Walmart is making two major changes to its stores to make shopping easier.
First, the retailer is cutting down on the number of products it sells in its giant supercenters, the Wall Street Journal’s Sara Nassauer reports. Instead of selling six different sizes of the same brand of ketchup, for example, the stores will only sell one or two sizes of the condiment.
The retailer has already cut roughly 2,500 items from its supercenters, which typically carry about 120,000 products, according to Nassauer.
Walmart is also making a change to its store aesthetics. The company is lowering the height of shelves near checkout areas by roughly one foot to make it easier for shoppers to see the whole store when they walk inside, Nassauer reports.
That may seem like a relatively minor change, but it will “wipe out hundreds of millions of dollars in annual sales of gum, candy, and magazines,” she writes. We reached out to Walmart for comment and will update when we hear back.
Both decisions by Walmart are causing friction with suppliers, because they will result in lost sales, according to Nassauer. But Walmart needs to improve its stores to drive traffic and sales growth.
Walmart’s stock took a beating this month when the company revised its profit and sales outlook for the year, saying profit could drop by as much as 12 percent next year and that sales this year will likely be flat, compared to growth of 1 percent to 2 percent that was predicted in February.
The news sent shares plunging by as much as 10 percent, marking the retailer’s worst one-day drop in more than a decade.
Walmart’s problems stem in part from its business model, which is becoming outdated, according to some analysts. For decades, Walmart reaped huge profits by keeping employees’ wages low and using its massive share of the retail market to negotiate the cheapest prices from suppliers.
But now Walmart is raising wages to attract and retain workers in an increasingly competitive retail labor market, and that’s eating into profits. The retailer is also facing growing competition on pricing and ecommerce from a number of companies including Amazon, Costco, and Aldi.
Walmart has been investing heavily in its stores and in ecommerce to fend off its rivals. The company recently brought back greeters to its stores to improve customer service and hired “asset-protection specialists” to check customer receipts and help reduce theft.
Walmart has also been pouring money into its online business. The company planned to invest between $1.2 billion and $1.5 billion in ecommerce this year and will spend even more next year, Walmart Chief Financial Officer Charles Holley told analysts in February.
Walmart has been using the money to make its website more user-friendly, open additional ecommerce fulfillment centers around the US, and expand the number of products available for purchase on its website.
The retailer also recently began authorizing store managers to match prices found on Amazon and other websites to better compete with its rivals.