DBB Walmart Results

Walmart: Taking Stock and Looking Ahead
Presented by:
Leon Nicholas
Senior Vice President
March 2011
Copyright Notice and Disclaimer

Copyright 2011 Kantar Retail LLC (formerly
Management Ventures, Inc.). All Rights Reserved.
245 First Street, 10TH Floor, Cambridge, MA 02142 USA
Contact: hzimmerman@kantarretail.com
known
as
Tel. +1.617.588.4100
No part of this material may be reproduced or transmitted in any form or by any means,
electronic or mechanical, including photography, recording, or any information storage and
retrieval system now known or to be invented, without the express written permission of Kantar
Retail LLC.
The printing of any copies for back up is also strictly prohibited.
Disclaimers
The analyses and conclusions presented in this seminar represent the opinions of Kantar Retail
LLC. The views expressed do not necessarily reflect the views of the management of the
retailer(s) under discussion.
This seminar is not endorsed, or otherwise supported, by the management of any of the
companies covered during the course of the workshop or within the following slides.
Copyright 2011 Kantar Retail
Topics
Q4 2010 ResultsWhere does Walmart stand?
Spotlight on Key Tactics: Assortment, Promotion, Price
Supply Chain Matters

Beyond the Supercenter Standard
Looking Ahead: Thoughts for Suppliers
Sales and Comps Fiscal Quarters

Walmarts comps down seven quarters running
Walmart US Sales growth
Target Corp Sales growth
Walmart US Comps
Target Corp Comps
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
-1%
-2%
-3%
-4%
-5%
-6%
-7%
Q4 ' 08
Q1 ' 09
Q2 '09
Q3 '09
Q4 '09
Q1 '10
Q2 '10
Q3 '10
Q4 '10
We are disappointed by our Walmart U.S. fourth quarter sales

Mike Duke, Feb. 2011
Source: Company reports, Kantar Retail analysis
Walmart US Comments on Performance

Walmart US Q4 (ended Jan 31, 2011)
Net Sales
(USD billions)
Q4
%
Change
71.105
-0.5%
Comps
Operating Income
(USD billions)
-1.8%
6.021
4.8%
Walmart US Q4 Comments:
Traffic declined, but average
ticket increased slightly
Weak performance attributed to
GM, particularly Electronics
Gross margin % up 17bp
Solid opex leverage
Inventory up 8.2%
Softlines = negative
General merchandise = negative
Walmart re-asserted current

strategies to drive sales growth:
Non-edible grocery= negative

Health & Wellness =positive
Food = solid positive

Source: Company reports, Kantar Retail analysis
2010 Holiday Results

Q4 shoppers down 3%
Holiday gift shopper base down 2%
Average holiday gift ticket down
3.2% decline in % shoppers who
spent the most $ on toys at WMT
Q4 shoppers up
Holiday gift shopper base
up
Web traffic conversion up
+7.3% Nov/Dec
comps
Q4 shoppers up
Q4 shoppers up
Holiday web site visits
and conversion up
+2.6% Nov/Dec comps
Q4 shoppers up;#1 toy pref
Average holiday gift ticket
up; strong web conversion
Source: Company reports, ShopperScape, and Kantar Retail analysis
Walmarts Holiday Efforts Missed the Mark

Stores, circulars focused on basket EDLP with little
differentiation beyond price; store clutter effect?
Our holiday message is
focused on basket savings.
- Bill Simon, Nov. 2010
We believe our core customers are focused on

price, basics, toys for kids and practical gifts
we expect that a lot of the spending will come
close to Christmas. - Bill Simon, Nov. 2010
Source: Company presentation, Kantar Retail store visits, research and analysis
Slide 7
Walmart Today: Back to Basics
Wide assortment of national brands, focus on new & smaller items
We want to sell national brands
Promotional intensity
EDLP provides the foundation and path for growth
National brand POP overtakes the spark
All categories are win
EDLP/ rollbacks=pricing simplicity, basket focus; 1-stop shop
A very familiar and

comfortable direction Bill
Simon, March 2011
Action Alley is back
Power
Merch (buyers) and Ops (store mgrs)
More collaborative with suppliers
Careful investments in smaller stores, .com
Net: A focus on the

price/value shopper
with a wide assortment
of national brands at a
low, everyday price= a
more practical, tactical,
value-focused operator.
Sources: Kantar Retail analysis; Walmart Investors Day, Oct 2010
Walmart Today
Questions for Suppliers.and Walmart
Do 7 quarters of decline suggest
that issues beyond assortment
and pricing are at play?
Is a return to pre-Impact strategies
the right course of action for
Walmart?
Supplier Implication: Walmart needs supplier input
and ideas to restore shopper confidence as a
destination. Working with Walmart to
stabilize/restore traffic is Priority 1, 2, and 3.
Sources: Kantar Retail analysis
Slide 9
Topics

10
Assortment: The SKUs Come Back
Source: Kantar Retail store visits and analysis
Slide 11
Shopper Awareness of SKU Increase

About three in 10 Walmart shoppers have noticed
Many (71%) have not
Have Noticed an Increase in Number of
Products Available at Walmart
(among past four-week Walmart shoppers)
No
Yes
71%
29%
Source: ShopperScape, November 2010
12
Big Thumbs-Up
Overwhelming share of shoppersnine out of 10say it is for the better
Have Noticed an Increase in Number of
Products Available at Walmart
Feels the Increase in Products

Is For the Better vs. For the
Worse
For the
worse
8%
No
Yes
71%
29%
For the better
92%
13
Low-Income, With Kids Most Likely to Notice

Shoppers Who Noticed Walmart's Increase in ProductsBy Key
Demographics
29%
33%
27%
30%
25%
26%
Income
All Walmart
Shoppers
< $25k
$25k$49.9k $50k$74.9k $75k$99.9k
29%
27%
28%
All Walmart
Shoppers
1824
2534
31%
$100k+
28%
29%
28%
4554
5564
65+
Age
3544
14
Changing Shopping Behavior?

Shopping Walmart More
Often
Buying More
Items per Trip
(among past four-week Walmart shoppers who noticed increase in products)
All
Walmart
shoppers
< $25k
30%
31%
$25k$49.9k
Income
29%
$75k+
29%
1834
35%
31%
35%
45%
3544
Age
35%
31%
$50k$74.9k
33%
4554
55+
34%
31%
20%
45%
32%
31%
30%
15
Pallets: How it Looks Today
Source: Kantar Retail store visits and analysis
16
Alleys Before and After
Sources: Kantar Retail store visits
Slide 17
Pallet Awareness
Only three in 10 Walmart shoppers noticed!
Have Noticed an Increase in Pallet

Displays at Walmart
No
70%
Yes
30%
For the better
92%
18
Low Income and Families More Aware

Shoppers Who Noticed Walmart's Increase in Pallets By Key
Demographics
34%
30%
30%
29%
27%
26%
Income
All Walmart
shoppers
< $25k
30%
31%
All Walmart
shoppers
1824
$25k$49.9k $50k$74.9k $75k$99.9k
$100k+
34%
29%
30%
29%
28%
4554
5564
65+
Age
2534
3544
19
Are Pallets Driving More Shopping?

Pallets Causing Shoppers to Alter Basket Size
(among past four-week Walmart shoppers who noticed increase in pallets)
All
Walmart
shoppers
Buying more
items
18%
Income
< $25k
21%
No change
73%
67%
Buying fewer
items
10%
12%
$25k$49.9k
17%
$50k$74.9k
17%
77%
6%
$75k+
15%
77%
7%
1834
Age
3544
4554
5564
73%
30%
20%
14%
16%
65+ 6%
56%
70%
11%
13%
10%
78%
9%
73%
10%
89%
5%
20
Do Shoppers Like the Pallets?

Have Noticed an Increase in
Pallet Displays at Walmart
(among past four-week Walmart
shoppers)
No
70%
Feel the Increase in Pallet

Displays Is For the Better vs.
For the Worse
Yes
For the
worse
30%
35%
For the better
65%
21
Who Doesnt Like the Return of the Pallets?

Shoppers Who Think Return of Pallets Is For the WorseBy Key
Demographics
(among past four-week Walmart shoppers who noticed the return of pallets) 42%
35%
31%
32%
1834
3544
37%
34%
Age
All Walmart
shoppers
4554
5564
65+
42%
35%
32%
35%
33%
Income
All Walmart
shoppers
< $25k
$25k$49.9k
$50k$74.9k
$75k+
22
Behavior Differs by Pallet Response

Pallets Causing Shoppers to Alter Basket Size
(among past four-week Walmart shoppers who noticed increase in pallets)
Those who like the

pallets are more
likely to buy more
(25%) than those
who dont like the
pallets are to buy
less (17%).
Buying more
items
All Walmart
shoppers
No change
18%
Like more pallets

("for the better")
Do not like more

pallets ("for the 4%
worse")
73%
25%
70%
79%
Buying fewer
items
10%
5%
17%
23
Pricing: Renewed Focus on Basket EDLP

And longer-term, more collaborative Rollbacks
EDLP provides the foundation and

path for growth.
Bill Simon, Oct. 2010
Source: Kantar Retail store visit and analysis
24
Kantar Retail Pricing Study Results

Targets basket was
slightly less expensive
than Walmarts overall,
driven by HBA
TGT/WMT
index
Walmarts EDLP
positioned appeared in
practice; Target
leveraged promotions
January 2011 Results
Walmart
Target
Edible Grocery
$ 30.87 $ 31.19
Non-Edible Grocery $ 70.10 $ 72.48
HBA
$ 120.42 $ 111.59
Total $221.39
$215.26
Jun-10
Jan-10 Jun-09
Jan-09
Index
(TGT WMT)
Index
(TGT WMT)
Index
(TGT WMT)
Index
(TGT WMT)
Index
(TGT WMT)
101
103
93
97
103
94
102
98
97
96
103
101
101
111
93
98
100
97
101
99
Source: Kantar Retail research and analysis
25
Summary of Findings
Targets basket used
price promotions to drive
guests impressions and
achieve actual basket
price leadership.
Walmarts basket
reveals its return to an
EDLP approach.
Price Index of Target to Walmart:

Change Results Over Time
100%
90%
80%
70%
60%
130
50%
110-129
40%
90-109
30%
89
20%
10%
0%
Jan '09 Jun '09 Jan '10 Jun '10 Jan '11
26
Netting Out the Tactics

Assortment: Awareness could be
higher, but the result is strong so far.
Flip-side: Loss of clarity
Promotion: Mostly positive, though not
resoundingly.
Flip-side: Navigability compromised,
especially for older & middle class
Pricing: Total basket savings missing

the mark?
Flip-side: Is the EDLP/basket
approach the right one?
Supplier Implication:
Work with Walmart to
fine-tune tactics
would moderation
help? Bigger question:
Is this how you beat
Amazon and Aldi?
Slide 27
Topics

28
Supply Chain Focus

Back-end to front-end
Global sourcing via GMCs
Direct imports; LT partnerships

Joint procurement; collaborative sourcing
Increased local buying
Sustainable farming methods
MABD
CPU
RFID
Source: Company presentations, Kantar Retail research and analysis
29
The Demand Side of the Supply Chain

Online order to urban FedEx
locations
Site-to-Store, Pick-up Today
Drive Thru Site-to-Store service
Dry and non-edible grocery
available for online order
Site to Store offered at
Neighborhood Market
You'll also see us enabled by
learnings from our friends at
ASDA, pilot online grocery in the
coming year.
Source: Walmart.com, Kantar Retail research and analysis
30
Stores as Distribution Touch Points

The differentiator between pure-play online
Shoppers Demands
Walmarts Position
Price
Save money, Live better

EDLP basket
Assortment
Mass merchandiser
Broad assortment
Customer Experience
??
Immediacy
Walmart US: 4,300+ stores

Over 8,600 stores worldwide
Having over 8,000 distribution points in 15 countries

clearly is a distinct advantage for us. - Wan Ling Martello, Oct. 2010
Source: Company presentation, Kantar Retail research and analysis
31
Supply Chain
Expect Walmart to continue to assert a
variety of supply chain effortsfrom
the back-end to the front-end-designed to reduce COGS
Supplier visibility and transparency are

the discussion points
Keep supply chain
The notion of stores as distribution
issues front-and-center
points has significant implications for
in your planning
Walmart retailing in the U.S.watch for
efforts.
Pick-up today to develop
Slide 32
Topics

33
CAGR
Walmart Stores: US
2005 2015E
CAGR
'05 - '10E
-10.2%
7.8%
8.4%
2.6%
'10E- '15E
-19.0%
4.1%
15.4%
2.0%
Sam's Club
1.2%
1.5%
Walmart USA total
2.4%
1.9%
Discount
Supercenter
Neighborhood Market
Walmart US
Marketside
fading, Walmart to
add Express
format in 2011
Discount
conversions
to be ~70%
of new SCs
Note: Excluding Puerto Rico

Source: MVI-Insights.com
34
Tiered Portfolio Strategy

Urban and smaller format efforts
Urban
New SCs
will continue
to get
smaller
To open
30-40
medium
and small
format
stores in
2011
Suburban
Rural
Large stores
(60,000 sq. ft + )
Medium
stores
Established
presence
(30,000-60,000 sq.
ft)
Some store
presence
Limited to no
store presence
Small stores
(< 30,000 sq. ft)
There are hundreds and hundreds, if not thousands, of opportunities in the US

for small formats. Some of them would be in fill in markets that are already
developed. But many, many of them exist in markets, urban and small town, where
we have no market share or next to no market share. - Bill Simon, Oct. 2010
Source: Company presentation, Kantar Retail research and analysis
35
Neighborhood Market
Rogers, Ark.
Also seeing other remodeled NMarkets with
Enablers to Neighborhood Markets expansion:

Assortment mix and importance of the Prescription
New merchandising approach now differing from SCs
Operational structure market managers roles redefined
Source: Kantar Retail store visit, company presentation
36
Supermercado de Walmart
Focused on Fresh & Hispanic tastes
Locations in Phoenix and Houston
Unique Fresh & Hispanic offerings:
Specialty meats include milanesa,
diezmillo, fajitas, & chuleta de cerdo
Bakery fresh corn tortillas & over 40
sweet breads
fresh tropical fruits and vegetables
Bilingual staff and signage

We are very pleased with the
performance we have now the
model that will allow us to expand
- Eduardo Castro-Wright, Oct. 2009
Source: Kantar Retail store visit, research, and analysis
37
Walmart Express stores to open in Q2

Assortment will be key
This will be a new format for both rural and urban locations.- Bill Simon, Feb. 11
Will Walmart Express draw from learnings of these concepts?
Walmart on Campus
Rogers, AR Site in Hospital
Might the new format open in these locations?
26K Site purchased in Chicago, IL
32K Site purchased in Downey, CA
Source: Company reports; Kantar Retail research, store visits and analysis
38
Mobile and Web Channel

Clearly digital is playing a huge role.
Mobile's becoming significant...
-Stephen Quinn, Oct. 10
Customers are also spending

more time researching online and
looking for multi-channel
solutions.
Bill Simon, Nov. 2010
87% of our core customers have

access to online and the Internet
and they use that to help them
with their retail purchases.
Source: Company presentations, Kantar Retail research
39
Formats and Channels

Walmart continues to invest in the
Supercenter format
At the same time, growth and
opportunity seem to be in smaller and
online formats
Will Walmart invest rapidly enough? Is
an acquisition in the future?....
Expect a multi-format
Walmart in the future
despite todays more
cautious approach.
Slide 40
Topics

41
Stock-Up Shopping
Implications for a 1-stop, basket approach?
Engaged in Activity on Last Supermarket Shopping Trip
44%
42%
36%
32%
28%
18%
14%
Immediate use
trip
Fill-in trip
Search out
sale items
Stock-up trip
Search out
coupon items
Browse
Buy special
for new
occasion items
items/items of
interest
Source: ShopperScape, JanuaryDecember 2010
42
Less Stock-Up Shopping.

Shop Weekly
32%
29%
34%
33%
33%
29%
Walmart
8%
10%
11%
10%
11%
12%
Target
Kmart
Reason for Last Dollar Store Trip
29%
2005
2006
2007
4%
4%
5%
4%
5%
4%
2008
19%
21%
Impulse trip; no particular

purchase in mind
2009
27% at $
General
2010
Planned grocery fill-in trip
16%
21%
Planned bargainhunting/treasure hunt trip
22%
16%
Shop 13x a Month

29%
29%
29%
29%
29%
32%
Walmart
24%
23%
27%
25%
24%
25%
Target
Kmart
36%
Planned general
merchandise trip
13%
10%
13%
10%
10%
10%
Planned grocery stock-up

trip
16%
15%
May-09
May-10
Source: ShopperScape, October 2005 2010
43
The Pricing Conversation is Evolving

Pricing complexity
Simultaneously:
Transparency for shoppers
via online tools
Customization of pricing
takes the tactic out of the
public domain
Slide 44
New Media Explodes

Comparing then and now
Info / Entertainment
1980s-1990s
TV, Print, & Radio
2000s-2010s
Projected
Mass
audience
Prepared
Restricted
Uninvolving
Social Relations
Landline Phones
Set structure
Linear
Stationary
Slide 45
New (Old?) Concerns

Back to the future?
Has the pendulum

swing too far back?
Is Walmart returning to the very conditions that generated

Project Impact in the first place?
How do suppliers align with a retailer whose brand equals
the sum of national brands? Is the ROI still there?
Will middle class+ shoppers stay?

Is price as relevant if its matched or beaten by others?
Does a focus on Supercenters, Action Alley, basket pricing,
and 1-stop shopping sidestep the issue of their relevance?
Is Walmart returning to a place of perceived comfortbut
one that had already run its course in 2007?
Did PI have the right ideajust poorly, and too radically, executed?
Source: Kantar Retail analysis
46
Retail Landscape
Differentiation
Comparability
Source: Kantar Retail analysis; Kantar Retail store visit; company websites
47
Considering Walmarts Direction

How are they positioning for future relevance?
Health & Wellness
Sourcing &
Supply Chain
Private Label
Customer
Communication
Resource
Utilization
Global
Presence
Multichannel Selling
48
Embracing its Future Fast Enough?

Staying Too Long in the Past?
Source: Kantar Retail research, analysis, and store visits
49
For SuppliersPartnering with Walmart

The Parallel Paths
Convergence
Mid to Long-Term
Moderate SC tactics
Near-Term
Restore traffic
Make EDLP fun
Create in-store
excitement
Accelerate new
products
Accelerate small
store opportunity
Expand online reach
Leverage new
technology
Capture aging
Boomer and Gen Y
shopper needs
50
THANK YOU.
QUESTIONS?
Leon Nicholas
Senior Vice President
leon.nicholas@kantarretail.com
T + 1 617 588-4146
M+ 1 603 770-9687
245 First Street

Floor 10
Cambridge, MA
02142
www.kantarretailiq.com
2011.Kantar. No part of these materials may be

used, reproduced or adapted without the prior
written consent of the copyright owner. All rights
reserved
51

DBB Walmart Results

Hochgeladen von

Dokumentinformationen

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

DBB Walmart Results

Hochgeladen von

Copyright:

Verfügbare Formate

Walmart: Taking Stock and Looking Ahead

Copyright Notice and Disclaimer

Copyright 2011 Kantar Retail

Supply Chain Matters

Copyright 2011 Kantar Retail

Sales and Comps Fiscal Quarters

Target Corp Sales growth

Target Corp Comps

We are disappointed by our Walmart U.S. fourth quarter sales

Copyright 2011 Kantar Retail

Walmart US Comments on Performance

Walmart re-asserted current

Non-edible grocery= negative

Food = solid positive

Copyright 2011 Kantar Retail

2010 Holiday Results

Copyright 2011 Kantar Retail

Walmarts Holiday Efforts Missed the Mark

We believe our core customers are focused on

Copyright 2011 Kantar Retail

Walmart Today: Back to Basics

Wide assortment of national brands, focus on new & smaller items

We want to sell national brands

EDLP provides the foundation and path for growth

National brand POP overtakes the spark

All categories are win

EDLP/ rollbacks=pricing simplicity, basket focus; 1-stop shop

A very familiar and

Action Alley is back

Merch (buyers) and Ops (store mgrs)

More collaborative with suppliers

Careful investments in smaller stores, .com

Net: A focus on the

Sources: Kantar Retail analysis; Walmart Investors Day, Oct 2010

Copyright 2011 Kantar Retail

Copyright 2011 Kantar Retail

Supply Chain Matters

Copyright 2011 Kantar Retail

Assortment: The SKUs Come Back

Source: Kantar Retail store visits and analysis

Copyright 2011 Kantar Retail

Shopper Awareness of SKU Increase

Source: ShopperScape, November 2010

Copyright 2011 Kantar Retail

Feels the Increase in Products

For the better

Source: ShopperScape, November 2010

Copyright 2011 Kantar Retail

Low-Income, With Kids Most Likely to Notice

$25k$49.9k $50k$74.9k $75k$99.9k

Source: ShopperScape, November 2010

Copyright 2011 Kantar Retail

Changing Shopping Behavior?

(among past four-week Walmart shoppers who noticed increase in products)

Source: ShopperScape, November 2010

Copyright 2011 Kantar Retail

Pallets: How it Looks Today

Source: Kantar Retail store visits and analysis

Copyright 2011 Kantar Retail

Alleys Before and After

Sources: Kantar Retail store visits

Copyright 2011 Kantar Retail

Have Noticed an Increase in Pallet

Source: ShopperScape, November 2010