The CEO of the world’s biggest retailer has his hands full with a big job. Doug McMillon, who replaced Sam Walton’s heir apparent Lee Scott in 2009, has refocused Walmart’s strategy since becoming its chief executive six years ago.
He has pushed back against rising organized retail crime, which is costing retailers billions of dollars in inventory losses and extra security expenses.
Creating a People-Led Culture
When Doug McMillon arrived as CEO of Walmart in 2014, the company was facing more challenges than it had in years. The world’s largest retailer was under threat from online competitors, enduring labor strife and the overall sluggish economy. Its stock lost more than a quarter of its value and was trading well below where founder Sam Walton had left it. And it was still saddled with a corporate culture that was often adversarial to the people on the front lines.
McMillon, who had previously been the chief executive of Walmart International and spent many years first at Sam’s Club then running its global operations, was determined to put a stop to that. He began by refocusing the business on its employees. In February, he announced that Walmart would raise wages for associates to $9 an hour this year and $10 next year, a move that made headlines and prompted rival retailers to follow suit. He rolled out new training programs and removed so-called zone managers from the mix to give more responsibility to the front lines.
But McMillon knew that simply addressing these immediate issues was not enough. He had to make sure the company was positioned to thrive in a new era of retailing. And that meant reimagining the store experience and investing in technology.
He brought the leadership of a tech-savvy business to bear in transforming the company, making it easier for customers to find what they’re looking for on digital and physical platforms. And he did so by leveraging the talents of the employees who make the experience happen.
I caught up with McMillon recently at one of the company’s newest retail experiments, a “pickup-grocery” located just a couple of miles from its headquarters in Bentonville, Arkansas. The facility is not a traditional store, but a small warehouse next to a parking lot where shoppers can drop by to pick up items they’ve preordered on their smartphones. To do so, customers sign in with a code on a kiosk then pull up to one of 33 spots where a Walmart employee wheels their order out on a dolly.
Reimagining the Store Experience
In his more than two-decade career at Walmart, Doug McMillon has unloaded trucks in a warehouse and helped lead a $2.4 billion acquisition in South Africa. He’s been one of the world’s biggest buyers of teen sportswear, Halloween candy, and potpourri, and he has been a champion for private-label baby formula.
Despite these challenges, McMillon has rarely appeared flummoxed. And that’s why so many are rooting for him to succeed. During his keynote at NRF’s Retail’s Big Show this week, the CEO spoke candidly about his plans to reinvent the company in an increasingly tech-driven marketplace.
The first order of business is to create a more people-led culture. “One thing I’ve learned about running a large organization is you have to embrace change,” he said. That means providing employees with more training and empowering them to make decisions at the front lines. It’s an approach that has worked for other companies, too.
But it’s only a small part of the equation. McMillon also knows that to keep Walmart competitive in the new retail era, the company needs to revamp its physical stores, too. And that’s a daunting task.
He says the company is looking at ways to reimagine its physical stores in a way that’s more relevant and efficient for customers, using technology to drive innovation and give shoppers an experience they can’t get anywhere else.
One example is a plan to use robots to help customers navigate the store and find what they need. Another is a test to use self-driving vehicles to transport inventory, which could eliminate a lot of manual work for workers in the warehouses.
McMillon has a healthy paranoia when it comes to keeping Walmart on top of its competition. He keeps a photo on his phone of the top retailers over the decades to remind himself that so many come and go. But he’s optimistic that the company is uniquely positioned to redefine retail.
And that’s because, he says, the company offers a unique combination of online speed and a billion square feet of space (a land area twice the size of Manhattan) that allows customers to shop however they want. That’s what he calls the “omnichannel” strategy.
Embracing Technology
As Walmart’s CEO, McMillon has always made it his mission to bring the company into the future without disrupting its heritage and legacy. He’s a man of action, and he knows that speed is key when it comes to change management. But his first day in his new role was a little confusing.
When he arrived at his modest office, it was the same room with cheap wood paneling that has been home to each of the previous three chief executives going back to Sam Walton himself. But as he looked at the 15-by-17-foot space, he noticed something was missing. “I didn’t know where to sit,” he said.
In the years since he joined Walmart in 1998, McMillon has been an executive all-star, helping grow the retail giant into the global juggernaut it is today. He has worked in every part of the business, from unloading trucks at a warehouse to spearheading $2.4 billion acquisitions abroad. He is credited with bringing e-commerce to the mainstream, and he has led a massive turnaround at Walmart’s struggling U.S. stores.
But he’s also been working hard to create an even more modern Walmart, one that isn’t afraid of technological disruption and that can keep up with its larger competitors. That includes modernizing the company’s supply chain and technology stack, transforming the way teams work together, and embracing innovations like grocery pickup and online ordering.
The result of this work is evident in the company’s recent results. Its established stores saw comp sales increase for the eleventh quarter in a row, and its e-commerce business grew by double-digit percentages. Walmart also is deploying next-generation warehouse robotics that will help it improve inventory and delivery accuracy.
But while the company’s moves are laudable, it can’t afford to rest on its laurels. During his presentation at CES, McMillon discussed how the company is continuing to make changes in other areas. It’s investing more in its workforce, including raising the minimum wage for workers to $10 an hour. It’s creating teams led by African-American employees to understand the impact of systemic racism on America and making changes to corporate processes related to promotions and pay. And it’s engaging with community organizations to help them solve problems that the big retailer can’t.
Creating a Better World
In his more than two-decade career at Walmart, McMillon has unloaded trucks in a warehouse, helped lead a $2.4 billion acquisition in South Africa and championed private-label baby formula. Through it all, he has rarely, if ever, looked flummoxed or lost his way. That’s why, when he says the company needs to change course in the face of declining customer traffic and a rising competitive threat from Amazon, his employees believe him.
As CEO, McMillon is reworking the half-century-old playbook that built the world’s largest retailer into a $400 billion behemoth. That includes refocusing the organization on customers and bringing in new technologies to better compete with Amazon, which has emerged as the retail industry’s dominant digital darling.
McMillon is a hands-on executive, whose approach to leadership has been to get out of the boardroom and listen to people from all walks of life. He knows that hearing directly from consumers and employees is the best way to understand how the company is doing. That’s why he has made it a point to ride with truck drivers, meet with grocery store clerks and visit warehouses.
A big part of the reinvention involves improving the quality of life for Walmart’s employees. In a move that shocked Wall Street several years ago, the company invested billions in raising worker wages and created innovative programs for workers to earn debt-free college degrees. These changes have helped lift morale, which in turn has led to more customer-friendly stores.
The company’s efforts also include testing out a number of other technologies, such as robotics to scan inventory and identify items that need to be replenished, image analytics to determine product popularity, automated pickup towers in stores for online orders and self-service stations in parking lots for picking up digital purchases. These efforts will help the company deliver on its promise to “Save money. Live better.”
McMillon will bring his vision of a “people-led, tech-powered” future to CES 2024, where he is scheduled to deliver the keynote address. It’s a far-reaching talk that will describe how Walmart is using its massive reach and scale to improve lives, communities and the planet.
