Of course, retail leader Wal-Mart is always on THE PACKER’s news watch list, and the Bentonville, Ark.-based company made plenty of news in 2014.
Wal-Mart deadline spurs demand for supply traceability solutions
By David Mitchell, Special to The Packer
The world’s biggest retailer announced in May that all fresh produce delivered to Wal-Mart distribution centers would be required to have standardized case labels, consistent with Produce Traceability Initiative best practices, starting Nov. 1. Furthermore, the retailer said it would reject noncompliant loads as out of spec starting Jan. 1.
So it’s no surprise that companies that supply traceability solutions noticed a jump in sales during the second half of last year.
“Until Wal-Mart made its announcement in May, things had been quiet,” said Todd Baggett, chief executive officer of RedLine Solutions, Santa Clara, Calif.
“People had kind of forgotten about PTI because no other big retailers had made an announcement about it. We saw a bump. It started in June, and we got more and more interest. By September and October, we had a lot of Wal-Mart suppliers coming to us. A lot of people were concerned about missing the November deadline.”
Baggett said RedLine implemented 40 to 50 new traceability systems, some for customers with more than one location, late in the year. That includes the massive deal RedLine struck with the Wisconsin Potato and Vegetable Growers Association to supply a uniform traceability solution for its members.
Baggett said RedLine implemented PTI programs for roughly 25 Wisconsin companies, concentrating on those with year-round programs so that they could meet Wal-Mart’s November and January deadlines. Baggett said RedLine had about 50 smaller Wisconsin growers, who are not currently shipping, that remain to be taken care of before their 2014 season begins.
Baggett is scheduled to present a traceability session and PTI update to WPVGA members Feb. 4 during the group’s meeting in Stevens Point, Wis.
Los Gatos, Calif.-based FoodLink also secured new business late in 2013, none bigger than Dole Fresh Vegetables, Monterey, Calif.
“We’ll be doing all the tracking for Dole Fresh Vegetables,” said chief marketing officer Kevin Brooks. “It’s our largest customer yet. It’s a big story for us.
“We had a surge of business late in the year. We had a lot of people who had been kicking the tires and thinking about PTI who finally get off the bench.”
“Wal-Mart certainly contributes to demand,” Brooks said of the surge of PTI-related business, “but a lot of these companies already were on that path. Better information is starting to be seen as something that can help growers and shippers take better control of their supply chain and their brand.”
Target Corp., Wal-Mart test smaller formats
By Pamela Riemenschneider, Retail Editor
A July opening is planned for Minneapolis-based Target Corp.’s 20,000-square-foot TargetExpress small format.
The store, aimed at students and urban dwellers, is near the University of Minnesota campus and is about 15% of the size of a typical Target general merchandise store, according to a news release.
The company plans to offer “essentials” in health, beauty and grocery, including a “larger selection of grab-and-go food options,” it said.
“We’ll carefully evaluate this new format to determine plans for future growth, so stay tuned,” John Griffith, executive vice president of property development, said in a news release
Bentonville, Ark.-based Wal-Mart Stores Inc. also is testing a Wal-Mart on Campus format. The company in August opened its third location on the Georgia Tech campus in Atlanta, offering a limited assortment including pharmacy, general merchandise and grocery.
The 2,500-square-foot stores are a pilot program, the company said in a news release, with locations at the University of Arkansas, Fayetteville, and the Arizona State University, Tempe.
Wal-Mart truck promises major gains in efficiency
By Doug Ohlemeier, Eastern Editor
Wal-Mart Stores Inc. is testing new truck technology to lower costs and more efficiently deliver products to the retail giant’s stores.
In early March, the Bentonville, Ark.-based Wal-Mart released news of testing the Wal-Mart Advanced Vehicle Experience concept truck that combines aerodynamic design, a microturbine-hybrid powertrain, electrification as well as advanced control systems in one vehicle, according to a news release.
The vehicle is constructed of carbon fiber and includes a hybrid engine that pulls a trailer weighing 4,000 pounds lighter than typical trailers, according a report in the International Business Times.
The new truck could deliver twice the fuel efficiency of conventional tractor-trailers, according to the report.
Wal-Mart re-commits to sustainability
By Tom Karst, National Editor
Wal-Mart’s produce buyers will increasingly rate suppliers’ sustainability efforts when deciding where to purchase fresh produce and other food.
Speaking in Bentonville, Ark., at Wal-Mart’s inaugural Sustainable Product Expo, Jack Sinclair, executive vice president for the chain’s grocery division, said Bentonville, Ark-based Wal-Mart Stores Inc. is determined to support systems that produce more food with less resources.
To do so, the chain is using its Sustainability Index to make purchasing decisions.
“We’re totally committed to the Sustainability Index. We’re very excited about the work going forward,” he said during the expo, featured in an online video.
Sinclair said Wal-Mart buys 1 billion pounds of bananas every year and in five years may up that total to 2 billion. Potato purchases now total 900 million pounds, and that is also expected to double within five or six years, he said.
The Sustainability Index is one way the company is supporting a more efficient food supply, he said. In use since 2009, the index involves a 20-question survey. About 20% of Wal-Mart’s food suppliers have taken the survey, Sinclair said.
The list of products covered in the index is online. Apples, packaged salad, grapes, tomatoes, potatoes, carrots, onions, cucumbers, berries and citrus are listed.
Brenda Briggs, vice president of marketing for Rice Fruit Co., Gardners, Pa., said the company has participated in the survey for several years. Briggs said she believes Wal-Mart considers sustainability one of several factors they use in choosing suppliers.
Wal-Mart’s Wild Oats ploy may affect supplies little
By Tom Burfield, Western Correspondent
Wal-Mart Stores Inc.’s April announcement that Wild Oats-branded organic food items are coming to Wal-Mart could be a shot in the arm for the organic category and probably won’t have a significant impact on availability for the fresh category, grower-shippers and industry experts say.
Bentonville, Ark.-based Wal-Mart said Wild Oats was relaunching its brand, offering “a more affordable price point” on products covering a broad variety of categories — from salsa and pasta sauce to quinoa and chicken broth.
Shoppers will save 25% or more when they buy Wild Oats products rather than national brand organic products, Wal-Mart spokesmen said.
The line will include nearly 100 products, including, for example, Wild Oats Marketplace Organic tomato paste selling at 58 cents for 6 ounces versus a comparable retail price of 98 cents — a difference of 41%.
Wal-Mart’s decision to join other retailers in the organic marketplace “is good news for shoppers whose appetite for healthy organic food is stronger than ever,” said Cathy Calfo, executive director and CEO of Santa Cruz-based California Certified Organic Farmers.
“It is also a signal to agricultural policy makers that we need to be serious about scaling up organic production to meet growing demand,” she said.
Industry members say it will be up to growers to determine how they will meet any increased demand for organic produce.
Wal-Mart to rebrand Express-format stores
By Pamela Riemenschneider, Retail Editor
After several years trialing the banner, Wal-Mart Stores Inc. plans to convert its existing Express stores to Neighborhood Markets.
The formats essentially serve the same function, the company reportedly said in a memo, and all Express stores in development will open as Neighborhood Markets. Previous Neighborhood Markets average around 38,000 square feet and Express stores are around 12,000 square feet.
Consumers use the stores for “fill-in trips, last-minute dinners and prescription pickups,” according to Wal-Mart research in a memo to Wal-Mart’s U.S. employees by Judith McKenna, chief development officer, reported by the Arkansas Democrat Gazette.
Wal-Mart vows to create more sustainable system
By Tom Karst, National Editor
Wal-Mart Stores Inc. says it wants to help create a more sustainable food system, but how that will affect fresh fruit and vegetable suppliers is not known yet.
The Bentonville, Ark.-based company announced at its corporate meeting on sustainability that it will reach the goal through what it called “four key pillars,” according to an Oct. 6 news release.
Wal-Mart will work with suppliers to track and report the progress of creating a sustainable food system, according to the release.
Wal-Mart plans to launch a “Climate Smart Agriculture Platform,” which seeks better visibility over the next 10 years of agricultural yields, greenhouse gas emissions and water use, while promoting best practices in sustainable agriculture, according to the release.
How soon Wal-Mart will request hard data from growers isn’t clear.
Wal-Mart has been championing sustainability for seven or eight years, said Tim York, CEO of Markon Cooperative, Salinas, Calif. The world’s biggest retailer is involved with the Sustainability Consortium and is still involved with the Stewardship Index for Speciality Crops, he said.
“The challenge for Wal-Mart, as it is for all of us, is what does that program look like,” he said. “Is a buyer best equipped to judge whether a grower is using, for example, too much water?” For example, York said there are hundreds of types of subsoils in the Salinas Valley alone and that makes it hard to say what is appropriate input use in one area versus another region, he said. Having growers compete against each other in sustainability measures is not a good approach, he said.
Another industry source, who requested anonymity, said the Wal-Mart announcement lacked details on how it will collect data from growers. Wal-Mart floated a sustainability proposal about two years ago that met some resistance in the trade, he said. At the retail level, the source said there seems to be an increasing realization that growers are doing all they can and the sustainability measuring may add costs to the system.
Wal-Mart sharpens focus on sustainability plans
By Tom Karst, National Editor
Wal-Mart is adding some detail to its recent pledge to create a more sustainable food system, revealing goals to help farmers manage input use and changes in buying practices aimed to reduce fruit and vegetable waste.
Officials at the Bentonville, Ark.-based retail giant said in early October the chain would work to decrease the environmental impact of agricultural practices by launching what it called the Climate Smart Agriculture Platform. The tool will provide “increasing visibility” over the next decade to agricultural yields, greenhouse gas emissions and water use, according to a news release from Wal-Mart.
Wal-Mart is also seeking to take on food waste in a bigger way, Tara Greco, director of sustainability communications, said in an e-mail.
“We are addressing this in three ways: in horticulture, purchasing more of the ‘whole crop’ across a spectrum of specs for use in our private label as well as on our produce shelves,” she said in the e-mail.
In addition, Wal-Mart is on a mission to reduce shrink in stores — in emerging-market stores and clubs by 15% and in our other markets by 10% by the end of 2015 compared to the chain’s 2009 baseline. “We are on track to meet those goals,” Greco said.
Wal-Mart stumbles on Fresh Over
By Pamela Riemenschneider, Retail Editor
Roughly 18 months after it launched a Fresh Over campaign to highlight improvements in its fresh produce operations, a leaked memo from Bentonville, Ark.-based Wal-Mart Stores Inc. indicates store-level operations need a do-over.
The “urgent agenda” market manager briefing, published in part by The New York Times, charges store personnel to do better managing fresh departments, including marking down and removing damaged or unsold produce on a “Would I Buy It?” scale.
Anonymous Wal-Mart employees told The Times objectives were unrealistic given the labor hours allotted to stores.
“Wal-Mart knows they have a problem,” said David Livingston, a Pewaukee, Wis.-based retail analyst. “To solve the problems they could add more labor. Out of stocks would decline, sales would increase, but not enough to justify spending more on labor.”
Wal-Mart has to decide if produce is a priority, said James Tenser, a Tucson, Ariz.-based retail analyst with VSN Strategies.
“They need to take a hard look at what’s in the basket,” he said, “and if their goal is to have baskets that contain more produce, it may require breaking some of their core operational tenets. It’s hard to have a different labor standard in one department versus another. I’m not saying they’d have to have a higher wage for workers in produce.”
Right now, supercenters feature produce front and center, and that department needs attention.
“Paying better attention to produce requirements could pay off big for Wal-Mart,” Tenser said. “Offering an unsatisfactory experience too often means shoppers are going to make the judgment to buy socks and canned goods at Wal-Mart, but go to Sprouts to buy produce.
“If you convince them it’s not worth the effort to even walk down that section of the store, that’s a loss for Wal-Mart.”
Greg Foran, president and CEO for Wal-Mart US, alluded to the issues during the company’s third-quarter earnings call on Nov. 13.
“I’m encouraged by our momentum on the ‘urgent agenda’ items,” Foran said during the call. “We’re already seeing improvements in how we execute markdowns related to damaged merchandise, particularly in produce, as we focus on improving freshness for our customers. Plans are emerging to deliver a strong in-stock position, while simultaneously managing inventory levels appropriately.”