Memo orders improvement at Wal-Mart stores

The dairy section in the Wal-Mart supercenter here, just across the border from Queens, was sparsely stocked. Some gallon jugs of milk were dented, others soiled with what looked like dirt. The meat aisle had run out of ground beef patties and strip steak, and residue streaked some shelves.

The disarray and out-of-stock items at just one store appear to be examples of wider problems that Wal-Mart is pressing store managers to address.

Last month, the retailer issued an “urgent agenda” memo to managers across the country pushing them to improve performance on “Chilled and Fresh” items in its dairy, meat and produce departments, part of an effort by Wal-Mart to help long-sluggish sales. It also reflected customer complaints that Wal-Mart has received in recent years as it has expanded offerings of organic foods and produce, often at cheaper prices than its competitors.

The memo, marked “highly sensitive,” tells Wal-Mart marketing managers to make sure the company’s 4,965 U.S. stores discount aging meat and baked goods to maximize the chance that those items will sell before their expiration dates.

The memo — leaked for public use by a Wal-Mart manager unhappy about understaffing — also tells stores to be sure to “rotate” dairy products and eggs, which means removing expired items and adding new stock at the bottom and back of display cases.

Sent on Oct. 2, the memo reminds managers that their No. 1 concern must be sales. For the last 18 months, Wal-Mart’s sales have been sluggish in stores open at least a year. The memo also urges managers to reduce backup inventory to trim costs and warns them not to exceed budgets for their stores.

Some retail analysts say these problems stem from Wal-Mart’s failure to have enough employees in its stores to do the many chores needed, like marking down aging items, rotating milk or getting needed goods from the backroom to stock shelves.

“Labor hours have been cut so thin that they don’t have the people to do many activities,” said Burt P. Flickinger III, a retail consultant. “The fact that they don’t do some of these things every day, every shift, shows what a complete breakdown Wal-Mart has in staffing and training.”

A Wal-Mart spokeswoman, Deisha Barnett, confirmed the memo’s existence and acknowledged some of the problems outlined in it. She pointed to the start last year of a 100 percent money-back guarantee for customers dissatisfied with less-than-fresh products.

“We certainly have been focused on fresh for quite some time now, and our CEO has been vocal about our need to improve in this category. We’ve made a lot of progress but are always working to do better,” Barnett said.

Some analysts say Wal-Mart’s acknowledgment of the problem is a step in the right direction.

“They seem to get it,” said Craig Johnson, president of Customer Growth Partners, a retail consultancy in Connecticut. “They know that they are still weak in fresh. And that if the produce is overripe or out of stock, people are going to go somewhere else.”

“But this isn’t going to be an overnight fix,” he added.

This story was originally published November 12, 2014 at 1:24 PM with the headline "Memo orders improvement at Wal-Mart stores."