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Nov 20, 2019

Walmart to redesign produce section in bid to fend off Amazon

Cashiers ring up shoppers at a Walmart Inc. store in Burbank, California.

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Walmart Inc., wary of Inc.’s encroachment into the grocery space, is revamping the produce department in its U.S. stores.

The nation’s biggest grocer will widen aisles, make fruit and vegetable bins more visible and consolidate organic items in one spot, it said in a blog post Wednesday. The renovations, dubbed “Produce 2.0,” will be in 800 Supercenters by the end of January and in about 3,000 stores, including smaller format Neighborhood Markets, by the end of next summer.

The changes follow earlier improvements Walmart made to the quality and assortment of its produce, a key category for food retailers and one where Walmart’s offering has historically failed to dazzle shoppers.

“We knew we were not meeting customers’ expectations for quality, so we went to work on that a few years ago,” Charles Redfield, Walmart’s Executive Vice President of U.S. Food, said in an interview. “Now that we’re comfortable with that, we’re ready to change the look and feel of the department.”

Produce can make or break a grocer. It’s the most lucrative fresh product category besides meat, and shoppers buying fruits and vegetables spend 55% more on their trips, according to data tracker Nielsen. That’s increasingly important to Walmart as Amazon ventures further into perishable food, having recently eliminated the additional fee for fresh grocery delivery for its Prime members. Other rivals, like dollar stores, also offer more produce nowadays.

Walmart said last week that sales of fresh food were “particularly strong” last quarter, and groceries have helped to fuel 21 consecutive quarters of same-store sales increases in its home market.

Redfield said the revamped departments will have as much as 15 per cent more space in the aisles.

The company generates 56 per cent of its U.S. sales from groceries, and takes in more than 20 cents of every dollar spent on food in the U.S. One area of focus has been organic produce, sales of which reached US$1.5 billion in the third quarter, according to the United Fresh Produce Association.

Walmart isn’t the only retailer to step up its commitment to berries and bananas lately. Kroger Co., the nation’s biggest traditional supermarket chain, has started selling longer-lasting avocados along with greens grown in mini-farms inside its stores.

Walmart’s new produce push will also include new signage and colorful displays of ripe tomatoes that will aim to give the section an “open market feel,” according to Redfield. Previously, its efforts in this space included working with German agriculture giant Bayer AG to develop a bespoke cantaloupe that maintained its freshness and taste better through the winter months.