Walmart’s sourcing team made a fundamental change in its supply chain model a handful of years ago that recognized the size of the company, its growth aspirations and the outsized role that Mother Nature can play in the produce sector.
Himes said that Walmart has large national and international suppliers as well as a developed locally-grown program. “Ideally, a supplier can support at least one D.C.,” she said.
Himes added that often the small locally-grown operators work with a larger supplier, who handles the Walmart logistics, on a co-management basis.
Mundo revealed that in launching this sourcing model, Walmart did ask its suppliers to make philosophical commitments that aligned with Walmart’s value proposition. On top end of that list were a commitment to growth, be customer obsessed and offer operational excellence. The retailer also asked its suppliers to think about regeneration, which Walmart colloquially describes as leaving the campsite in better shape than when you arrive.
Regeneration is a concept that is at the pinnacle of Walmart’s promise as a company. Several years ago, the retailer announced that it was focused on being a regenerative company and bringing its suppliers along with it.
Himes revealed that the change in the supply system did result in some suppliers not being able to continue to participate, but she said the effort was and is collaborative as Walmart continues to work with its suppliers to transition them to what is still a work in progress.
“We spend a lot of time with our suppliers, and we know it has to be a win-win situation,” she said.
She added that the smaller, regional suppliers that participate in the locally-grown program are very important to Walmart and its customers. For example, customers in Walmart’s home state want Arkansas tomatoes when they are in season and the produce supply team makes sure they are featured in the local stores.
In defining what she believes is the typical supplier experience, Himes said she hopes suppliers believe the prices they receive for their products are fair. “I think suppliers know that we will fight for less cost but that we are fair.”
Mundo added that the company’s every day low price (EDLP) mantra is not just achieved on the collective back of its suppliers. He noted that Walmart takes extra effort and tremendous pride in taking costs out of their own operations to help lower the price of the product to its customers. In fact, the retailer has two automated perishable distribution centers in Shafter, CA, and Lancaster, TX. In the coming years, two additional high-tech perishable distribution centers will open in South Carolina and Illinois.
Mundo freely admitted that Walmart’s reputation as a seller of high-quality fresh produce and other fresh items was not stellar a decade ago. “We have evolved,” he said. “We feel very strongly about the changes we have made, and we are super happy with our progress.”
He said a measure of the company’s ability to provide its shoppers with top-quality fresh produce is its growth in sales.
“We’ve doubled our produce sales in some categories over the last four to five years — and attracted new customers,” he said.
Himes added, “We’ve come a long way and we are a lot better than we were, but there’s always more to do.”
The company’s top produce executives believe other benchmarks of its success are the volume of its online sales, the growth of organics and the proliferation of brands in Walmart — both private label and the country’s top commercial brands. “We are a house of brands,” Mundo said.
Walmart sources the industry’s top brands as well as using its own private labels, including its own Marketside brand.
Himes said that organic produce is important to Walmart customers and sales are strong.
She also commented that the certified USDA organic seal is helping to drive those sales and continues to give organic producers a great sales tool. While other certifications do have followers in the marketplace, she said that the loyalty to the certified organic seal is a tremendous advantage and bodes well for the future of the category.
Speaking to the growth of both organics and in its online sales, Mundo believes that is also a measure of the strides Walmart has made in attracting higher income consumers to the retail brand. He noted that Walmart was ahead of the game and it had an early commitment “to win the digital space.”
He said digital customers are typically looking for top of the line brands and top-quality merchandise, especially in the fresh departments. The fact that Walmart’s fresh, online sales are robust, indicates the company’s sourcing team is doing an excellent job.
“We have an incredible story to tell,” Mundo said of the company’s digital fulfillment program. “We saw this coming and we changed the industry.”
Himes emphasized that the changes in its produce supply efforts came about through a team approach. “What makes us so strong is our team,” she said. “We have top notch merchandising, sourcing and replenishment teams. There are a lot of people that deserve recognition.”
She said the produce team includes sourcing and merchants who work together to source and buy produce and serve as the liaisons with the store operations teams.
Mundo singled out Himes, who he said has been a strong advocate for the changes that have been made since she joined Walmart more than a decade ago from the produce supply side. During her 30-year career, Himes has also worked for Chiquita, Driscoll’s, Sunnyridge Farms and Dole Fresh Vegetables. She is also an active participant in industry organizations and at industry events. In fact, in 2023 she served in the prestigious position of chair of the International Fresh Produce Association, the produce industry’s largest U.S.-based trade association.
Himes said she takes great satisfaction in working for Walmart, which she called a “people led, tech-powered company. We are a people business.” For his part, Mundo joined Walmart more than 20 years ago, with most of his Walmart career spent in the global sourcing arena, including stints in Argentina and Costa Rica before moving to the headquarters in Bentonville, AR, in 2011. He marvels at the size of Walmart but says the nation’s largest retailer has not maxed out. “We are still hungry for growth.”
