CPGmatters: Diageo Reveals What Wal-Mart Really Wants from Suppliers
Through a special arrangement, what follows is an excerpt of a current article from CPGmatters, a monthly e-zine, presented here for discussion.
As category advisor for the beverage alcohol business, Diageo relies on store-by-store planograms to maximize sales in Wal-Mart. There are 35 different shelf sets ranging from four feet to 168 feet in the 18 states where its world-class brands of beer, wine and spirits are sold.
"It's a difficult and time-consuming process," said Francesca Hahn, Diageo's senior category manager for Wal-Mart, recently at Nielsen's Consumer 360 Conference. "We tailor our offerings to whatever the demographics are. If consumers want Johnny Walker Blue at $200 a bottle, we want to make sure that it's there for them."
But she also touted the clear benefits of being a category advisor.
"There are advantages to being a category advisor: a seat at the table to be able to hear all of the department strategies and being part of decisions," she said. "You get to control some of your destiny. It's nice not having my competitor controlling the shelf set."
Ms. Hahn pulled back the curtain to reveal what Wal-Mart really wants from its CPG suppliers:
- New Products: Wal-Mart wants to collaborate with suppliers to be part of breakthrough products. If a new product arrives first at Target, that annoys them. Give Wal-Mart an opportunity to look at the item first.
- Exclusive Products: If you offer exclusivity in a category, Wal-Mart appreciates it.
- Shelf Sets: That is the most time-consuming activity for suppliers positioned in Bentonville. Everyday assortment, price points, replenishments - and more.
- Profitability: Wal-Mart prices its products, but the pricing model that goes behind the cost and how to get it as low as possible is a supplier responsibility. It can take as much time as a shelf set.
- Targeting: If you can provide products targeting consumer segments like Hispanics, affluent consumers, etc., Wal-Mart will help you position a product in stores that match up well.
- Consumer Insights: They want consumer insights about what drives consumption.
- Competitive Intelligence: Wal-Mart wants to hear about new ideas in the marketplace and what is effective in stores.
- Sustainability: For every new product, Wal-Mart wants to know what's sustainable about it. This is not a PR policy. It is a business practice.
- Joint Events: Wal-Mart wants to create excitements in their stores. They want to do things that will bring shoppers back. They want any kind of marketing event you can provide.
- Aging Population: Wal-Mart wants to enhance the aging experience for Baby Boomers. Present those products and ideas that match up.
- Unbeatable Prices: Everyday low prices continues to be the key.
"If you can do all of those things, maybe you can evolve your relationship to be a category advisor," said Ms. Hahn. "My goal is to drive category growth every day in an ethical and objective manner. My goal is Wal-Mart's goal."
She said that Wal-Mart buyers are the most open, receptive and honest she has worked with in the industry. They just want to know the truth, and want to know what should be done.
Getting to Bentonville enough times for face-to-face meetings with the buyer should be sufficient.
"But living in Bentonville is helpful. It's a nice place to live and I recommend it," she said.
Discussion Questions: Anything surprise you about the requirements listed by Diageo's Francesca Hahn on ways to be a strong supplier to Wal-Mart? Did she miss any? Which ones do you think are hardest for suppliers to fulfill?