Big Blue Sees Green
To achieve "Low Prices Everyday," as its slogan declares, Wal-Mart has historically taken a no-frills, bare-bones approach to retailing, an approach that can certainly be seen in its garden centers. The company has held its stance against merchandisers, for example, (and the higher costs they bring) even while competitors like Home Depot and Lowe's have found success with them — until now.
Reportedly, Wal-Mart will start a pilot merchandising program in spring 2007, a move that will affect the company's growers and consumers and possibly alter the look of its garden centers.
Sources for GPN's Big Grower reported that Wal-Mart has spoken with several of its growers in different markets and asked them to include merchandising pricing in their spring 2007 quotes. Wal-Mart has indicated it will pay for the service, though the exact pricing is not known. If this move remains true to Wal-Mart's methods, the company will test merchandising in a few markets and then base a company-wide decision on the results.
Wal-Mart is considering basic merchandising such as maintenance, restocking and cleaning; Wal-Mart's growers are not taking the proposal request to mean Wal-Mart will be initiating pay by scan at this time.
What Does It Mean?
This decision is both a triumph and a challenge for Wal-Mart's suppliers: Home Depot and Lowe's have shown that in-store merchandising can increase product quality, presentation and sell through, and those benefits should transfer to Wal-Mart. A clear advantage for growers is that Wal-Mart will be paying higher prices to cover the merchandising costs.
Of course, the benefits will only come about with proper plan execution. The first consideration is money: Will the frugal company allot enough to make merchandising work? Merchandising is not a monthly activity, and it is not cheap. Merchandisers (whose pay varies regionally) need to make frequent (if not daily) visits to stores to maintain the departments.
The plan's timing is as important as its execution. With a spring 2007 target, the plan needs to be discussed with and agreed upon by suppliers as soon as possible. The timing is important, especially for Sunbelt growers who will be entering into their peak seasons in a few month's time, because the suppliers need time to recruit, hire and train merchandisers.
In the past, Wal-Mart held its annual supplier meeting early in the year. Sources for GPN's Big Grower reported that Wal-Mart feels it has been holding its meetings so early it cannot give detailed program information, a feeling many growers echo. Reports indicate the company is waiting until it has all the merchandising details in place before it approaches suppliers. As of press time, Wal-Mart had not scheduled its yearly meetings, so the breadth of the merchandising program is not known.