Last year, my colleague Steve Banker wrote a few postings about Walmart’s “Project Impact” initiative and the retailer’s quest to simplify its SKU selection (see “SKU Reductions in Consumer Goods Supply Chains” and “Walmart’s ‘Win-Play-Show’ Assortment Strategy”). At a Bank of America Merrill Lynch conference yesterday, Walmart U.S. Chief Operating Officer Bill Simon provided a quick summary on the results to date, as shown on the slides below (you can access the full presentation and listen to the webcast here).

Walmart's Project Impact Remodeling Schedule (Source: Walmart, Bank of America Merrill Lynch Conference, March 10, 2010; click to enlarge)

Walmart's Project Impact Performance (Source: Walmart, Bank of America Merrill Lynch Conference, March 10, 2010; click to enlarge)

In short, Project Impact (PI) has led to increased sales, decreased inventory, and a more positive customer experience. But Simon also said that Walmart has brought back about 300 items it had discontinued. Why? “You can discontinue items that don’t sell anything, but get you a [customer] trip [to a store]. We did discontinue some things…mostly in food and consumables, there were flavors, items, sizes that customers are very accustomed to and like very much and we disappointed them by taking them out.”

The net result is that if a customer knew they could no longer find a favorite item at Walmart, such as a one-pound bag of brown rice, they would go to a competitor and do all of their shopping there. “[We’d] lose an $80 basket or a $60 basket and not just the dollar for the one-pound brown rice,” Simon commented.

Also, the increased sales at the PI stores were after the remodeling was completed. According to Simon, “The Project Impact remodels are more severe…than our prior remodels, they are longer, and there are more of them than we’ve done in the past, and the traffic declines in the Project Impact remodels during the remodeling is deeper than we projected them to be and that was responsible for some of the traffic [and] sales decline.” Walmart made some changes in the latter half of the year to make the remodeling process more efficient. It is also doing more local advertising to entice customers to visit the stores undergoing remodeling, and associates have been trained to proactively help customers find what they want.

Bottom line: In initiatives of the size and scope of Project Impact and Win-Play-Show, these types of bumps in the road should be expected. How quickly you recognize these bumps and navigate around them is what’s important. My key takeaway from Bill Simon’s presentation is that Walmart is obviously using the vast amount of data it collects from its 140 million shoppers per week in the U.S., and the 500,000 survey responses it receives from customers each month, to make the course corrections necessary to achieve its long-term objectives.