Former Wal-Mart exec reflects on career, looks to next challenge
Former Wal-Mart exec reflects on career, looks to next challenge
While he applauds the industry's current efforts with regard to food safety initiatives, former Wal-Mart produce executive Bruce Peterson believes that at least the same amount of energy should be spent on developing a sophisticated trace-back program.
"The problem in my mind is not food safety. The problem is the consumer reaction to an isolated outbreak in a given commodity," he said.
Mr. Peterson, who resigned March 31 after serving as the top produce executive for Wal-Mart for the previous 15 years, discussed food safety and a number of other topics in an hour-long interview with The Produce News in mid-April. His future of course, was top of mind.
"As I see it, I have four choices: I could stay retired, I could conceivably go to work full time for another company [in the produce industry], I could consult for several different companies or I could change careers and get into a different business," he offered.
As quickly as he laid out his choices, he somewhat dismissed the concept of retiring at such a young age (53) or trying his hand at a different business. "I expect to stay associated with the produce industry, and I think by the end of this month (April), 'the future' will become more clear."
For the time being, however, Mr. Peterson is enjoying playing golf and riding his new Harley Davidson motorcycle. He said that he enjoys both pursuits, but clearly the lack of a scorecard propels the Harley riding into first place. Back to food safety, the longtime retailer said that food recalls are common. "Clearly we are not going to completely stop isolated outbreaks," he said, due to the outdoor manner in which most produce is grown, which can create food-safety situations. "The key is a verifiable trace-back system. The consumer just wants to know that you have isolated the problem and removed it from the shelves. The spinach crisis became such a problem because it took so long to trace the problem back to the source. In fact, they still don't know exactly what caused it."
Mr. Peterson knows that because of the way produce is currently grown, packed, shipped and sold, creating a fool-proof, trace-back system is going to be difficult. "Sure it is hard, but what they are doing right now [to deal with the food safety issue] is also hard."
As the interviewed continued, he used Wal-Mart as an example often - praising the company but also discussing some challenges associated with working for the nation's largest retailer. "But I don't want it to be perceived that I have an ax to grind because I don't. Wal-Mart was very good to me."
Wal-Mart's size clearly made it both a pleasure to work for and also presented challenges, he indicated. "Everyone knows Wal-Mart is very big," he said, "but unless you are on the inside and see exactly how much produce we sell, it is hard to imagine."
Working for a very large, public company obviously had its drawbacks. First and foremost, he said that Wal-Mart is a general merchandise retailer, meaning that produce was not the king of the court. Mr. Peterson said that he had to face that reality as he dealt with upper management and with the realities of a public company, which basically needs good returns every quarter. Long-term gains sometimes have to be sacrificed for short-term performance because that is how a public company is judged.
"Ideally you are going to have a win-win situation but responsibility to shareholders is always going to come first - and it should," he said.
While there are things that private companies can do differently and even better because they are private, Mr. Peterson said, it is hard to argue with Wal-Mart's success.
"The same year that Sam Walton opened his first store, Fred Meyer did the same thing. Fred Meyer kept his company private and it grew to a nice 150- or 160-store chain. Sam Walton decided to take his company public and it is the largest retailer in the world," he said.
Though his years with Wal-Mart made him very adept at performing under the microscope of a public company, Mr. Peterson does not believe that being a public company is a good fit on the supply side of the produce industry. "Wall Street does not like oscillation," he said. "And let's face it, when you are in a commodity business in the produce industry, you can't always control your supplies."
He said that weather calamities like freezes can hurt the bottom line. "It's hard to meet Wall Street expectations when you lose 50 percent of your crop."
Mr. Peterson said that the key to the success of Wal-Mart's produce department is that "I always believed that I had to set the rules of the game. If the rules of engagement revolved around who did the best job of merchandising, then I am not going to beat Wegman's, for example. But if the rules of the game are about selection, variety and price, I can win."
As such, Wal-Mart is the world's biggest seller of produce to consumers. Mr. Peterson played his game and played it well. He is well known within the industry for believing strongly in creating a good relationship between Wal- Mart and its produce suppliers. He said that the relationship between buyer and supplier is much different in produce than in other departments, and this is one area where he said upper management at Wal-Mart did not always understand the way produce operated.
"I had to have good relationships with my suppliers," he said. "We all know that there are times when supplies are short and you [as a retailer] are relying on your supplier to take care of you. I also know that the supplier has to take care of his other customers as well."
Mr. Peterson said that these nuances of the produce industry were not always understood by his colleagues who were in charge of other departments. Basically Wal-Mart would never have any difficulty getting supplied as many light bulbs as it could sell, for example. The same can't be said for strawberries, peaches, melons or kumquats for that matter.
In looking at the produce-supplier community, Mr. Peterson had many nice things to say, but he also said that some grower-shippers didn't seem to see the big picture.
"Let's face it, just about every one wants a [purchase order] from Wal-Mart," he said. "But as grower-shippers came to me, I really wasn't that interested in what they had to sell. What I wanted to know is, did they understand my customer? That was the key."
He said that many grower-shippers accepted the Wal-Mart mandates or suggestions, but they did not embrace them as their own -- and he could tell the difference.
"Some grower-shippers did things for Wal-Mart just because we told them to, and it was just an extra cost," Mr. Peterson said. "But others took that information, treated it as an asset and leveraged it. Those companies are more successful."
He said that if one looks at a list of Wal-Mart suppliers, one would find a list of the best and most innovative companies in the business. "Best of class," he quipped.
But he did add that "it is unfortunate that more companies didn't" embrace Wal-Mart's initiatives and use them to propel themselves to a higher level. It is obvious in talking to Mr. Peterson that he loves the business and loves the art of retailing. In fact, just weeks into retirement, he said that what he missed most is the interchange of ideas with others.
"I got to interact with the brightest minds in the industry," he said. "Of course, I do a lot of reading and keep up with what's going on, but I miss that personal interaction."
Retailing is a complex endeavor and is not just about stocking shelves. A good retailer has to know its customers well and know the mix of products best for its marketplace.
Mr. Peterson said that more often, top personnel are being evaluated by gross margin. It is not just how much one sells, but how much profit a department sends to the bottom line. As such, prepared foods tend to have a greater gross margin than the standard staple items. Yet if there is not a good selection of standard staple items, the customer might not come in at all. Mr. Peterson illustrated this concept using a center-store item. "Take yellow mustard. It is not an exciting item, but if you come into my store to buy yellow mustard and I don't have it, you're pissed off. I haven't done my job."
Mr. Peterson said that the same concept works in the produce department, which has exploded in recent years with many new items, especially in the value-added category. But the majority of sales still revolves around staple items -the commodities. A successful retailer has to have both.
He admitted that traditional food retailing is becoming more difficult as retailers fight for share of stomach. Consumers have many options to fill their bellies, and it is difficult to know what that consumer is going to do in the future.
Mr. Peterson is certain that technology will continue to play an ever- increasing role. Wal-Mart was an early adopter of the radio frequency identification technology, and Mr. Peterson was its major proponent in the produce industry. And while some in the produce industry say that it has underperformed, he doesn't agree.
"People forget that it took about 30 years for UPC codes to be fully implemented," he said. "RFID is a major initiative. It is going to take time. It has only been a few years."
Mr. Peterson said that one of the things he is most proud of during his tenure at Wal-Mart is that the company did tackle the hard issues.
Pundits say that the next generation is not going to shop in supermarkets as their parents and grandparents did. They are accustomed to multi-tasking and do not like the idea of walking up and down the aisle in a single pursuit of filling their shopping carts.
But Mr. Peterson resists the concept of making blanket statements about human behavior. After all, he said, if Sam Walton had listened to what people said, Wal-Mart itself would still be just a dream.
"People said it would not work to take a discount store to rural America. But he proved them wrong," he said. "Wal-Mart has always been about change. Its culture of change and how to adapt to change has made it successful. I came to Wal-Mart in 1991, and Sam Walton died in 1992. People said we wouldn't be able to continue and be as successful without him."
Obviously that wasn't true. Growing up in his business life in that culture, Mr. Peterson is very much ready to adapt to the next big change in his life. And he is looking forward to it.
"The problem in my mind is not food safety. The problem is the consumer reaction to an isolated outbreak in a given commodity," he said.
Mr. Peterson, who resigned March 31 after serving as the top produce executive for Wal-Mart for the previous 15 years, discussed food safety and a number of other topics in an hour-long interview with The Produce News in mid-April. His future of course, was top of mind.
"As I see it, I have four choices: I could stay retired, I could conceivably go to work full time for another company [in the produce industry], I could consult for several different companies or I could change careers and get into a different business," he offered.
As quickly as he laid out his choices, he somewhat dismissed the concept of retiring at such a young age (53) or trying his hand at a different business. "I expect to stay associated with the produce industry, and I think by the end of this month (April), 'the future' will become more clear."
For the time being, however, Mr. Peterson is enjoying playing golf and riding his new Harley Davidson motorcycle. He said that he enjoys both pursuits, but clearly the lack of a scorecard propels the Harley riding into first place. Back to food safety, the longtime retailer said that food recalls are common. "Clearly we are not going to completely stop isolated outbreaks," he said, due to the outdoor manner in which most produce is grown, which can create food-safety situations. "The key is a verifiable trace-back system. The consumer just wants to know that you have isolated the problem and removed it from the shelves. The spinach crisis became such a problem because it took so long to trace the problem back to the source. In fact, they still don't know exactly what caused it."
Mr. Peterson knows that because of the way produce is currently grown, packed, shipped and sold, creating a fool-proof, trace-back system is going to be difficult. "Sure it is hard, but what they are doing right now [to deal with the food safety issue] is also hard."
As the interviewed continued, he used Wal-Mart as an example often - praising the company but also discussing some challenges associated with working for the nation's largest retailer. "But I don't want it to be perceived that I have an ax to grind because I don't. Wal-Mart was very good to me."
Wal-Mart's size clearly made it both a pleasure to work for and also presented challenges, he indicated. "Everyone knows Wal-Mart is very big," he said, "but unless you are on the inside and see exactly how much produce we sell, it is hard to imagine."
Working for a very large, public company obviously had its drawbacks. First and foremost, he said that Wal-Mart is a general merchandise retailer, meaning that produce was not the king of the court. Mr. Peterson said that he had to face that reality as he dealt with upper management and with the realities of a public company, which basically needs good returns every quarter. Long-term gains sometimes have to be sacrificed for short-term performance because that is how a public company is judged.
"Ideally you are going to have a win-win situation but responsibility to shareholders is always going to come first - and it should," he said.
While there are things that private companies can do differently and even better because they are private, Mr. Peterson said, it is hard to argue with Wal-Mart's success.
"The same year that Sam Walton opened his first store, Fred Meyer did the same thing. Fred Meyer kept his company private and it grew to a nice 150- or 160-store chain. Sam Walton decided to take his company public and it is the largest retailer in the world," he said.
Though his years with Wal-Mart made him very adept at performing under the microscope of a public company, Mr. Peterson does not believe that being a public company is a good fit on the supply side of the produce industry. "Wall Street does not like oscillation," he said. "And let's face it, when you are in a commodity business in the produce industry, you can't always control your supplies."
He said that weather calamities like freezes can hurt the bottom line. "It's hard to meet Wall Street expectations when you lose 50 percent of your crop."
Mr. Peterson said that the key to the success of Wal-Mart's produce department is that "I always believed that I had to set the rules of the game. If the rules of engagement revolved around who did the best job of merchandising, then I am not going to beat Wegman's, for example. But if the rules of the game are about selection, variety and price, I can win."
As such, Wal-Mart is the world's biggest seller of produce to consumers. Mr. Peterson played his game and played it well. He is well known within the industry for believing strongly in creating a good relationship between Wal- Mart and its produce suppliers. He said that the relationship between buyer and supplier is much different in produce than in other departments, and this is one area where he said upper management at Wal-Mart did not always understand the way produce operated.
"I had to have good relationships with my suppliers," he said. "We all know that there are times when supplies are short and you [as a retailer] are relying on your supplier to take care of you. I also know that the supplier has to take care of his other customers as well."
Mr. Peterson said that these nuances of the produce industry were not always understood by his colleagues who were in charge of other departments. Basically Wal-Mart would never have any difficulty getting supplied as many light bulbs as it could sell, for example. The same can't be said for strawberries, peaches, melons or kumquats for that matter.
In looking at the produce-supplier community, Mr. Peterson had many nice things to say, but he also said that some grower-shippers didn't seem to see the big picture.
"Let's face it, just about every one wants a [purchase order] from Wal-Mart," he said. "But as grower-shippers came to me, I really wasn't that interested in what they had to sell. What I wanted to know is, did they understand my customer? That was the key."
He said that many grower-shippers accepted the Wal-Mart mandates or suggestions, but they did not embrace them as their own -- and he could tell the difference.
"Some grower-shippers did things for Wal-Mart just because we told them to, and it was just an extra cost," Mr. Peterson said. "But others took that information, treated it as an asset and leveraged it. Those companies are more successful."
He said that if one looks at a list of Wal-Mart suppliers, one would find a list of the best and most innovative companies in the business. "Best of class," he quipped.
But he did add that "it is unfortunate that more companies didn't" embrace Wal-Mart's initiatives and use them to propel themselves to a higher level. It is obvious in talking to Mr. Peterson that he loves the business and loves the art of retailing. In fact, just weeks into retirement, he said that what he missed most is the interchange of ideas with others.
"I got to interact with the brightest minds in the industry," he said. "Of course, I do a lot of reading and keep up with what's going on, but I miss that personal interaction."
Retailing is a complex endeavor and is not just about stocking shelves. A good retailer has to know its customers well and know the mix of products best for its marketplace.
Mr. Peterson said that more often, top personnel are being evaluated by gross margin. It is not just how much one sells, but how much profit a department sends to the bottom line. As such, prepared foods tend to have a greater gross margin than the standard staple items. Yet if there is not a good selection of standard staple items, the customer might not come in at all. Mr. Peterson illustrated this concept using a center-store item. "Take yellow mustard. It is not an exciting item, but if you come into my store to buy yellow mustard and I don't have it, you're pissed off. I haven't done my job."
Mr. Peterson said that the same concept works in the produce department, which has exploded in recent years with many new items, especially in the value-added category. But the majority of sales still revolves around staple items -the commodities. A successful retailer has to have both.
He admitted that traditional food retailing is becoming more difficult as retailers fight for share of stomach. Consumers have many options to fill their bellies, and it is difficult to know what that consumer is going to do in the future.
Mr. Peterson is certain that technology will continue to play an ever- increasing role. Wal-Mart was an early adopter of the radio frequency identification technology, and Mr. Peterson was its major proponent in the produce industry. And while some in the produce industry say that it has underperformed, he doesn't agree.
"People forget that it took about 30 years for UPC codes to be fully implemented," he said. "RFID is a major initiative. It is going to take time. It has only been a few years."
Mr. Peterson said that one of the things he is most proud of during his tenure at Wal-Mart is that the company did tackle the hard issues.
Pundits say that the next generation is not going to shop in supermarkets as their parents and grandparents did. They are accustomed to multi-tasking and do not like the idea of walking up and down the aisle in a single pursuit of filling their shopping carts.
But Mr. Peterson resists the concept of making blanket statements about human behavior. After all, he said, if Sam Walton had listened to what people said, Wal-Mart itself would still be just a dream.
"People said it would not work to take a discount store to rural America. But he proved them wrong," he said. "Wal-Mart has always been about change. Its culture of change and how to adapt to change has made it successful. I came to Wal-Mart in 1991, and Sam Walton died in 1992. People said we wouldn't be able to continue and be as successful without him."
Obviously that wasn't true. Growing up in his business life in that culture, Mr. Peterson is very much ready to adapt to the next big change in his life. And he is looking forward to it.
