The Effect of Increased Online Sales
With the presence of COVID-19, Walmart Online Pickup and Delivery (OPD) and digital sales have skyrocketed as consumer shopping habits changed drastically, leading to challenging Walmart comps for suppliers in 2021 that Harvest Group is working to evaluate and adapt within.
“Heavy” COVID items—sanitizers, cleaning supplies, etc.—continue to spike in the first couple of months of 2021, and this demand has certainly put a strain on manufacturers and suppliers.
Despite the chaos, Walmart’s store-level comp sales experienced a 6.4% increase with digital comp sales at a 79% increase. Other retailers such as Kroger and Target experienced a 100% digital increase. Sporadic sales followed, such as hair coloring and at-home meals, creating a 20-30% sustained increase lift.
Shoppers have items they want and need, and even though COVID has put immense strain on the pace at which these items reach the consumer, consumers are still getting their items. All thanks to retailers’ adapted presence online and within OPD.
What Challenges Are Retailers Facing?
As comps vary across departments and we look at consumables in general, the comps look great, but brands risk losing share in the marketplace. Competition is consistently right around the corner.
There is also a continued struggle of gaining shoppers’ trust given so many “out of stocks.” In fact, many Walmart shoppers have leaked to other retailers as a result. They are thinking, “Walmart doesn’t have what I need, so I have to go somewhere else.”
Other times, we will suddenly see an unexpected spike in demand. Massive orders have not been forecasted and brands are forced to quickly adapt. Supply chain issues follow, and the wait time for items goes from a couple of days to a couple of weeks.
Suppliers learned they need to catch these spikes much sooner.
Brands are consistently competing for the attention of the shopper, which is no easy feat. They are also trying to keep their heads above water as COVID-19 circumstances continue.
As retailers dive into 2021, there are things they can do to have an edge on competitors.
Harvest Group’s Recommendations for 2021 Walmart Comps
Evaluate Category Trends
Suppliers should look within their category because the current trends show item by item differences. That is, shoppers have very different needs than they once did.
For example, in grocery, most consistently, there has been an increased growth rate of 20-25% given shoppers’ desire to cook at home more given the pandemic. Retailers must adapt to these desires quickly and effectively.
With COVID Wave 1, there were COVID-specific items, such as the sanitizers and cleaning supplies mentioned previously, that saw huge demand increases. Walmart made the decision to increase safety stock and inventory levels on COVID items more so than non-COVID items given the increased demand for those products.
Pay Close Attention to the Details
Working with our Replenishment team, Harvest Group built a way to detect demand increases within our system, which will be flagged from a consumables and merchandise perspective to make sure competitive items are not experiencing supply constraints.
It is increasingly important to pay close attention to details and be constantly up to date with what’s happening within your Walmart business.
When planning for 2021 sales with our clients we look at all scenarios, laying out the possibilities, and pay close attention to trends within the marketplace. 2020 taught businesses about the potential spikes in demand. We have a better idea of the possibilities compared to this time last year.
We encourage brands to feel empowered, be proactive, and stay aligned with their buyer.
What Happens Next?
While nobody knows exactly what is going to happen (that’s what crystal balls are for, right?), our greatest pieces of advice are to: pay close attention to supply constraints, participate in active communication, acknowledge the possibilities, adapt quickly and effectively, and, of course, avoid those OTIF fines!
If you are interested in learning more, please feel free to reach out to us here at Harvest Group. We are more than happy to help.