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THE NEW ERA

BALTIMORE - As the top buyer of fresh foods in the country, Wal-Mart Stores faces enormous challenges managing perishable departments, an official with the chain said.Bruce Peterson, senior vice president and general merchandise manager of perishables, discussed the effort involved in selling fresh foods at a breakfast session at the International Fresh-Cut Produce Association's Fresh-Cut Expo here."I've

BALTIMORE - As the top buyer of fresh foods in the country, Wal-Mart Stores faces enormous challenges managing perishable departments, an official with the chain said.

Bruce Peterson, senior vice president and general merchandise manager of perishables, discussed the effort involved in selling fresh foods at a breakfast session at the International Fresh-Cut Produce Association's Fresh-Cut Expo here.

"I've worked in the supermarket business for 36 years and I've watched the evolution of the fresh channels," said Peterson, who started his career at the Bentonville, Ark., chain before it offered any fresh food. "It used to be that you'd take out your Ginsu knife and slice and dice and then you'd have a salad. Now you open a bag and pour some dressing and you have a fresh salad.

"The orientation of the customer has become really important, so at Wal-Mart we're selling bags of fresh-cut salad in the produce department and single-serve salads with protein are sold in the deli near sandwiches."

During Peterson's career, management of the traditional produce channel - the section where he got his start many years ago - has proved to be especially difficult.

"The challenges of managing fresh produce are really tremendous," he said. "The produce industry is probably one of the only industries where when the product is at its worst, it's

most expensive. When the ingredients of a fruit cup, for instance, are in season they will be good, but if the contents aren't in season we have to get them offshore and they might not be as good.

"We're very thoughtful about how much product we have on the shelf at one time and how often we replenish it. Ultimately, we want the consumer to be satisfied and we'll do everything to ensure that. If a person has a bad experience with a particular brand of salad, they're not going to blame the manufacturer, they're going to hold Wal-Mart responsible."

The unique logistical challenges posed by perishable products are compounded by the retailer's scale.

"We try to anticipate consumer trends and understand where the customer is going and how we're going to be best suited to position ourselves for that," Peterson explained.

"I start thinking through different merchandising schemes and I'm not asking myself about the different strategies that I can put into place, I'm thinking about what I can execute to scale. A lot of times, Wal-Mart gets criticized about its fairly basic merchandising schemes but there is good reason for them. The more complex the scheme, the more labor-intensive it becomes and the more training required," he said.

"If we decided that we'll need to expand our refrigerated space by 40% to accommodate [additional fresh-cut produce], we can't just change on a dime. We're creating 275 new supercenters each year and we also have to consider going back and retrofitting our stores with the refrigerated casing."

Still, consumer expectations carry a lot of weight. At Wal-Mart, they are gauged through comprehensive point-of-sale information, consumer marketing and surveys, and collaborative work with suppliers.

"The information that the supplier provides about the consumer is more important than the actual products they provide," Peterson said. "The consumer is the most important thing and we're making it a much more collaborative effort with suppliers when we think about consumers."

In that spirit, Wal-Mart has begun to tailor its stores to the specific shopping patterns of local demographics.

"People in New York shop differently from people in Florida and so many huge chains fall short by never tailoring those consumers' shopping experiences to the local demographic," Peterson said. "If someone offers me a Diet Pepsi and I like Diet Coke, then I'll just opt for water instead. Fruit is one of the most personal products you can offer and we want to ensure that customer experience."

Recalling his job interview with the late Wal-Mart founder Sam Walton, Peterson said he was especially charmed by the amount of attention the visionary lavished upon him.

"It didn't make a difference to me whether I got this job or not because I got the chance to meet Sam Walton and he was one of the most interesting individuals that I've ever met," he said. "Typically, in settings like those, people have other distractions but during our conversation he made me feel as if my answers to every question had the success of Wal-Mart depending on what I was going to say."

Peterson noted the late founder might be taken aback by the retailer's enormous growth, he said.

"I don't think he ever intended Wal-Mart to become the largest retailer in the world. He was one of those people who believed that if he took care of his customers one at a time, one store at a time, then the rest would take care of itself," Peterson said. "He did, however, recognize that the engine that was Wal-Mart could really do something like this.

"The thing that would have surprised Sam the most would be the kinds of criticism we're getting. During Sam's time he just worried about supporting his organization out of Arkansas and now Wal-Mart is being accused of everything. We spend time addressing those issues and at the end of the day it's made us a better organization, but it's definitely a distraction."