Continued growth and increased competition from Amazon.com and the dollar stores. Improved in-stock levels offset by questionable in-store execution. Reduced buyer turnover and senior executives receptive to trading partner views.
Those are among a few of the key findings of the third annual Walmart Supplier Survey conducted by Drug Store News’ sister publication, Connecting Northwest Arkansas. Participation in this year’s survey increased to 219 respondents, compared with 194 last year, and was limited to those who occupy senior leadership positions at their respective companies and whose responsibilities for the overall Walmart business relationship enable them to offer an informed view on a breadth of topics relating to Walmart U.S., Walmart.com, Sam’s Club and Walmart International. Connecting Northwest Arkansas worked with Cameron Smith & Associates, the leading recruitment firm based in Rogers, Ark., to field the survey across a mix of large and small companies and a breadth of product categories comparable to the merchandise mix found in a typical Walmart store.
Nearly half of those who participated indicated they have worked with Walmart for 15 or more years, and three-quarters of respondents indicated that Walmart is their company’s largest account. Accordingly, this veteran group of CPG executives with considerable exposure to Walmart offered the view that despite some challenges, they expect continued growth from Walmart. That means in the years ahead roughly 10% of those surveyed said they would be allocating significantly more resources to Walmart, while 45% said slightly more. A large group (41.3%) will keep things about where they are.
Another interesting revelation this year is the extent to which Northwest Arkansas-based supplier teams are supplemented by additional resources at companies’ respective home offices. For example, about 27% of those surveyed said roughly 90% of the employees their company dedicates to Wal-Mart Stores are physically located in Northwest Arkansas, but roughly 40% said their Bentonville, Ark., team accounted for less than 39% of the resources allocated to Walmart.
Another area explored in this year’s survey was Walmart’s renewed emphasis on Every Day Low Price/Every Day Low Cost. These foundational aspects of the company’s business model are credited with driving improved financial performance and are supposed to yield supplier benefits as well due to the elimination of demand fluctuations within the supply chain that is caused by promotional activity. It hasn’t turned out that way just yet, with survey respondents offering a mixed view of the impact EDLP/EDLC is having on their business and relationship with Walmart. For example, survey respondents were nearly evenly split on the topic of whether Walmart’s adherence to EDLP/EDLC would contribute to an improved rate of profitability on their sales at Walmart. In addition, there was a core group of suppliers (15.3%) who said their ability to manage the business relationship was much better as a result of Walmart’s renewed emphasis on EDLP/EDLC, and 31.6% said it was somewhat better. However, nearly 30% said their ability to manage the relationship was now more challenging, and 23.3% said it was largely unchanged.
In addition, a little more than half of those surveyed disagreed with the statement that Walmart’s adherence to an EDLP/EDLC operating model going forward would contribute to an improved rate of profitability on their sales at Walmart. Meanwhile, a slightly higher percentage disagreed with the assertion that EDLP/EDLC would allow them to operate more efficiently. Said another way, a little less than half of those surveyed did agree that EDLP/EDLC is favorably impacting their ability to operate efficiently and more profitably.
Finally, suppliers were asked about expectations for marketing support. Nearly 24% said expectations had increased significantly, and 37.9% said they had increased somewhat, figures that might have been thought to be lower considering a lack of promotional price is supposed to diminish the need for advertising.
Those suppliers who’ve yet to see the benefits of EDLP/EDLC can take comfort in the fact that Walmart’s senior executives are willing to listen. The company rated very high in this regard, with the overwhelming sentiment among suppliers being that Walmart’s senior leadership is receptive to their views. More than 84% of respondents agreed with that sentiment. Walmart also can feel good about the perception held by 66.5% of respondents that buyers are willing to experiment with new products, services and merchandising strategies. In addition, nearly as many suppliers believe buyers’ ability to manage and grow categories has improved due to Walmart’s decision to participate in such data syndication networks as Nielsen and Symphony/IRI.