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May 2009 | Vol. VIII - No. 5
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Followup: Toy Space at Wal-Mart

More Coverage of "Fast, Friendly, Clean" and Inventory Cuts

Thursday, May 28 — Wal-Mart Stores Inc. recently denied “new plans to reduce allocated shelf space for toys companywide” as a statement of response to a TDmonthly Magazine article, “Wal-Mart Cuts Toys and Crafts in Clean-Up Campaign,” written by TDmonthly contributor Lutz Muller.

While Wal-Mart has refuted inventory changes in toys and crafts across the Wal-Mart brand, Muller contends that information regarding the “fast, friendly, clean” message and its implications for inventory “has been around for awhile.” Therefore, although the number of stores that will be affected has not been publicized, TDmonthly is providing some additional information to give retailers and manufacturers a broader frame of reference in processing the data and its possible implications for the toy industry.

During Mattel’s Q1 Earnings Call, as logged in an April 17 transcript on Seeking Alpha, analyst Sean McGowan of Needham and Co. asked Mattel CEO Bob Eckert the following question: “Bob, can you give us a sense as to what extent you think Mattel might or might not be affected by some moves that WalMart is making to reduce its SKU count and inventory space for toys?”

This is one example Muller shared with TDmonthly. He also referenced a Feb. 17 RFF Retailer article that broadly mentions Wal-Mart’s “SKU rationalization program,” as well as comments about the retailer’s inventory reduction and “fast, friendly, clean” approach from Bill Simon, executive vice president and chief operating officer of Walmart U.S., as reported by The Morning News.

In an email, Wal-Mart expressed to TDmonthly concern that Muller used coverage of one store as a source for companywide plans.

“My statistical example relied on measurements which I personally took over a period in time in one of their Supercenters. To allege that this was an isolated case is silly. A Modular [the Wal-Mart term for Planogram] is set in Bentonville and applies nationwide for the store category for which it has been set — in this case their Supercenters," Muller said.

Muller's specific findings from the statistical example are below:

I measured the toy space footage in the store I cited in my report on 3/28, 4/20, 5/3 and 5/16. The space went from 3/28 to 5/16 as follows:

Backwall -- from 100 running feet to 64
Aisles -- from 725 running feet to 320
Endcaps -- from 27 endcaps and 1/2 aisle caps to 5 endcaps

I was told by the manager as well as other very credible sources that this change between 3/28 and 5/16 was the result of the "fast, friendly, clean" motto announced by Wal-Mart management earlier this year. I was also told that, yes, SKU counts would be sharply reduced but that all strong brands would continue to be represented [albeit at a smaller SKU count].

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Julie L. JonesWriter's Bio: Julie L. Jones has written articles for both newspapers and magazines. Before joining the staff of TDmonthly Magazine, she worked as a communications writer and provided editorial support for a market research company. Read more articles by this author

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