Feeding Walmart

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RICHARD GONZALES HAS ON his shopping list many of the same items as consumers making their weekly trips to the supermarket: apples, cherries, potatoes, onions.

The difference is in the quantities being purchased. Consumers are looking to fill a grocery cart. Gonzales is hoping to fill truck trailers and railroad freight cars.

And while those consumers want to feed hungry mouths around the family dinner table, Gonzales hopes to satisfy the voracious appetite of Walmart, the nation’s biggest retailer.

Gonzales is a senior director of global food sourcing for Walmart and head of its Yakima Valley buying office, which buys Northwest fruits and vegetables directly from growers and packing houses in the region.

Walmart buys a lot of Northwest produce, including 400 million pounds of tree fruit from Washington producers in the past year, the company says, as well as 15 to 20 million pounds of potatoes and 80 million pounds of onions. Between 70 and 75 percent of the apples and cherries Walmart sells across the country comes from Washington.

It wants to buy even more and make more of those purchases directly, rather than through consolidators or brokers. Established in 2009, the buying office has grown from one employee to 10.

In part, the move reflects Walmart’s need to fill the shelves of its growing network of grocery stores, including in Washington where it was a relative latecomer to food retailing. The company opened three stores—in Bellevue, Lynnwood and Spokane Valley—in October 2012 alone, bringing its total to 58. It has plans for more, including a new Tacoma location, possibly opening in 2013.

But Walmart also believes there may be some competitive advantages to running a direct-buying operation. “A lot of our job is making sure we have product on the shelf,” Gonzales says. “Having that communication with the grower allows us the opportunity to make sure we’re giving the customer the best product at the best price and making sure it’s regionally relevant.”

What Walmart gets, he adds, is real-time information about what’s going on with the crops it plans to market to customers. What does production look like this year? What constraints and issues do growers face? What new varieties are growers planting and harvesting that might do well in stores? “That [information] doesn’t come when you meet with salespeople on a quarterly basis,” he says. “It comes when you’re out in the field on a weekly basis, developing these relationships.”

Scott McDougall, co-president of Wenatchee-based McDougall & Sons and general manager of the company’s orchard operations, says getting such information is important to retailers because of the change in Washington’s apple industry during the past decade, from when most of the state’s output was in red or golden delicious. “It’s more important that they be out here and get a little more familiar with all the varieties that are out there,” he notes. Gonzales adds that Walmart can also use its volumes of data about customer purchasing patterns to match varietal flavor profiles with those regions where they’re likely to do well.

What growers get is access to Walmart’s vaunted distribution network, which includes a major center in Grandview, just minutes from many of those growers and packing houses the company deals with (although Walmart also buys from ag producers west of the Cascades, too). It also gets a customer buying in quantities.

“We’re almost a hedge for a lot of growers doing business with us because they know they’re going to get paid, which is a big part of doing business. They get paid timely by us, they have a certain amount of business that’s sold at a sustainable price for them and they’re not subject to the whims of the market,” Gonzales explains. “The growers like the fact they can move a lot of product with us. We need them as much as they need us.”

While Walmart has a reputation of being tough on price negotiation withs vendors and suppliers, Gonzales says, “We tend to pay what we have to to make sure we have product in our store. Walmart pays a fair price; I would challenge you to find someone who says we don’t pay a fair price who’s doing business with us.”

McDougall, whose company packs about 4 million boxes of apples and pears a year, likes the direct-sales model between retailer and marketing representative (McDougall & Sons owns a portion of Columbia Marketing International, a fruit packer and shipper).

“I don’t see any downside,” he says. “It’s all been positive from the standpoint of having somebody closer and having people come to look. ... They’re stringent on their quality but their sales mechanism’s a lot better” than the older model. “We know that if we can put quality in the box,” the grower will get a good price for the product.

Being as big in the agriculture business as Walmart is in retailing is not an essential for supplying the company. Gonzales says his office deals with growers ranging in size from as few as 15 acres to operations with thousands of acres. What is required is compliance with food-safety rules and Walmart’s internal sourcing requirements.

But with consolidation reducing the number of retailers (while increasing their size), the trend is having an effect on the producer side as well, notes Desmond O’Rourke, a veteran Northwest agricultural economist and publisher of World Apple Review.

“Large operators like Walmart and Kroger need large volumes of fruit every day of the year,” he says. “Price is important, but not being out of stock is just as important. The best way to ensure security of supplies is to deal with the big, integrated grower-packer-marketers. It is too risky trying to buy the volume of the desired varieties from many small growers.”

Having an office in the growing regions isn’t unique to Walmart, which has similar offices in California and Florida. McDougall notes that Kroger, which owns QFC and Fred Meyer, has had such an office in the state. Topco Inc., a Chicago company representing multiple retailers, also has a Yakima buying office.

“The largest retailers have had offices in producing regions like Yakima on a fairly erratic basis,” O’Rourke says. “When they are doing a large volume of buying, they like to have personal relationships with the major shippers. Those buying offices tend to come and go as retailers expand or contract, as the philosophies at central purchasing change, and as fads in use of telephone or internet buying come and go.”

Retailers such as Walmart like local buying offices “to enhance their ‘buy local’ credentials or to cut out the middlemen,” O’Rourke adds. That latter goal hasn’t worked out quite as planned, he notes, since “apples have more frequently been in short supply than not, so Walmart has been unable to apply much leverage on suppliers. In addition, most Washington apples now are controlled by integrated grower-packer-marketers like Rainier or Stemilt, so the distinction between growers and middlemen [like packers and marketers] has become academic.”

Whatever the track record of direct-buying offices, Walmart’s venture in the Yakima Valley will be closely watched by everyone in the business, from growers to competing retailers and even to consumers paying attention to what’s in the produce section of their local stores.

Walmart has proven to be hugely influential not only for its size, but also for its growth, its buying and pricing policies and its logistical capabilities, so the mere fact that it’s Walmart doing it will prompt others to consider whether there is merit to the effort.

Gonzales believes there is. “We’re in touch with what’s happening on the growing side, and having that connection allows us to have a deeper understanding of what the growers go through as well as what we can do for our customer,” he says. “Obviously, we want that to translate into some sort of benefit.”

Dining: Collective Consciousness

Dining: Collective Consciousness

It’s Josh Henderson’s world; here's your guide to eating in it.
| FROM THE PRINT EDITION |
 
 

Ten years ago, Josh Henderson left a sweet gig cooking for photographers on location in Los Angeles to start a food truck in Seattle called Skillet. It did quite well, expanding with help from equity partners into four brick-and-mortar diners and a catering company. 

Henderson left the Skillet Group in 2013 to again do his own thing, that being the Huxley Wallace Collective (named for Henderson's two sons). Today, he’s the brains behind 10 restaurants, eight of them coming to life this year. While it’s impressive and challenging to open so many locations in quick succession, the real story is Henderson’s vision. Food and flavor are important, but equally, or more so, is the diner’s experience. 

Each restaurant is stylized. “We want to create joy and a sense of discovery for our guests,” says Henderson’s creative director, Matthew Parker, largely responsible for the look at each venue. “To Josh’s credit, he has put design on the same level as customer service and food, which is really new.”

Don’t know where to start? Use this primer to tell the restaurants apart and experience them for yourself. Find more info at huxleywallace.com.

QUALITY ATHLETICS
Pioneer Square | 121 S King St.
The name: “I wanted something a little kitschy and a little ambiguous.” 
The vibe: A 195-seat sports bar on steroids.
What to order: Jerk-spiced duck wings seasoned with cinnamon and cayenne, with pickled pomegranate seeds and lime yogurt ($12). 

WESTWARD
North Lake Union | 2501 N Northlake Way
The name: Inspired by a painting Henderson saw in a ship-supply store. “I saw it and it stuck in my head.”
The vibe: A yacht club for misfits.
What to order: House-made potato chips served with tonnato and capers ($12).

GREAT STATE BURGER
Downtown | 2041 Seventh Ave. 
Laurelhurst | 3600 NE 45th St.
The name: “We were going for something generic but that also drew on the state pride we have.”
The vibe: From the cornflower blue color scheme to the crinkle-cut fries and cheery polka-dot burger wrappers, Great State Burger is Americana on Prozac.
What to order: Steaming hot french fries ($3) are a must with the organically raised grass-fed beef burger ($5.50). Add an 8-ounce shake featuring locally made Parfait ice cream ($3.50). 

BAR NOROESTE
Downtown | 2051 Seventh Ave.
The name: It means “northwest” in Spanish. Enough said.
The vibe: Small, dark and sexy, with charred-wood elements and blue-gray-green concrete Mexican tiles that change color depending on the light shining through the street-front windows. 
What to order: Tacos for two — 10 handmade tortillas with your choice of two proteins, served with chef-paired veggies, dressings and a selection of house salsas ($45).

SAINT HELENS CAFE 
Laurelhurst | 3600 NE 45th St.
The name: A nod to our lopped-off mountain to the south. “The ‘saint’ was the part that showed a bit of brasserie,” Henderson says. “I also just like how the words look.”
The vibe: Bright and feminine, with mismatched vintage china, gold cutlery and locally made pink paper flowers. Super intimate. 
What to order: Slow-braised chuck in a spring onion soubise with charred savoy cabbage and demi sauce ($24).

SCOUT 
Downtown | Thompson Hotel | 110 Stewart St.
The name: “A scout is a youthful explorer, and we consider ourselves explorers of creating excellence in food and service while being playful ...," says Parker.
The vibe: Playful but high end and rooted in the materiality of the region, with reclaimed Douglas fir wood tables, cream linen drum shades and upholstery in mix-and-match wool plaid fabrics.
What to order: Trout with smoked artichoke cream, braised artichokes and clams ($25). 

THE NEST 
Downtown, Thompson Hotel | 110 Stewart St.
The name: “The Nest is about being at the top of the tree … where we nurture and feed you,” Parker says. 
The vibe: A little bit of Hollywood on the Thompson Hotel rooftop. (Ages 21 and over.)
What to order: Tableside oysters with a crisp Washington rosé.

These three open in August

CANTINE BOTTLESHOP& BAR 
South Lake Union | 513 Westlake Ave. N
The name: “I needed a simple name for a beer-driven watering hole,” Henderson says.
The vibe: An industrial beverage lab.  
What to order: Country ham with cheddar cheese, pickles and mustard on a milk roll.

POULET GALORE 
South Lake Union | 513 Westlake Ave. N
The name: “A cool name with a James Bond reference,” says Henderson.
The vibe: Like a market in Paris with the perfectly cooked rotisserie chickens to go.
What to eat: A whole, half or quarter chicken with kicky chimichurri sauce and crispy chicken-roasted potatoes.

VESTAL
South Lake Union | 513 Westlake Ave. N
The name: A Roman reference to the hearth, which, to Henderson, means home. “This place [is] my home base, where I’ll be cooking,” he says of the 49-seat restaurant. He’ll cook here three nights a week. 
The vibe: A masculine, midcentury-modern living room with walnut paneling and a 350-year-old Douglas fir stump fashioned into a hostess stand.  
What to order: Ricotta gnudi with roasted pork broth, hazelnuts, sorrel and Washington truffle.