Inaction Alley?

In an increasing number of Walmart stores, the most valuable stretches of real estate are coming off the market.The chain's legendary "Action Alley" is conspicuously empty in the roughly 200 stores that have been revamped by "Project Impact," Walmart's high-profile strategic roadmap for reshaping its store design, merchandise mix, pricing strategy and promotional activity over the next three years. Announced in October 2008, the umbrella plan unites a spate of back-room practices with initiatives to improve store design and the customer experience. Among its objectives, Project Impact aims to enhance the "clarity" of Walmart stores by reducing merchandise assortment and -- evidently -- the number of secondary displays. Walmart will bring the remodeling elements of Project Impact into another 500 to 600 stores during 2009 and, according to public statements by vice chairman Eduardo Castro-Wright, will reach about 70% of all discount stores and supercenters in the next three years. The company plans to convert all stores by 2014.If Walmart stays on schedule, Project Impact will deliver a reality that many product marketers (not to mention display manufacturers) dread: an Action Alley that is entirely clean. (Readers: Tell us what you think.)While Walmart has been quite open about many components of Project Impact, it has remained vague when discussing the glaring changes in Action Alley. The company has yet to confirm or deny whether the aisles are 100% empty in all Project Impact stores, or whether future stores will exhibit the same clean-aisle policy. But according to numerous sources, the display guidelines for Project Impact stores bar merchandising vehicles from these primary aisles.During a fall 2008 presentation to investors, Castro-Wright declared that, "The clean store has more to do with uncluttered stores than anything else." He referred to remodeled supercenters -- with barren Action Alleys -- in Bentonville and Rogers, AR, as providing "a sense" of the retailer's new look. "Regardless of nomenclature - Project Impact, clean-store conversion, etc. - it is common knowledge that Walmart is actively expanding, evaluating and evolving its overall customer experience initiatives," said Patrick Sbarra, president of Rogers, AR-based display manufacturer New Creature, which handles many product-vendor accounts for Walmart. "A critical in-store merchandising objective is the reduction of "visual noise" to create more clarity for the customer."Walmart reportedly turned off the "noise" in Action Alley to improve sightlines for store departments and facilitate the navigation into them. Under the chain's traditional layout, "the customer had to walk into a pad quite a bit before finding all of the merchandise that we have to offer," said Castro-Wright, identifying the apparel and home categories in particular. By clearing away displays from the central alleys, he said, "customers consider us in categories that they were not considering us in before."The clean-aisle strategy reportedly has generated positive results for some departments: In a recent 30-store test, the chain left "no features in Action Alley ... so our customers [could] actually see into the Home pad much more easily and see what's featured there from a price standpoint with the strong signage," said Linda Hefner, executive vice president, home, during the 2008 investor presentation. As a result, she said, those stores generated a 1.7% sales improvement in the home category.Suppliers in some categories, however, may have reason to fret. Elizabeth Bishop, vice president of creative services for NBC Universal, interprets the clean-aisle guidelines to mean "nothing in Action Alley and no temporary footprints," restrictions that don't bode well for an impulse-driven category such as DVDs. Universal's "E-Center" fixture, an H-shaped pallet that merchandises recent releases and catalog titles, sits near the electronics department in Action Alley. The display "comprises a significant percentage of our sales," says Bishop. In clean-aisle stores -- where the "E-Center" has no place -- the company has seen a "significant decrease in sales.""Any category that is an impulse category is going to be at risk in the clean-floor stores," she adds, naming batteries and salty snacks as other examples. "They are going to be hard-pressed to maintain market share." Other suppliers believe the clean-aisle policy offers some flexibility. "Even in a clean store, there may be -- when appropriate -- seasonal opportunities such as the Black Friday Blitz for pallet displays in the store," says Sbarra. And, in fact, a few Project Impact supercenters still deploy pallets of seasonal merchandise in the stretch of Action Alley that separates the grocery and general merchandise departments.One supplier, speaking on anonymity, notes that even the most rigid clean-aisle requirement will not automatically persist in a fickle retail market. "Don't be surprised if, 1,000 stores into this, Walmart's store design starts to evolve into something else. Walmart is the gorilla, they can do whatever they want. It's hard for anyone to say they're on a marching path and, by the end of four years, all stores will look like this."Walmart's commitment to be a "Store of the Community" also factors into the design and merchandising of each store, said the supplier. "A clean-store prototype may be appropriate in one city in one season, but may not be appropriate somewhere else."Merchandising AlternativesWhile Project Impact may ultimately cut off Action Alley from many product marketers, the plan does not yet limit other secondary display opportunities. Suppliers confirm that clean-aisle stores still accept endcaps, PDQs, sidekicks, signage and other temporary vehicles.Clean aisles direct more attention to endcaps, and Walmart is adjusting its configurations accordingly. The chain is experimenting with high-capacity endcaps that run deeper into the gondola and higher off the ground to hold more product and provide visibility from three sides rather than one. The chain has also incorporated alternate display vehicles into its endcap presentations. Pallets, for instance, comprise the bottom half of some endcaps, a tactic primarily used to merchandise packaged goods from a single manufacturer. On other endcaps, larger, more prominent sidekicks are affixed to the sides."In a clean-aisle environment, there exist many opportunities for suppliers to create bold, relevant, clear and compelling endcap displays," said Sbarra. The lack of secondary displays also shines greater light on the Walmart Smart Network, the chain's upgraded digital-advertising system, which places screens airing ads for the merchandised product in the center of five endcaps. The network, which will be in all stores by the end of 2009, is also touted as a pillar of Project Impact.Bishop, however, doesn't see as much promise for the entertainment category, where Universal's DVD titles are being merchandised on a high-capacity endcap. "I don't find it visually engaging," she says. "I don't know if it's going to sell more product and do anything other than hold more capacity. I don't know if it's best for the consumer."She also wonders whether her category will benefit much from in-store media. "I think it works for a category like vegetables because it offers solutions, and maybe for brands because [there is] already awareness. But if it's a promotional sell, I'm just not sure how effective that is."On the other hand, Bishop does see opportunities in Walmart's self-proclaimed "Hot Spots," which denotes sections within ladies apparel, seasonal and other departments composed of permanent four-ways, gondolas and other freestanding fixtures. (See Sidebar.)Bishop expects Walmart to keep the four-way fixtures, which typically carry vendor-supplied PDQs. "I do not really see those going out, even with a clean store," she says. "I think you can take a four-way and 'eventize' it fast and cleverly. Instead of sending in cardboard, you're sending in PDQ trays. That allows you to keep merchandise fresh but use a permanent footprint, instead of fighting tooth and nail to secure an impulse footprint."Some suppliers also point to the health & beauty and pet care departments as areas with secondary display opportunities in clean-aisle stores. The HBA category continues to employ a multitude of vendor-supplied endcaps, sidekicks and PDQs, including both corrugated displays and, increasingly, semi-permanent merchandisers made of plastic. The pet department's long gondola runs have been sliced into two smaller units, thus adding more endcaps. In some stores, four-ways carrying shelf trays sit between the two gondolas.Bishop envisions a similar concept in the electronics department, suggesting that the existing 20- to 30-foot gondolas could be halved to add her company's revenue-driving "E-Center" pallet. "The department would still be compliant with the overall box, but [would] not lose impulse sales," she said. "I don't know what happens when consumers have to veer inside the aisle, but it's something that I think is obvious to try."The clean-aisle policy gives suppliers like Bishop even stronger impetus to innovate. "Suppliers that relied heavily on frequent Action Alley presence for unit and sales lift are being challenged to get creative inside the box," said Sbarra. "The suppliers who act quickly and bring innovative programs to market fast will continue to thrive."

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