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Walmart to unveil stricter on-time delivery requirements

BY David Salazar

Walmart is revising its on-time delivery goals while bringing some transparency to its supplier base, according to a report from Reuters. The changes are being announced this week at the company’s Supplier Growth Forum at its Bentonville, Ark., headquarters.

Walmart reportedly will announce changes to its delivery changes, which are aimed at boosting its revenue by $1 billion through improved product availability. Under the new rules large suppliers will be required to meet an 85% on-time goal or face a 3% fine on the cost of the goods being delivered — this an increase over the previous 75% on-time goal, the report said. Additionally, smaller suppliers will need to up their on-time deliveries from 33% to 50% or face a fine.

“We have reduced inventory in stores in order to have the right amount of stock and have made significant progress in the past few years,” Walmart’s U.S. chief merchandising officer Steve Bratspies told Reuters. “We want to focus on improving that even more.”

Also as part of its Supplier Growth Forum — and its efforts to compete with Amazon — Walmart will be offering suppliers its On Shelf Customer Availability data at the forum. These data had previously only been for internal use, Reuters said.

To read the full report, click here.

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Lidl bound to rebound in 2018, Daymon says

BY Michael Johnsen

Daymon on Monday reported that more than 63% of consumers surveyed indicated that Lidl’s entry into the U.S. market had exceeded their expectations.

And yet Lidl’s U.S. debut, by many accounts, fell flat.

“While there have been mixed reports about Lidl’s initial U.S. success, rest assured, they are in for the long haul,” Daymon noted in its first-ever Private Brand Intelligence Report. “Lidl has a proven track record of adaptability if they are faced with market challenges or in a position to gain a competitive advantage. … Lidl in 2017 is not the Tesco of 2009 when the company launched its ill-fated ‘Fresh & Easy’ U.S. concept. Being a private company that does not answer to shareholders has its benefits, and Lidl is not arriving at the start of a recession either.”

So what happened?

“We don’t believe Lidl put their best foot forward, likely due to their rush to enter the market and inability to meet minimums,” Carl Jorgensen, director thought leadership for Daymon, wrote. “But that doesn’t mean they won’t succeed over the long haul. One of our predictions about Lidl is that because they are privately held and have resources, they have the luxury to work on this and to learn from their mistakes.”

While Lidl is expected to improve in the coming year, own brand-focused retailers in search of strategies to build upon private label success stories won’t have to look far. According to Tom Stockholm, CEO Experticity, the biggest retail success of 2017 was the introduction of Nordstrom Local. “The new store is only 3,000 square feet and while you can return or pick up online orders at the store, there’s not actual inventory,” he told Daymon. “The whole purpose of the physical store is to delivery expertise and help customers have better buying experiences. The trend of increasing the customer experience will be increasingly important as the buying landscape continues to evolve.”

Other own brand success stories include Walmart’s focus on digital, as evidenced by its launch of Uniquely J, a digital-only own brand for its Jet.com platform. “We designed Uniquely J for e-commerce and not for a store, though it could be sold in a store,” Dan Hooker, general manager, private brands, Jet.com and Walmart ecommerce, said at the time of the launch. “Really three things went into developing this brand, such as quality ingredients. … We also took into consideration the things that millennials find to be important, like fair trade and sustainably sourced. That was the foundation of the brand.”

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Amazon to form healthcare company with 2 partners

BY David Salazar

Amazon is teaming up with two big-name companies to create a new healthcare company. Amazon, Berkshire Hathaway and JPMorgan Chase will form an independent company that they said will address health care for the companies’ employees with the aim of lowering costs and improving satisfaction — outside a focus on profit making and other constraints.

The initial focus of the new company will be tech solutions that can make quality, transparent health care accessible at a manageable cost, the three companies said. They noted that this new long-term venture would leverage the scale of each of them alongside their various specialties.

“The healthcare system is complex, and we enter into this challenge open-eyed about the degree of difficulty,” Amazon founder and CEO Jeff Bezos said. “Hard as it might be, reducing healthcare’s burden on the economy while improving outcomes for employees and their families would be worth the effort. Success is going to require talented experts, a beginner’s mind, and a long-term orientation.”

The three companies bring significant financial and operational scale to healthcare. Berkshire Hathaway had $27.4 billion in comprehensive income for the full-year 2016, Amazon is projected to report earnings around $177.3 billion for its full-year 2017 on Thursday and JPMorgan Chase controls $2.5 trillion in assets. Amazon also brings to the table its Whole Foods retail footprint.

“Our people want transparency, knowledge and control when it comes to managing their healthcare,” JPMorgan Chase chairman and CEO Jamie Dimon said. “The three of our companies have extraordinary resources, and our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans.”

The effort currently is in the planning stages, and its initial formation will be helmed by Todd Combs, a Berkshire Hathaway investment officer; Marvelle Sullivan Berchtold, who is a managing director of JPMorgan Chase; and Beth Galetti, an Amazon senior vice president.

“The ballooning costs of healthcare act as a hungry tapeworm on the American economy,” Berkshire Hathaway CEO Warren Buffett said. “Our group does not come to this problem with answers. But we also do not accept it as inevitable. Rather, we share the belief that putting our collective resources behind the country’s best talent can, in time, check the rise in health costs while concurrently enhancing patient satisfaction and outcomes.”

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