Walmart’s McMillon Believes SuperCenters Are Still Best Weapon Against Amazon
When you’ve been dominant as long as Walmart has, sometimes the brilliance of its leader is overlooked. To compare, in the 18 years he’s served as head coach of the Patriots how many times has Bill Belichick won coach of the year in the NFL? How about Greg Popovich whose 21-year record as coach of the NBA’s San Antonio Spurs makes him a first ballot Hall of Famer? What about Joe Torre, who helped take the Yankees to six World Series (winning four times) and compiled a better than .600 winning percentage during his 12-year tenure with the Bronx Bombers (answers coming later)?
That’s the case in my opinion with Doug McMillon, who in four years has turned around the biggest and once most bottom-heavy organization in U.S. retailing.
Every aspect of Walmart’s operation has improved – its stores are cleaner and better stocked; its investment in e-commerce has proven to be a big winner and most importantly, McMillon revamped a culture where the associates were apathetic because management saw many of them as movable pieces.
As I’ve said before, I believe McMillon’s greatest achievement was convincing the company’s board of directors (comprised of several Walton family members) to buy into shifting the company’s investment strategy away from bricks and mortar and into digital and e-commerce, especially seeking firms that drew a more affluent demographic.
That didn’t mean it would turn its back on the bellwether SuperCenters that made Walmart so feared for a 25-year period beginning in the late 1980s; it meant that the Behemoth needed to play catch up with Amazon if it wanted to maintain its dominance over the next decade and beyond. To begin its digital initiative, McMillon overpaid for jet.com ($3.3 billion) but with that purchase also acquired the talents of Mark Lore who has spearheaded walmart.com since the deal was consummated in 2016. Other niche acquisitions included Bare Necessities, Bonobos, Spark, Corner Shop, Parcel and Modcloth.
At the company’s annual investor’s day held at company headquarters in Bentonville, AR, McMillon said the digital acquisitions will continue, but reinforced the importance of its core SuperCenter presence and its low-price image.
With more than 3,500 U.S SuperCenters ranging in size from 105,000 to 210,000 square feet, the company’s combo stores are within a 10-mile proximity to all U.S. shoppers. In the past three years, Walmart has improved its once subpar perishables presence. Its vastly improved its private label offerings and the planet’s largest retailer has also introduced curbside pickup, which by the end of next year, will be available at more than 85 percent of its stores. It’s currently utilizing its own people and third-parties to deliver products to its loyal and growing customer base in areas such as New York City and the San Francisco market where it operates few or no stores.
And food is driving the equation – approximately 56 percent of Walmart’s $500 billion in annual revenue is derived from groceries.
“We’re adapting and transforming with speed to better serve our existing customers and reach new ones. We’re operating with discipline, balancing our short and long-term opportunities. While we’re excited about what we’ve done so far, we aren’t satisfied. As we execute today and build for tomorrow, our associates and unique omni-channel assets position us for success,”
McMillon told approximately 200 financial analysts who trekked to Northwest Arkansas to attend the half-day meeting.
Doug McMillon may be somewhat unsung, but he’s my choice for Retailer of the Year.
Oh, and here’s the answer to our trivia questions in the first paragraph. Belichick was named NFL Coach of the Year only three times; Popovich also won the NBA Coach of the Year three times and Torre won Manager of the Year (American League) only twice. Combined, these three coaching greats have won 3,132 games, led their teams to 14 world championships and compiled a career winning percentage of .615.