Bare Shelves at Walmart? $1.14 Billion in Strawberry Losses! What’s the Connection?

A story in Kevin Coupe’s Morning News Beat references Bloomberg as saying that: at a February 1, 2013 internal Walmart meeting, US CEO Bill Simon said that keeping shelves stocked has become a big problem, is “getting worse,” and is a “self-inflicted wound” that is the company’s “biggest risk.”

Where are my groceries?

Where are my groceries?

According to the piece, Walmart “has been trying to improve its restocking efforts since at least 2011, hiring consultants to walk the aisles and track whether hundreds of items are available. It even reassigned store greeters to replenish merchandise. The restocking challenge emerged as Wal-Mart was returning more merchandise to shelves after a previous effort to de-clutter its stores. Walmart’s inability to keep its shelves stocked coincides with slowing sales growth.”

While Bloomberg reports that Simon’s comments are taken from official minutes of the meeting, company spokesman David Tovar said they were “personal notes from one participant in the meeting and are not official company minutes,” and said that “there are a number of significant misinterpretations and misleading statements that do not accurately reflect the comments by Bill Simon or any other participant in the meeting.”

Tovar said that Walmart is happy with its in-stock positions.

Mr. Coupe then opines: No disrespect to Walmart, but I believe Tovar about as far as I can throw a supercenter. I’ve gotten a number of emails from folks in recent months suggesting that out-of-stocks has become a growing problem for Walmart, one that it has a hard time dealing with.

Coincidently, FreshPlaza recently reported that Walmart is donating $3 million to the University of Arkansas’ Center for Agricultural and Rural Sustainability to create and manage a national competitive grants program, awarding money for projects that will, among other things, expand where strawberries can be grown, enabling shorter trips for the berries between farm and consumer.

The story mentions that: “Strawberries are a highly perishable fruit with a short shelf life in the supply chain,” said Curt Rom, a horticulture professor for the Division of Agriculture, and part of the center’s leadership team. “Strawberries travel an average distance up to or exceeding 3,000 miles from farm to market.” Though prized for their delicate taste and texture, those same qualities can be the berries’ weakness – especially when hauled thousands of miles. It’s estimated that between the time the berries are picked to the time they reach the consumer, losses can reach 36 percent, with an annual value of $1.14 billion, Rom said.

Wow! $1.14 billion in losses – 36% of what’s harvested – between harvest and the consumer? Yikes, that’s a lot of berries! That’s a lot of money! Other academic and industry research shows that half of this loss is due to improper temperature management. One potential consequence of this loss: out-of-stocks.  If you’re a retailer and you’re expecting pallets of strawberries to replenish your shelves and discover upon delivery that they’ve spoiled, you may end up with an empty shelf and an unhappy customer who will turn to another retailer to buy their strawberries.

To be clear, I’m not suggesting that any Walmart out-of-stocks are specifically strawberries but the connection between the two stories is meant to drive home a point about the complexities and challenges associated with managing the supply chain to keep inventory in stock. If it is difficult to do for non-perishable items, imagine how much more challenging it is to ensure your high value produce, meat, seafood, poultry and dairy can be.

Kevin Payne
Senior Director of Marketing

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