Walmart Reversal Marks Victory for Brands

Retailer Restores 300 Items to Shelf After Consumers Were 'Aggravated' by Loss

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BATAVIA, Ohio (AdAge.com) -- Walmart has decided that national brands are still important -- even ones with relatively small shares that it used to think didn't.

The world's-biggest retailer had embarked on an ambitious program to winnow brand assortment in an effort to reduce inventory, improve margins and, it said, offer the consumer a better shopping experience. But realizing the culling actually "aggravated" consumers, it's now restocking hundreds of brands and products eliminated or curtailed months ago and taking a new look at other categories where it has streamlined assortment.

LEFTOVERS: Hefty One-Zip Food Bags are among the products being reinstated byWalmart.
LEFTOVERS: Hefty One-Zip Food Bags are among the products being reinstated byWalmart.
"We did discontinue some things that people didn't buy very often, but were aggravating to a customer to lose," Bill Simon, chief operating officer at Walmart U.S. told a Merrill Lynch investor conference March 10. "And, you know, [former CEO and current board member] Lee Scott told us recently, rule No. 1 in retail, don't aggravate your customer." In all, he said, the giant retailer is returning about 300 previously eliminated items.

The move follows a fiscal fourth quarter when Walmart's traffic declined and sales actually fell for the first time in the retailer's history. Last year, according to Information Resources Inc., Walmart actually lost share modestly in package goods for the first time ever despite getting a seeming boost from value-conscious consumers in a deep recession. The slowing top-line results coincided with a restage and, in many categories, expansion of Walmart's Great Value private label and sometimes deep cuts in brand and product assortments.

Mr. Simon said Walmart had discontinued some things that didn't sell well and were only bought infrequently but still hurt sales because it cost the retailer shopping trips. "Mostly in food and consumables, there were flavors, items, sizes that customers are very accustomed to and ... liked very much, and we disappointed them by taking those out, and we put them back."

'Arrogant'
He described the returning items as "a small percentage" of what was cut. But another person familiar with the matter said Walmart has also begun taking a new look at another 18 categories where cuts were made. It's looking to weigh the effect of assortment decisions on broader category and store sales after having previously based its decisions entirely on the margin impact and market share of the brands and items involved.

"They were arrogant and ignorant, which is a dangerous combination," said a person close to the retailer.

Leon Nicholas, director of insights at Kantar Retail, sees "a bit of a pendulum swing back to the power of suppliers" and national brands at Walmart. He said he's seeing that not only in the return of items, but also in the return of branded point-of-purchase displays that had largely been wiped out by Walmart's tougher clean-store policy in the past year. "There's more supplier branding in the store, and a return ... particularly on the weekends, of more pallet displays," Mr. Nicholas said.

Among items coming back in April are Hefty OneZip food bags, eliminated late last year, according to people familiar with the matter. A spokesman for Pactiv Corp., marketer of Hefty, would only say that Hefty products will be back "in the near future."

GETTING NICKED: As Walmart prepares to launch two mens' razor systems, another is due for a cut.
GETTING NICKED: As Walmart prepares to launch two mens' razor systems, another is due for a cut.
Similarly, more than a year after Walmart removed Arm & Hammer liquid laundry detergent from most of its stores, the brand appears to have regained most of the ground it lost following a category revamp last month. It's the third reset in a year for the category, with Arm & Hammer picking up ground in each. In that particular case, Walmart lost category share in part because the brand's owner, Church & Dwight Co., stepped up promotion at other retailers in response to the delistings.

Walmart declined to comment on the moves.

Razors
While items are coming back, Walmart isn't done cutting. According to people familiar with the matter, as Walmart prepares for two launches of new men's razor systems from Procter & Gamble Co.'s Gillette and Energizer Holdings' Shick this spring and summer, it's planning to eliminate products from Personna American Safety Razor, according to people familiar with the matter. At the same time, these people say, Walmart is adding private-label razors to be made by Energizer.

Energizer and Walmart declined to comment, and a Personna executive didn't return calls for comment.

Third- and fourth-tier brands remain vulnerable, but Walmart is discovering it can't get away with assortment cutbacks as draconian as some dollar, club and drug stores for a variety of reasons. Mr. Simon noted that Walmart relies on low prices for branded products and a large assortment to differentiate itself, but it lacks individual shopper data that show the impact on its most-valued customers from assortment decisions.

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