Front-end focus: OTC gets in on the ‘Action’

Walmart’s back-to-basics strategy is good news for OTC suppliers, as the retailer stocks a broader assortment of products and opens up Action Alley to endcaps and gondolas.

The phrase coined by Sam Walton — “Stack ’em high and let ’em fly!” — is reverberating throughout Walmart again.

The retailer’s back-to-basics strategy is good news for OTC suppliers, because going back to basics at Walmart also means going back to a broader product selection. Between the resumption of Action Alley and a recommitment to assortment, Walmart already has grown its carrying inventory by 4%, and the company plans to grow its inventory at a rate of half the 
expected sales lift.

Reverting to Action Alley could spark pantry-loading of the medicine cabinet again. Today, 58% of consumers only purchase an OTC medication when there’s a need, according to a recent SymphonyIRI Group survey. More importantly for Walmart, Action Alley might help reverse the slight decline in OTC dollars and units — Walmart OTC sales were down 0.1% and units were down 2.1% in 2010 versus 2009, SymphonyIRI Group reported.

Action Alley also affords Walmart a ready vehicle to showcase new product launches. “From a supplier’s perspective, you can get your product out there and get market share and trial and penetration much faster through our system than you can anywhere else,” Bill Simon, Walmart U.S. president and CEO, told analysts earlier this year.

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