ATLANTA (FNS) -- Wal-Mart Stores has fine-tuned and developed its meat, seafood and deli departments using the same strategies that have fueled overall growth of the retailing giant -- employing the latest technology, involving suppliers in the process, and tuning into what consumers say they want.
Ken Parnell, vice president of Wal-Mart Supercenters' meat, seafood and deli businesses, said the company's strategy for every department is consistent: Focus on the customer, use technology to minimize costs and develop supplier relationships that maximize efficiencies.
"We always go back to see what we can do to enhance the customer's bag," he said, speaking here at the 11th Annual Executive Poultry Conference, sponsored by The Solae Co., St. Louis, a soy protein manufacturer recently formed by an alliance between DuPont and Bunge Limited.
One way Wal-Mart focuses on its customers' needs is through surveys. In Parnell's case, the retailer polled shoppers' attitudes about whole fryers stuffed with the neck, liver and other pieces of the bird. Respondents indicated they had little use for the innards, and said they were happy the items came in a bag, making them easier to discard. As a result, Wal-Mart went to its suppliers and now sells whole fryers without the parts.
"We thought we had to have them in there to lower the cost per pound, but we were able to look at it from a consumer standpoint," said Parnell. Wal-Mart moved to provide a product that was better for shoppers and was priced the same.
It's well known that Wal-Mart works closely with suppliers. In the case of the meat department, technology is used to balance customer demand, store space and vendor supply.
"We collect sales data by the half hour," Parnell said. "The technology allows us to track our product more efficiently."
Wal-Mart shares all sales data with suppliers who are connected to its system. The closeness means "decisions are made by fact vs. opinion. They know as much about our business as we do."
This partnership works to the supplier's advantage as well, Parnell pointed out. For example, vendors who give Wal-Mart a year commitment on pricing decide which of the retailer's warehouses to use.
"It makes it easier for us and easier for suppliers to know they have the contract for the year," he said.
Wal-Mart doesn't even keep significant inventory of meat products in its distribution centers, even though the company has a 72-hour turnaround time on orders. The system is set up to provide just-in-time deliveries.
Accomplishing this is no easy task. Each store system communicates with the home office, which then transmits that data to the processor. The processor sends the meat to the distribution center, which immediately sends it to the store. The system "takes the emotion out of it. Our store [employees] don't order." Customers do with their purchases, Parnell said.
The company was a prime facilitator in the industry's move toward case-ready and fixed-weight meat products. The products have reduced costs to Wal-Mart and its suppliers, while providing convenience for consumers. "Case-ready did change our mix," Parnell said, adding that 40% to 50% of ground beef is case-ready. Fixed-weight packages also make the process easier.
Wal-Mart has instituted several other practices in its meat departments to maximize space and growth potential. One such program lets suppliers for a certain product -- say chicken -- decide what products are best suited to that store.
