Empty Shelves, Cluttered Aisles: Walmart Woes, in Pictures

Scott Mushkin, founder and CEO of New Canaan, Conn.-based research firm R5 Capital, has been calling out what he sees as deteriorating conditions in Walmart stores in light of the Bentonville, Ark.-based retail giant's increasing e-commerce obligations—and the heightened labor needs that come along with fulfilling all of those online orders.

"I think the challenge that Walmart’s having is a little bit of over-promising on the click-and-collect business," Mushkin said in an interview with Winsight Grocery Business. To illustrate some of what Mushkin said he has observed in tours of Walmart stores from Maryland to Texas to Washington in the past several months, Mushkin took photos at three Walmart Supercenter stores in Willow Grove, Warrington and Warminster Heights, Pa., on March 25. 

Walmart has invested in exterior upgrades and updated signage in stores, Mushkin noted. Farther into the store, inventory challenges and disorganization related to restocks and fulfillment emerge, he said. 

"They paint the outside so that the building looks, from afar, pretty good," he said. "You first walk in and they're hitting you with the produce, and they obviously have some kind of program to make sure the bins of produce are full. You're hit with that, and you're like, 'Oh, OK, the outside’s nice.' "

"As you go in, you realize how much is wrong," he said. "We see this out-of-stock issue pretty much universally. ... You’ll go to one supercenter, and there will be a blank wall, and then you’ll go 10 miles away, and they’ll be thin, but there’s stock. So why are you [having] a blank wall someplace?" Mushkin shared this photo of sparse meat shelves at a Walmart store in Glenville, N.Y., during Walmart's Investors Day call on Feb. 18. 

Walmart will "have to get more labor in the stores" to better meet order-picking demands and maintain organization of stock within departments—to clean up literal and figurative messes, Mushkin said. But of equal importance, he said, Walmart should be charging for pickup orders. Curbside pickup and BOPIS require store associates to do the work that customers would ordinarily do, from finding items to placing them in a car trunk, and not charging for that extra labor is ultimately unsustainable, he said.

"If you’re not going to charge for that, there is no way it’s profitable; it’s impossible," he said. "You are giving the consumer an additional service; they need to pay for it."

"If the problems are left to fester, we see both short- and long-term sales pressure and the potential for a deteriorating brand reputation," R5 Capital wrote in its March 29 report on Walmart.

Walmart is investing heavily in automation-centric microfulfillment centers, but these take time to get up and running, and the in-store issues Walmart is facing demand immediate attention, according to Mushkin.

"The challenges that we saw within those stores are really throughout the country," said Mushkin, who says he has visited more than 50 Walmart Supercenters since January.