How to Improve Discount Retailer Operations

By Vladik Rikhter

walmart-neighborhood-market

Walmart is often the subject of negative press, but that’s bound to happen when you’re No. 1 on the 2014 Fortune 500 list of the world’s largest companies by revenue. Walmart is not just the preeminent big-box, discount retailer in the United States – it’s a global empire. Domestically, the company operates more than 5,000 stores and clubs nationwide. Globally, it operates an additional 6,000 retail units in 27 countries.

For the fiscal year ended Jan. 31, 2014, Walmart increased net sales by 1.6 percent to $473.1 billion. As of this month, it captured 25 percent of the U.S. grocery market, making it the largest grocery retailer in the country. However, Walmart also ranked lowest in freshness, according to a May 2015 Consumer Reports ranking. The company is currently trying to address this discrepancy between traffic and customer satisfaction.

In February of last year, Walmart announced plans to add 270 to 300 small-format stores in fiscal year 2015, which was twice the amount initially forecasted. According to the company, comp sales were “driven by fresh and pharmacy.” Put simply, Walmart looked at its sales data and learned that many customers prefer a smaller store when making a quick stop for groceries or picking up a prescription.

Walmart is not the only discount retailer tweaking its business model in terms of store size. Target, which calls itself the “upscale discount retailer,” is expanding its TargetExpress concept to more markets, including urban areas. By the end of the year, nine major cities will have these small-format stores.

Thinking Small for Big Rewards

If you’re a smaller discount retailer, it’s good to be you right now! The size of your operation in on trend. You might not have your own private-label products or handle distribution from your own supercenter (as Walmart does), but you can improve your vendor relationships to stock products quickly and efficiently.

Here are three areas to focus on:

  1. Improve how you communicate between your stores regarding pricing and promotions.
  2. Raise the level of customer service by responding to issues as they arise.
  3. Stay true to your individuality. Get to know your local customers and their preferences.

Learn from the discount retail giants by running a lean and efficient operation, but keep in mind that more customers are looking for alternatives to the supercenter shopping experience. You can reap big rewards if you answer the call for smaller, easily navigable and well-stocked stores.

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