Evolution, Paranoia and Low Prices at Walmart
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The Walmart Inc. charm offensive continues.
Doug McMillon, president and chief executive officer, and his top brass were out in force spreading the Walmart message — from the company’s shareholder meeting on Wednesday to an associate rally and webcast Q&A with Wall Street analysts on Friday.
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McMillon clearly feels he has a strong story to tell as the company seeks to grow profits faster than sales and continue its evolution from a huge yet straightforward retailer to a multifaceted merchant that can play in more spaces, including higher-end apparel on its online marketplace.
“We’re a people-led tech powered, omnichannel retailer dedicated to helping people save money and live better,” McMillon said at the company’s 53rd annual shareholders meeting. “We know who we are. We like who we are and we like who we are becoming.
“For fiscal 2023, we added $38 billion in revenue and we crossed $600 billion for the first time in our company’s history,” he said. “We drove strong results in the first quarter and we’re well-positioned for the rest of the year.”
Walmart operates more than 10,500 stores and also drummed up more than $80 billion in revenues online last year.
It’s the kind of scale that only Walmart has and it had McMillon, as usual, fielding questions from across the spectrum, from why the retailer engages in social issues to whether not recession is good for the discount giant.
So on Wednesday the CEO said: “We don’t wake up in the morning wanting to go and make social or political statements. We’re a retailer. We’ve been managing the incoming more than trying to initiate outgoing. We want everybody to feel comfortable shopping with us and choose Walmart. Everybody. And we want everybody to feel comfortable and excited about working at Walmart.”
And on Friday it was: “None of us are cheering for a recession in any country where we operate. We want our customers, families, members to have more money, not less money, and have growth. That’s what we want. We’d rather have that environment to operate in than the other. But value does matter in an environment where people are more price conscious. So we certainly care a lot about that.”
Walmart is both changing — adapting to a more digital world where Amazon popped up and threatened its dominance — and sticking to its core.
It’s a dual profile that can be seen in the company’s investment priorities.
McMillon told analysts that Walmart has been investing over a number of years on the prices it charges and the wages it pays — and has largely gotten to where it wants to be in those areas and is watching for gaps with competitors.
The other areas where it’s focusing funding are e-commerce and technology.
“We were store experts and we recruited e-commerce expertise and technology expertise in a variety of ways, including acquisition,” the CEO said, referring at least partially to the 2016 acquisition of Jet.com. “And if you fast forward to today and you hear how people think and what they know, including the people that are here and our broader group of merchants and operators, they are omni now. There’s a digital language.”
Walmart plans to keep moving forward, keeping up with the latest tech.
When asked about artificial technology, McMillon said: “Others will build it. Some of it will be open source, some of it won’t…And then the question is, who’s got the data? We have data, a lot of it. So we can apply our own expertise.”
But however tech-savvy Walmart becomes, its retail nature never seems to be far beneath the surface.
One example came when an analyst noted that inflation was covering up just how much share Walmart was taking from its competitors.
“How paranoid were you and are you that some of these guys will come a little unglued as inflation cools down and the volume losses are more exposed?” the analyst asked, referring to the impulse of retailers to cut prices to win back the business.
“Paranoia and humility are still at a high level here,” said McMillon — the paranoia part of that at least is classic retail.
But the CEO is also looking to move Walmart beyond that game too.
“We’ve got some things built into our plan and we have a business model transformation underway that gives us more flexibility,” McMillon said.
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