Following several reports last spring on the inconsistent and sometimes poor condition of the produce on store shelves, Walmart announced plans last June to improve the quality of the fruits and vegetables it sells. (Problems in produce, of course, exemplify the negative effects that Walmart’s persistent understaffing has on store operations.)
So how’s it going in the produce section these days? At a Goldman Sachs event last week, Walmart U.S. President (and CEO heir apparent) Bill Simon spoke about the company’s efforts to improve its produce business, including third-party quality inspections in Walmart stores.
Here’s the good news: More stores are passing produce quality audits! Yay! Fresh produce!
Here’s the bad news: The audits are basically rigged, and Bill Simon is totally cool with that. Huh?
This is what he told the Wall Street analysts in the audience:
The audit process has been real interesting for us. We are not above teaching the test just for the record, the audit is of produce and we tell the stores they’re going to be audited and they’re audited regularly on produce. And the idea is if you teach the test they ought to get the test right, and if you tell them what to study then they will study the right things.
A-ha! No wonder more stores are getting passing scores on the quality audits!
This is the second time in recent months that Walmart has engaged in some funny business with audits: In May, a month after reporting on Walmart’s problems keeping shelves stocked, Bloomberg wrote that Walmart ended its practice of doing secret audits. Instead, stores began labeling items that would be included in third-party in-stock audits with bright green dots so that store worker could focus on making sure those items were fully stocked.
In case you were wondering what the point of rigged in-stock audits is, take a look at Proposal 4 from the company’s shareholder meeting last June, which (unsurprisingly, given size of the Walton family’s stake in the company) was approved: The proposal asked shareholder to approve several amendments to the Management Incentive Plan (MIP) for executive compensation, including adding on-shelf availability as a performance measure for awards under the MIP.
Whether it’s “teaching to the test” in produce or putting bright green dots on shelves, it seems Walmart brass is more interested in having audit results that look good rather than real, robust audits that capture what’s actually going on in stores.