By
Warren Thayer, Editorial Director, R&FF Retailer
Through a special arrangement, presented here for discussion are excerpts of a current article from Refrigerated & Frozen Foods Retailer magazine.
Having written the book about taking costs out of the supply chain, Wal-Mart is now focusing on building growth categories and taking market share. To bring all this about, Wal-Mart has developed a category framework it calls "win, play and show." It is tied to each category's growth potential and Wal-Mart's advantage of scale there.
Also important is the credibility Wal-Mart might or might not have as a destination for the category. A "win" category typically is growing at twice the rate of its business unit. On a conference call, John Fleming, EVP and chief merchandising officer, cites, by way of example, pet products -- a fast-growing category where Wal-Mart has a scale advantage. You can expect to see Wal-Mart adding SKUs to "win" categories.
A "play" category (not "place," as in horse racing, although the analogy is apt) is one that is growing, but not as quickly as a win category. A play category may also be a stable business where Wal-Mart has a scale advantage and can offer highly competitive prices. An example here might be denim, where Wal-Mart has a huge scale advantage but doesn't have access to the full range of product. Since it will thus not be seen by consumers as a destination for denim, it will not invest as heavily here as it will in pet products. You can expect stability in SKU counts in "play" categories.
By the way, we're using pet foods and denim as examples because those were the ones used by Wal-Mart execs in their conference calls. But you get the idea.
A "show" category is typically one that is on the decline, and one where Wal-Mart may not have a scale advantage or credibility as a destination retailer. This category's mission is to fulfill Wal-Mart's one-stop shopping proposition, but you can expect to see ongoing SKU rationalization here.
"It's important that we have tape measures, but we don't need to have 28 tape measures, which before we started this process we actually carried at one time," Mr. Fleming says. "It gives us the opportunity to really rationalize the assortment and supplier base to be able to drive more productivity, to be able to invest in the win categories."
He goes on to say that, "We should never feature products from a 'show' category. We used to all the time and yet those are categories that are declining. That is not what we should be using our feature space for. So it just gives us a framework to be more efficient, but I think even beyond that to be more relevant to customers."
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