where they began the year and more than 46% above the 52-week low price of $48.31 seen late last summer. The move is nothing short of remarkable considering an investment in Walmart was dead money for the past dozen years as shares traded for a little more than $69 back in December 1999.

The recent run up comes as Walmart has logged three consecutive quarters of accelerating same store sales growth. Analysts are optimistic the company continues to experience favorable sales trends during the second quarter, especially in its U.S. stores, as merchandising initiatives to broaden assortment and more effective marketing around a familiar low price message are gaining traction, just as moderating gas prices are leaving the company’s core shoppers with more money to spend.

The company’s improved stock price performance also is likely having an intangible effect on employee morale in stores, where the stock price is posted in common areas each day, and at the company’s home office.

Source: retailingtoday.com

Walmart web traffic surges in May

Online measurement firm comScore is out with its top 50 web properties report and Walmart.com must be doing something right, judging from a surge in traffic.

Walmart.com was ranked 24th on the top 50 list for May, with 42.4 million unique visitors, a 9% increase from the prior month when comScore showed Walmart.com had 38.8 million unique visitors in April. The gain in web traffic over the same month the prior year is even more substantial, as Walmart.com registered a 26.2% increase from a May 2011 unique visitor total of 33.6 million.

As for Amazon.com, the company Walmart.com is continually measured against, it continues to attract more than double the number of unique monthly visitors as Walmart.com, but its traffic situation looks very different. For starters, comScore shows May traffic at Amazon.com registered 99.4 million visitors, down from 101 million visitors in April. When compared with the same month the prior year, Amazon.com’s unique monthly visitor total increased a modest 4.7% rate, according to comScore data.

Source: retailingtoday.com

Walmart Q1 comps gain 2.6%

First quarter profits at Walmart exceeded analysts’ estimates, as same-store sales increased 2.6%, and the company said its strategy of low prices on a broad merchandise assortment is resonating again with shoppers.

Sales for the quarter increased 8.6% to $112.3 billion, compared with $103.4 billion in the first quarter last year. The results would have been even stronger, except for an approximately $800 million headwind related to a negative currency exchange rate. Earnings per share of $1.09 were a nickel ahead of analysts’ estimates and three cents higher than the top end of the company’s guidance of $1.01 to $1.06.

“Our overall performance reflects the success of Walmart’s business model: driving the productivity loop, leveraging expenses and investing in price leadership,” said Wal-Mart Stores president and CEO Mike Duke. “We believe that the momentum throughout our business positions us very well for the rest of the year.”

Strength was evident across all three of the company’s business segments, but it was the performance of the U.S. group that stood out, thanks to a 2.6% same store sales increase that exceed the company’s flat to 2% guidance range and marked the third consecutive quarter of U.S. comp improvement. Total U.S. sales increased 5.9% to $66.3 billion.

“In a highly competitive retail environment, Walmart U.S. is increasing price separation across categories and driving increased traffic to both the grocery and general merchandise areas of our stores,” Duke said.

Source: retailingtoday.com

Walmart first-ever retailer to launch online ‘pay with cash’ option

Walmart has launched a “Pay with Cash” service that offers cash payment options for online orders at Walmart.com in the United States.

Walmart is the first major retailer to offer online purchases without the need for banking services or a credit, debit or prepaid card.

The retailer said that the majority of its in-store transactions are paid in cash or cash equivalent, including debit cards, with just 15% of transactions paid in credit. The “Pay with Cash” program will allow the same payment options online, which is expected to appeal to the retailer’s customer base.

To use the option, a shopper places an order on walmart.com and, during checkout, selects the "Cash" option and a shipping preference. The customer immediately receives an order number on the order confirmation page and an email receipt with the order number. The item is reserved in the system.

The customer has 48 hours to take the printed order form to any cash register of any Walmart store or Neighborhood Market.  Once cash payment is completed in the store and received, shipping then occurs via Site to Store or to a preferred address.

Source: retailingtoday.com

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.

Analyzing Walmart Retail Link POS Data

If you are a Wal-Mart vendor, you have access to a wealth of data via Retail Link.  As a service provider, we work with a lot of Wal-Mart vendors, helping them to analyze the point of sale data made available by Wal-Mart through Retail Link.   Sometimes a vendor will ask us “If I have Retail Link, why do I need to hire someone to help me analyze POS data?”

Retail Link provides a method for getting POS data, but as the vendor, you will be responsible for transforming the data and you will need a database to store the data.   Both of these are critical to provide for comp week and comp year comparisons, which are the basis for accurate and insightful POS analysis.  The complexity of building a database to store Retail Link data is more than most vendors want to bite off, since it requires hardware, software, and IT skills to accomplish.

What can you do with Retail Link data if you have it stored in a database?

·   Analyze SKU/store level sales

·   Analyze SKU/store level on hand

·   Analyze average unit selling price by SKU/store

·   Analyze plan-o-gram compliance by verifying on hand and selling at traited and valid stores

·   Identify out of stock stores, and even forecast demand based on prior sales

·   Create SCRIPT forecasts for your buyer indicating where inventory is needed to maximize sales and avoid out of stocks.

·   Group stores into A, B, C categories based on SKU level sales volume. 

Wal-Mart buyers expect vendors to use Retail Link data to analyze and manage their SKU activity.  If you are not already using the data, of if you are not using it as well as you could be, then you are missing sales opportunities.  Don’t wait for your buyer to call you and ask a question you can’t address – start working with the data today. 

Improving Walmart Retail Link Data Analysis

Wal-Mart’s Retail Link* web site is a rich tool, providing vendors with a well of data for analyzing sales and inventory. The problem for many vendors is that Retail Link provides data, but storing the data, calculating metrics and providing users with analytics and reports can be a time consuming chore. Just this week I have spoken to three Wal-Mart vendors, who have dedicated staff to the task of running Retail Link reports and turning them into reports for other users. From our research working with many Wal-Mart vendors, we have calculated data manipulation and reporting averages 18 hours per week for most Wal-Mart vendors. On an annual basis, that is nearly 1,000 hours of administrative time spent just preparing data for analysis and reporting. In addition to the administrative time, there is a data storage issue most vendors encounter. Since the data is UPC/store level data, most vendors do not have the ability to store each weekly data file at the store detail level. As a result, they lose critical detail, as well as the ability to calculate key metrics like inventory weeks of supply on hand, or comp year performance comparisons. If your organization is spending administrative time preparing Retail Link data for analysis, consider for a moment how much more efficient it would be to eliminate that work and instead focus your staff on data analysis. What stores are performing poorly, what stores are performing above average, do you have the correct amount of inventory at each store? These are all questions your analysts should be analyzing, but instead they are spending half of their week preparing data. It’s a simple matter of efficiency and resource assignment.

*Retail Link is a Wal-Mart software application and is not affiliated with Accelerated Analytics.

Making Sense of Retail Link Data

Retail Link is an internet based tool created by Wal-Mart, which allows suppliers to access point of sale data and other important information. The benefits of analyzing sales data cannot be overstated – there are case studies documenting sales increase by more than 40% per SKU.

But using Retail Link data can be a challenge. A user must navigate the system, find the correct data, download the data and then create an actionable report. This is a lot of work. Especially if you have a dozen other retail customers who make the same data available. Retail Link users consistently praise the benefits of having access to the raw data, but complain that  they do not have the time or tools to turn the data into action. This is now changing with the availability of Accelerated Analytics®.

According to an article written by Mike Troy and published in DSN Retailing Today, Retail Link has approximately 100,000 registered users, who work at 40,000 companies and run 350,000 weekly queries. Retail Link contains over 583 terabytes of data over 104 weeks. “Use Retail Link and it will grow your business at Wal-Mart, “says Dan Phillips Wal-Mart’s VP of Merchandizing Systems.

In fact, Retail Link is so sophisticated, about 50 user groups have been formed in the U.S. as an ad-hoc training and support tool. And several third party vendors provide end user training seminars on how to use Retail Link effectively.

Fortunately, now there is a tool you can use to fully gain the benefits of Retail Link, while at the same time, dramatically lowering costs.

Accelerated Analytics® can automate all of your Retail Link tasks. Accelerated Analytics® will provide automated data downloads, pre-formatted reports, exception highlighting and an executive dashboard. Plus, using Accelerated Analytics® your entire team can collaborate in real-time on the same set of reports.

Best of all, Accelerated Analytics® will allow you to combine ALL of your retail customer’s data. Imagine a single report or dashboard with JC Penny’s, Wal-Mart, Target, Sears, all on one report. And because Accelerated Analytics® is a hosted service, there is no software or hardware to purchase. We can have you up and running in a matter of days for a low monthly fee.

Making the most of Retail Link Data

Walmart vendors have access to a wealth of sales and inventory data through Walmart's Retail Link portal. The challenge for many vendors, is that Retail Link can provide access to extremely detailed data, which increases the quantity and difficulty of analyzing the data and making fast business decisions. Without the right tools, the process can be very time consuming and difficult.

If you are a Walmart vendor, invest in a set of tools that will allow you to store and quickly analyze Retail Link data. The tool should allow storage of multiple years of store and item level detail and it should provide filtering and sorting to narrow the focus of your decision making. The focus of your fist analysis efforts should be sales velocity and inventory in-stock. The tool should automatically filter the top 50 and bottom 50 stores by unit sales volume. This allows the vendor to quickly identify which stores are driving the most volume, as well as the stores that need immediate attention. Next, it is critical to identify on a daily or weekly basis, the stores that are out of stock. Fixing the inventory out of stock in these stores will directly increase your sales.

Become proactive in dealing with out of stock at a store level,  by reviewing the unit sales volume for all of your out of stock stores for the 8 periods prior to the out of stock. Determine an average period units sold, and then identify for each store how many periods it takes to get new inventory to the store. So, for example, if a store is averaging 6 units per week, and it takes 14 days to get inventory to the store, then the minimum inventory level that store should maintain at all times is 12 units. This provides two weeks of inventory on-hand and will allow for proactive replenishment to avoid stock-out exposure. As a Wal-Mart vendor, you may be selling into over 3,500 Walmart stores, but if you complete this analysis for the top 70 or 80% of your stores based on units sold velocity, you will have gone a long way toward reducing out of stock situations and increasing sales.

Walmart Cutting Prices

I noticed this in a WSJ article today on Walmart aggressively cutting prices on 3,700 items.

“Chief Marketing Officer Stephen Quinn said Walmart expects to expand the number of price cuts in coming months, with help from suppliers. Walmart is encouraging them to reduce what they charge the chain, in exchange for having it spotlight their products as part of its price "rollback".  "It forces them to sharpen their pencils a little bit and see what they can do to be a part of this," Mr. Quinn said. "Obviously, they are competing with each other to get space and visibility at Walmart."

Our company counts many Walmart suppliers as clients. We provide sales reporting and inventory analysis services for them, and I can tell you many are already being preassured by Walmart to cut their prices. It’s a tough spot for a vendor; don’t cut your price and risk loosing a huge platform for distribution or cut your price and reduce the profit. We are working with these vendors to create price elasiticy models to hopefully avoid price cuts, but in the case they do agree to a price cut, study the effect. Remember, not all products sell more with a lower price, and certainly the margins are reduced. Carefully analyzing the data and presenting your business case to the buyer will be critical to avoid a “rollback” becoming a permanent price cut.

You're not the only one

I sat down with an analyst at a consumer products company the other day, and had an in depth conversation with her about the process she goes through to export data from Retail Link and transform the data into reports for her management. I’ve been working with Walmart vendors for a long time, so I have a good awareness of the effort that it takes to go from raw data downloads to finished reports, but this detailed conversation was an eye opener. There were 17 unique steps to get from point A to point B and they consume about 13 hours per week. The process starts on Monday morning and reports are distributed to management before lunch on Tuesday morning. Management reviews the reports and then typically sends follow up questions and requests for detailed drill down as the week progresses. One weeks cycle runs into the next week’s, and on and on it goes.  If you’re shaking your head and saying, “yep, that sounds just like my job”, maybe you can take some satisfaction in knowing you’re not alone. Keep up the good work, knowing what’s’ happening at the point of sale is critical and your efforts are making it happen.

Walmart Tightens Delivery Deadlines

Walmart’s new “must arrive by date” ratchets up supply chain pressure on vendors, shippers and carriers.

Like most shippers, Walmart Stores is looking for a delivery guarantee from its suppliers. Unlike most others, the world’s largest retailer now is demanding one. While many retailers were scrambling last week for any space they could find out of Asia, Walmart implemented its strongest delivery requirements yet on suppliers in the United States, imposing new deadlines for getting goods to distribution centers as well as tough penalties on those that miss the mark. As of last week, U.S. companies shipping goods to Wal-Mart distribution centers must begin to deliver within a four-day window leading up to a “must arrive by date,” or what the company calls its MABD. The requirement will initially apply to suppliers shipping prepaid and truckload freight to Walmart DCs.

What action’s can you take if you are a Walmart vendor? We have started conversations with vendors about how to integrate together various Retail Link data with the vendors purchase order and shipping data, to create exception based reports to show them when they are in danger. The key to not getting hammered by fines is going to be careful management, and with the high volume of orders and shipments many vendors have with Walmart, careful exception based reporting is key.

Walmart Point of Sale Data Reporting

If you are a Walmart vendor, you have access to a wealth of data via Retail Link. As a service provider, we work with a lot of Wal-Mart vendors, helping them to analyze the point of sale data made available by Walmart through Retail Link. Sometimes a vendor will ask us “If I have Retail Link, why do I need to hire someone to help me analyze POS data?”

Retail Link provides a method for getting POS data, but as the vendor, you will be responsible for transforming the data and you will need a database to store the data. Both of these are critical to provide for comp week and comp year comparisons which are the basis for accurate and insightful POS analysis. The complexity of building a database to store Retail Link data is more than most vendors want to bite off since it requires hardware, software, and IT skills to accomplish.

What can you do with Retail Link data if you have it stored in a database?
· Analyze SKU/store level sales
· Analyze SKU/store level on hand
· Analyze average unit selling price by SKU/store
· Analyze planogram compliance by verifying on hand and selling at traited and valid stores
· Identify out of stock stores, and even forecast demand based on prior sales
· Create SCRIPT forecasts for your buyer indicating where inventory is needed to maximize sales and avoid out of stocks.
· Group stores into A, B, C categories based on SKU level sales volume.

Walmart buyers expect vendors to use Retail Link data to analyze and manage their SKU activity. If you are not already using the data, of if you are not using it as well as you could be, then you are missing sales opportunities. Don’t wait for your buyer to call you and ask a question you can’t address – start working with the data today.