Summary of Session 2 of Walmart’s Year Beginning Meeting 2021

In session one of Walmart’s Year Beginning Meeting 2021, Walmart executives looked back on 2020 and how it affected sales and technological rollouts. Session two focused more on how merchandising units performed and their plans for the upcoming year.

Session two of Walmart’s Year Beginning Meeting for 2021 on March 10th featured speakers from across Walmart’s executive suite, including:

• Scott McCall, Executive Vice President and Chief Merchandising Officer of Walmart U.S.
• Anthony Soohoo, Executive Vice President of Home Goods, Walmart U.S.
• Jeff Evans, Executive Vice President of Entertainment, Toys, and Seasonal Goods, Walmart U.S.
• Diana Marshall, Executive Vice President of Hardlines, Walmart U.S.
• Denise Incandela, Executive Vice President of Apparel and Private Brands, Walmart U.S.
• Charles Redfield, Executive Vice President of Food, Walmart U.S.
• Latriece Watkins, Executive Vice President of Consumables, Walmart U.S.

Everyday Low Price

Scott McCall, EVP and chief merchandising officer started by thanking Walmart store associates for continuing to serve customers during the challenging times of 2020. He reiterated that store associates helped grow Walmart sales by 8.6%.

Despite store hours and capacity limitations, 2020 also saw growth across Walmart’s omnichannel. Walmart.com and Walmart stores became one merchandising team, which simplified the overall work and helped create the “Everyday Low Price” experience Walmart customers expect.

Walmart increased its EDLP policy by leveraging buying power across its channels and upheld its mission of exceeding customers’ expectations and becoming the first choice for everything consumers need.

McCall emphasized Walmart’s three primary goals for merchandising and sales:

• Winning on price
• Delivering assortment excellence
• Creating the best omni experience

Winning on price

The goal of winning on price drives back to the core promise Walmart makes to its customers – save money and live better.

Every Walmart merchant is a “price agent” for the consumer. This role means suppliers must negotiate the best price for the Walmart customer and recognize inefficiencies in their businesses to lead to additional savings.

Delivering assortment excellence

The goal of delivering assortment excellence is to ensure that the best, top-performing products are in Walmart stores. Walmart is implementing a “one team structure,” which allows the retailer to test items online, receive customer feedback, and stock the best products in stores.

Walmart continues to focus on growing its private-label brands, such as Wonder Nation and Onn electronics. The retailer also added over 500 new national brands in 2020, such as Champion, Umbro, Reebok, and S’well.

Creating the best omni experience

As suppliers and consumers are aware, Walmart struggled with inventory issues in 2020, so the merchandising team has committed itself to remaining instock as a top priority in  2021. The team will be working to hold suppliers accountable for On-Time, In-Full deliveries as well.

McCall stressed the importance of creating the best omni experience by making online shopping simple, intuitive, convenient, and frictionless.

The rise of home goods during quarantine

Anthony Soohoo, EVP of home goods, started by saying that the home was more critical than ever to consumers in 2020. The home is where customers eat, work, and play, and the sales growth in home drives sales growth elsewhere in Walmart stores.

Soohoo described four ways to win in 2021:

• Winning the season with the customer mindset
• Introducing new brands and items
• Implementing aggressive rollbacks
• Keeping shelves stocked

The customer mindset

Keeping the customers’ mindset a priority means catering to their needs. Store organization and regular cleanings will continue to be valuable for Walmart customers even as the pandemic begins to ebb.

Consumers will also look to create more memorable experiences with their families, driving a focus on fabrics and crafting goods. To enable healthy sleep habits, Walmart is also launching a Sleep Center in select stores.

Soohoo emphasized that Walmart is working on providing more stylish, seasonally relevant items that Walmart customers might find surprising at the retailer.

New items and brands

In 2020, Walmart introduced Gourmia, Tineco, S’well, Tempurpedic, and Queer Eye Furniture to grow its brand and item diversity.

Walmart’s new strategy is to launch new products and brands online first, which will then drive purchasing momentum in Walmart stores. The retailer has plans to introduce more brands this year, including Drew Barrymore’s Beautiful kitchenware line.

Aggressive rollbacks

Walmart’s pricing strategy continues to rely on rollbacks. In 2021, the retailer will continue this plan by implementing aggressive rollback pricing. 

Walmart hopes that these pricing strategies will drive repeat customer visits and purchases in stores and online.

Stocked shelves

2020 saw massive out-of-stocks and low on-shelf availability due to panic buying, quarantining, and other factors. Soohoo stressed the importance of keeping store shelves stocked and executing modulars quickly.

Walmart’s aim is 100% fulfillment on Pickup and Delivery. Soohoo stated that Online Pickup and Delivery (OPD) grew by 170% in 2020, primarily due to the pandemic.

The age of technology

Jeff Evans, EVP of entertainment, toys, and seasonal items, stated that there are five key pillars to winning 2021:

• Summer seasonal items
• The Paw Patrol: The Movie line
• Week 16 electronics modular
• Video game consoles and virtual reality
• Simplification and feature execution

Summer seasonal

2021 started with a harsh winter, with snow and ice storms raging across the county. So, naturally, many customers are ready for warmer weather and the activities it brings. 

To this end, Walmart is focusing on fewer, bigger, better, and more exclusive summer seasonal items. For example, there has been a 50% SKU reduction on small pools.

Paw Patrol

Paw Patrol: The Movie releases on August 20, 2021, and Walmart expects to be the destination for officially licensed products across the store.

As an example, there will be a twelve-foot pallet train in 2,500 stores from week 27 to 33.

Electronics mod

In week 16, Walmart plans to drive customer excitement by launching over 400 new electronic items in stores. Walmart is converting the TV wall to a new customer experience to improve execution and presentation by using shelves instead of TV brackets.

Walmart has relaunched its Onn brand and will keep up momentum on these products going into 2021. Additionally, Apple fixtures will expand to 2,000 stores, and Gateway’s brand is back as of week 8 and will be exclusive to Walmart.

Video games and VR

Video games and virtual reality are sharp growth categories for Walmart. The retailer will continue to sell Playstation 5 and Xbox One X consoles online only due to extreme demand.

Games and accessories for both consoles and Playstation 4 and Nintendo consoles will still be available in stores. Walmart expects virtual reality headsets to grow in sales as the new VR system Oculus Quest 2 becomes available.

Simplification and feature execution

Walmart expects there to be less feature-setting labor in 2021. There will be reduced assortments, linking, and cross-referencing to help simplify assortments in stores. 

For instance, the celebrations modular has 79% fewer assortments in 2021 compared to 2020. Additionally, Walmart reduced modular relays for books and magazines by 50%. Simplification and feature execution make it easier to replace broken fixtures by implementing the “Break/Fix” program coming in June.

The great outdoors

Diana Marshall, EVP of hardlines, started her talk describing the new outdoor hobbies many Americans adopted due to the pandemic. Walmart expects these hobby trends to continue in 2021.

Hardlines’ list of 2021 priorities are:

• Winning the start of spring
• Driving units for PUD
• Showcasing great prices, quality, and new brands
• Winning with Auto Care Centers

The start of spring

With the start of spring, Walmart stores will begin to re-open third door entrances with appropriate COVID-19 preventative measures in place. Some stores will also have parking lot displays.

Walmart’s focus will be on grand openings for its store Garden Centers and “win[ning] the first weekend.” Marshall stressed the importance of having displays look attractive and keeping items in stock.

The season starters will include bagged items such as mulch and potting soil. Walmart also plans to promote products that help with raised garden beds, a hot new lawn and garden trend.

Walmart expects baseball and softball to have one of the best seasons in five years. Ballplayers must provide their own helmets, bats, and other accessories due to COVID-19 guidelines, presenting a great sales opportunity.

Winning with PUD

Hardlines expects to drive unit sales and win with Pickup and Delivery with its outdoor items. The top hardlines category is bird products in terms of PUD and units. The number one item in stores and for online, pickup, and delivery is Pennington 40-pound Classic Wild Bird Seed.

Meanwhile, with patio furniture and grills having an average unit retail (AUR) of over $300, Walmart expects this category to drive topline dollars. As an example, Blackstone is one of the most-searched-for terms in this category.

Marshall stated that it is critical to win with unit drivers and to have the items customers seek.

Great prices, quality, and new brands

Marshall stated that Walmart plans to showcase its great prices, items’ quality, and new brands. Some exciting new lines include:

• Jay Leno’s Garage and Automotive, which is new to Walmart
• Coleman, which is relaunching and expecting to hit $100MM in sales
• Firefly! Outdoor, a new and exclusive brand to Walmart
• Sunday, of which Walmart is the sole retail partner

Walmart also seeks to win with its Auto Care Centers, primarily by focusing on tax time tire rollbacks, a major draw for customers.

Marshall finished her talk with some asks for hardlines’ operations partners:

• Set mods correctly and stock items
• Focus on first-time pick rate for Pickup and Delivery
• Use grand openings for Garden Centers with hospitality
• Surprise and delight customers in Auto Care Centers with new digital tools

The emperor’s new clothes

Denise Incandela, EVP of apparel and private brands, started her talk by describing Walmart’s critical initiatives to accelerating growth and gaining market share:

• Building a competitive product assortment
• Creating an exciting and seamless shopping experience
• Broadening customer reach and playing offense

Building a competitive product assortment means substantially improving private brands and focusing on quality. Walmart apparel added 15 national brands in stores and over 100 online, including Lee, Reebok, and U.S. Polo Association.

To be exciting and seamless, Walmart will need to improve the in-store shopping experience and expand RFID usage. This technology will fuel inventory visibility and on-hand accuracy, which is critical for Pickup and Delivery. Already, Walmart uses RFID tags on 99% of all its receipts.

PUD is a critical service to Walmart’s customers, and expanding on omnichannel strategies will broaden customer reach and help the retailer “play offense.”

Big bets for the first half of 2021

There are some exciting sales opportunities for apparel in the first half of 2021. George Tees are now selling at $3.88, and the department is leaning into dresses, which it expects to be a $240 million category.

Walmart also expects to see gains in kids’ athletic apparel as the pandemic comes to an end, along with sandals, beach shoes, and other beach accessories. Secret Treasures is undergoing a rebrand and expects to hit $500 million in sales in the first half of 2021. Garanimals is also an up-and-coming brand.

Incandela ended her talk with some asks of the operations team, including:

• Ensure that they set modulars correctly, keep items in stock, and create visual merchandising in line with brand guidelines
• Meet key performance indicators and timelines for PUD
• Become an apparel product expert
• Partner with cross-functional teams on the “Apparel Pad of the Future” initiatives

Food for thought

Charles Redfield, EVP of food, started by saying that getting products to Walmart stores for customers is the number one priority. He went on to describe some key topics for food sales:

• Newness
• Winning the seasons
• Driving comparable sales to the previous year
• Addressing the stores’ role

Newness

There has been a great deal of new product innovation, and consumers love new items. Some examples of these pioneering products are:

• Doritos Roulette
• Coca Cola Coffee
• Powerade Freezer Bars
• Key Lime M&Ms
• Oatmeal Creme Pie Cereal
• Pokemon Cereal

Winning the seasons

In 2020, holidays impacted customers differently than in previous years due to the pandemic. However, Walmart expects its customers to “catch up” in 2021, and nothing drives food sales quite like holidays.

Some significant food holidays are:

• Lent – seafood
• Easter – candy, deli items, bakery products, and wine
• Cinco de Mayo – Mexican foods, such as taco shells
• Memorial Day – grilling foods
• Independence Day – the “Superbowl of the Summer,” one of the biggest holidays for overall food and beverage sales

Driving comparable sales over 2020

The pandemic vastly altered consumer behavior in 2020, and Walmart as an entity had to react. However, while sales increased in the food merchandising unit, Walmart must always compare sales to the previous year and continually grow.

Some strategies the retailer is implementing are:

• Improving first-time pick rate for customers 
• Increasing availability and instocks
• Maximizing sales and saving on waste 
• Reinventing the seafood category
• Performing rollbacks on critical items (the retailer expects rollbacks to drive an additional $100 million in first-quarter sales)

Walmart stores’ role

Walmart stores play a critical role in advancing food sales and growth. Stores may help bolster the unit’s performance by fighting phantom inventory, creating more accurate on-shelf models, ensuring precise item locations and modulars, and utilizing the “Fresh Production” app.

A new normal

Latriece Watkins, EVP of consumables, started her talk by stating that the business unit has a lot underway for the first half of 2021, focusing on these initiatives:

• Building trust
• Simplifying in-store execution
• Driving connection and excitement

Building trust

The first priority for consumables is to build trust by reducing and eliminating out-of-stocks. The team is laser-focused on getting products to the customers, regardless of the channel they use.

The unit expects to see Walmart customers continue their COVID-19-driven behaviors, such as:

• Sanitizing
• Using cleaning products
• Buying paper plates and trash bags
• Home hair and nail care
• Indulging in a lot of baths

Online Pickup and Delivery continues to be a significant growth driver. The consumables unit is working on improving inventory levels and modular organization to make picking more efficient. One of the most challenging areas appears to be canned cat food, so the unit is adding new signage to the cat modular.

Simplifying in-store execution

Walmart is continuing to simplify pack sizes and improve signage for consumables. For example, it is getting comparable soap pack counts in the Dove brand. Simplifying in-store execution will help the retailer to:

• Reduce space
• Become pack-and-a-half compliant
• Add exclusive brands like Degree
• Expand value body wash

Additionally, simplifying pack sizes for critical categories, such as toothpaste and bath tissue, will allow for space expansion and the ability to test new products in the first quarter.

Driving connection and excitement

To drive connection and excitement for consumables, Walmart is launching 50 new brands in the first half of 2021. Customer connections will help build retention and customer loyalty, while excitement will help get new customers.

Some new brand highlights are:

• Happy Place, which is launching one new scent each quarter
• Degree brand in the body wash and bar soap categories
• Nervive, which is a first-of-its-kind nerve pain reliever
• Baby Dove, a multi-cultural hair and skin line
• Great Value Our Promise, a new line of paper and cleaning products
• UOMA, which is a black-owned brand first to retail at Walmart

National Pet Month

Walmart is celebrating National Pet Month in May and is aiming its message to the 10 million new pet parents with brands like:

• Pure Balance Pro
• Milk-Bone supplements 
• Alpo wet dog food

The retailer is also supporting pets with a pet pharmacy, insurance, and services platform.

Summary

Walmart saw growth across its business units in 2020, even as out-of-stocks rose. The retailer plans to continue expanding its omnichannel strategy with OPD and PUD by making picking easier for associates and ensuring instocks remain healthy.

Across Walmart’s business units, the retailer’s goal for 2021 is to win on price, deliver assortment excellence, and create the best omni experience.