Tested by COVID-19, Walmart Leaned on Supply Chain and Customer Service

As nonessential retailers temporarily closed during state lockdowns last March to rein in the spread of the deadly novel coronavirus, Walmart was bracing for demand.

Deemed an essential retailer allowed to stay open, Walmart was facing customers during what it denoted as the “stock-up” phase of the pandemic, when customers hunted down cleaning supplies, paper goods, dry groceries and consumables, said John Furner, president and chief executive officer of Walmart U.S.

Walmart executives in the U.S. looked to their counterparts in China for lessons they learned when the pandemic broke out first there, Furner said.

“We started by talking to our colleagues that were working in Walmart China,” he said. “I’d lived in China for a few years, and knew a few people there and knew who to call and that society had been through what we were about to go through a few months ahead of us. So we learned and we asked questions and we heard about the things they did to try to stay ahead of what the customers were going to need.”

Furner addressed the early inventory challenges Walmart’s stores faced in the spring, when soaring customer demands and lockdown panic cleared shelves. The retailer has also had to turn some retail store space into fulfillment centers to meet ongoing e-commerce demand. Products that saw some of the most demand were primarily what the company refers to as “stay-at-home” categories, as well as loungewear, home office and home improvement products, and hobby products, such as fishing equipment and even hair care.

“It’s been interesting to see and I’m sure one day we’ll look back through all the data and be able to identify what was selling when, and know a lot about what our customers were going through at that time,” Furner said.

Meanwhile, empty shelves during the earlier phase of the pandemic also reflected the “enormous strain” on the supply chain at the time, he said.

“There were literally weeks where the grocery distribution center network and the regional distribution center network were just pushing record volumes through,” he said. “And it puts a lot of strain on them and stress on them.

“At times, it’s easy to see what the end result is in retail, but you’re not always thinking about the truck drivers and the order fillers and the unloaders, who are doing so much of the retail work in the background,” he said. “The teams learned a lot about how to optimize the assortments, what needs to be in a store versus the fulfillment center and the marketplace.”

As cases continue to spike around the U.S., those systems are being tested again, even as some parts of the supply chain are still recovering. Some products, including food such as canned vegetables that are usually sold in the fall and packaged by manufacturers earlier in the year, are in short supply as inventories remain depleted.

“Even as we sit and talk today, the assortments are just more narrow than they would have been had this not happened,” Furner said.

“In the future, we’ll…hopefully we’ll never have to use this playbook again,” he said. “This is something that at least in our lifetimes we would hope to never experience again.”

Cases in the U.S. have resurged again in the winter months as people move indoors, and travel over the holidays, even as the CDC has issued cautionary alerts that holiday travel can spread the virus. In the past day, there were 193,454 new COVID-19 cases and some 1,311 recorded deaths, according to the Johns Hopkins University daily tracker as of Dec. 15.

Meanwhile, Walmart expects also that the new norms around daily activities and distancing will extend beyond the pandemic. As many white collar employees continue to work from home in 2021 and beyond, and mask-wearing remains a practice, the retailer is anticipating more demand for certain types of clothing and health-related gear, Furner said.

As the COVID-19 vaccines are starting to be deployed in the U.S., the CDC has been urging people to wear masks even after they receive the immunization shots, saying on its web site that “experts need to understand more about the protection that COVID-19 vaccines provide before deciding to change recommendations on steps everyone should take to slow the spread of the virus that causes COVID-19.”

“I talk to people all the time that tell me their employer has made a decision that they’re going to work remote, far beyond next year. I think those trends will stay around,” Furner said. “But definitely, health and safety equipment will be considered differently in this country I think for a long time. Mask wearing is not uncommon in parts of the world. It was unusual in the U.S. to see people adapting to wearing masks, now I think people are more comfortable with it.”

Walmart has also been expanding its fashion offerings, recently introducing its own casuals line billed “Free Assembly.” The retailer has been conscious about expanding its options in stores, online as well as on its online marketplace portal, Furner said. In recent years, the retailer has seen demand for other apparel brands including Reebok and Champion, which it carries in stores and online, he said. The retailer has more than a 1,000 clothing brands on its platform, and has sought to market itself as a fashion hub, its executives have said.

“We’re really improving the customer experiences that you’d find when you’re shopping for apparel and other fashion categories in each of the three channels,” he said.

“There’s a great variety that customers can find,” he said.

To meet the changing shopping patterns, the retailer super charged its hiring methods, bringing new staff on more quickly than its usual weeks-long hiring process, Furner said. The retailer has brought on some 500,000 people so far this year, with many new staff also working in curbside pick-up services — some 140,000 new staff work in pick-up this year, more than twice the number last year, according to Furner.

Some of those developments also reflect the retailer gearing up for potentially long-term changes in consumer behavior, he said, particularly in terms of their preference for ordering online and picking up at the store or having products delivered to them.

“Certainly, the customer is more digital, they’re shopping more at home, online, they’re looking for more delivery options, and I think those things are here to stay,” he said.

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