Empty shelves at Walmart are getting a lot of attention these days, but the situation isn’t new and can’t be blamed entirely on store staffing levels.
Reports in Bloomberg and the New York Times have both detailed Walmart’s shortcoming when it comes to keeping products on shelves. And both reached the same conclusion that the issue is related to a reduction in staffing levels. It is a convenient and easily understood explanation because if there are fewer associates working there is less time available to perform the essential functions of running a retail business, namely keeping shelves stocked and accepting payment from customers.
The fact that Walmart is struggling to keep its shelves stocked is not a new development. Retailing Today documented the company’s difficulties with an in-stock study in 2003. Back then, the company regularly vowed to Wall Street that it would grow inventories at half the rate of sales because it was focused on improving its return on assets.
We suspected pursuit of that strategy might put a strain on the company’s supply chain and leave store backrooms with little safety stock to accommodate demand spikes associated with promotional efforts. Then, as now, Walmart’s supply chain was touted as state-of-the-art and a source of great competitive advantage.
The methodology involved picking 12 items across a range of categories that were featured in what was then a monthly circular that appeared in May 2003. Editors conducted simultaneous store visits the day after the ad first appeared at 12 locations in New York, New Jersey, Atlanta, Tampa, Dallas, Chicago and San Diego.
Walmart’s performance was abysmal with the items featured in the ad in stock only 77% of the time. In hindsight, the methodology of the study was skewed to allow Walmart to fare better. The items included were those featured in an ad so stores presumably would have received adequate inventory levels days if not weeks in advance of the ad breaking to accommodate increased demand. In addition, the survey was conducted on a Thursday after the ad broke on Wednesday, again giving Walmart an advantage because the stores had yet to experience peak weekend traffic.
And still the company scored 77%.
“We are not pleased with these results. Our goal is to have every featured item in stock for the entire length of the circular, and we go to great lengths to make this happen, including tracking individual shipments of featured items,” former Walmart spokeswoman Melissa Berryhill explained at the time.
We thought the exercise was interesting so it was repeated in January 2004. The methodology was the same and the results were improved to an 85.6% in-stock rate. While substantially better than the 77% the company scored eight months earlier, finding some of the items was so difficult they fell short of the company current definition of in-stock known as “on shelf availability,” or OSA.
“The bottom line is that Walmart’s in-stock score improved from the last time the survey was conducted, but inconsistent store level execution of many of the details associated with promotional programs continue to fall through the cracks,” is how Retailing Today described the situation.
So what’s changed in 10 years time? Walmart’s stores are still busy as ever, shoppers find the combination of low prices on a broad assortment incredibly powerful and employees continue to grouse about how there aren’t enough of them to do all the work. The big difference is the in-stock situation is probably better now than it was back then, but Walmart was barely on the radar of outlets such as Bloomberg and the Times, employees and customers weren’t able to vent via social media and candid conversations company executives had about opportunities to improve were shared less frequently outside the company.
None of this is meant to excuse Walmart for occasionally atrocious in stock levels that annoy the hell out of shoppers, erode trust in the company and results in lost sales. Achieving high in-stock levels is a perpetual challenge for all retailers and most would rather be in Walmart’s situation, figuring out how to keep shelves full rather than devising strategies to generate traffic and get shoppers to buy stuff.