By Sarah Nassauer
BENTONVILLE, Ark.--The vibe is "Shark Tank" meets speed-dating,
with a side of "Superstore."
At the headquarters of Wal-Mart Stores Inc. here, dozens of its
buyers held half-hour meetings earlier this month with hundreds of
prospective suppliers touting products--from frozen deep-fried
turkeys to toddler dirt bikes--all eager for a chance to land on
the shelves of the world's largest retailer.
Scott Bonge, a Little Rock, Ark., investor and father of three,
was trying to interest Wal-Mart in his plastic shaving stencil, the
GoateeSaver. With sales of shaving gear falling as more men embrace
scruff and beards, Wal-Mart is looking for different shaving
paraphernalia to sell.
The product "came out of my own need for something to keep my
goatee looking even back in college," Mr. Bonge told Jason Kloster,
senior buyer for personal care at Wal-Mart.
Mr. Kloster then drilled down into how many American men have
goatees. Without an exact answer, Mr. Bonge noted that they are
popular in the South among men over 25.
"I've been in the category for four years and I've never heard
of your brand," Mr. Kloster said. "Your biggest challenge is
awareness." Mr. Kloster suggested selling the device on Walmart.com
to test demand before offering it in stores.
The daylong event provides a window into the relationship
between Wal-Mart and its suppliers as well as the influence
retailers haven't just on selecting the products on their shelves
but on how those products appear.
These meetings serve a clear purpose for prospective
suppliers--a shot at vaulting into retail's big leagues. For
Wal-Mart, the purpose is more subtle. New suppliers bring risks of
inexperience and untested products. But the retail giant is on a
mission to improve its 4,600 U.S. stores and part of that is
overcoming a reputation of stocking cheap imported goods. Pursuing
new suppliers, whose products at least partially are made in the
U.S., could help it attract new shoppers and add momentum to a
recent run of slightly better U.S. sales.
Since taking the helm in early 2014, Chief Executive Doug
McMillon has been working to make Wal-Mart's stores better. The
company--which has annual sales of $485.65 billion, 60% of which
are generated in the U. S.--is trying to fix its fresh grocery
experience and has raised the company minimum wage to motivate
store employees to keep its shelves stocked and stores neat.
Wal-Mart's same store U.S. sales have increased slightly the last
three quarters and traffic has the last two.
Wal-Mart billed the event--Made in USA "Open Call"--as a way to
boost its support for products made or assembled in the U.S. For
Wal-Mart shoppers, where a product is manufactured comes second
only to price in their on-site purchase decision, Matt Kistler, the
retailer's head of global customer insights, told the gathered
businesses in a presentation.
U.S. manufacturing is a thorny issue for the retailer.
Wal-Mart's purchasing power and its dogged pursuit of low prices
has drawn criticism for driving the production of goods offshore in
the first place.
This is the second year in a row that Wal-Mart has held the
event, which it advertises in newspapers and other outlets. Many of
the participants received invitations because they were on the
radar of Wal-Mart buyers. Wal-Mart won't say what its acceptance
rate is for pitches made during the Open Call. Those who do get a
shot at Wal-Mart often are given a small run in a few hundred
stores, so as not to overwhelm their startup businesses.
In a long hallway lined with small conference rooms at the
Wal-Mart headquarters, buyers grilled the mostly small-business
owners about market research, peppered them with questions about
social-media strategy and prodded companies to make improvements to
packaging. A unifying mantra was price.
With executives from Blamtastic, a company pitching adult
diaper-rash spray, Wal-Mart buyer Staci Cochran quizzed the
Atlanta-based company about its pricing plans in a discussion about
the size of the bottle. "Wal-Mart absolutely cannot be beat on
price," said Ms. Cochran, senior buyer for over the counter
pharmacy. "To win at Wal-Mart make it under $10."
Jacob Moore, the retailer's merchandise planner for health and
wellness, analyzed the mock packaging of the yet-to-be-released
product called BootySHYSpray. "You can use this billboard much
better," he said, examining the spray can. Mr. Moore suggested a
bigger font for some phrases like: "No messy hands."
Karen Posada knows that getting into Wal-Mart doesn't lead to
immediate success. The 36-year-old Austin, Texas, resident started
supplying Wal-Mart with $4.99 organic pasta sauce about two years
ago but sales haven't been strong enough to make a profit.
Part of the challenge was an unexpected competitor: Wal-Mart
itself, which started selling an organic store brand version for
under $2, a price point shared by other nonorganic sauces on the
shelf, undercutting her sauce.
"I'm thinking I've won the lottery and all of a sudden your
product is not moving," said Ms. Posada, who co-owns the
Austin-based business with her mother.
She says she made other missteps too. She started out selling in
about 300 Wal-Mart stores scattered around the country far from her
production facilities in Texas and New York. The cost of shipping
glass jars ate into profits. Wal-Mart tried to help by placing her
sauce at eye level on shelves and pulling back distribution, but it
didn't make much of a difference.
She now has something new she thinks will work at
Wal-Mart--veggie smoothie and juice pouches, priced around
$1.80.
"We've learned we need a '1' in front of our price," Ms. Posada
told Paul Renn, Wal-Mart's category team director for produce and
floral, as he sipped her new beet, tomato and pineapple drink. The
Good Promise pouches are refrigerated. so they can be sold near
produce, a more desirable part of the store, said Ms. Posada.
"Dry grocery is tough," because sales of those foods are falling
overall, Ms. Posada told Mr. Renn. "Yes, it's a beast," he
said.
Mr. Renn nodded approvingly as he tasted, noting the pouch will
stand out on refrigerated shelves now filled with juice in bottles
often priced slightly higher.
"Anything under $2, you are gold," he said.
Write to Sarah Nassauer at sarah.nassauer@wsj.com
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