Shareholders hear strategy of 'new Wal-Mart'

CEO McMillon outlines retail chain’s ‘people-led, tech-empowered’ action plan

Wal-Mart President and Chief Executive Officer Doug McMillon told shareholders Friday that the company’s network of stores, distribution centers and e-commerce sites will be a winning strategy against the likes of Amazon.com.
Wal-Mart President and Chief Executive Officer Doug McMillon told shareholders Friday that the company’s network of stores, distribution centers and e-commerce sites will be a winning strategy against the likes of Amazon.com.

FAYETTEVILLE -- Wal-Mart Stores Inc. is reinventing itself to keep pace with the changes in retail, and President and Chief Executive Officer Doug McMillon believes that the company's technological capabilities, network of stores and efforts to better train and compensate its workforce have it uniquely positioned for success.

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NWA Democrat-Gazette

Country music star and television personality Blake Shelton served as host at Wal-Mart’s shareholders event Friday. Other performers included Shelton’s girlfriend Gwen Stefani, Ne-Yo, and Mary J. Blige.

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NWA Democrat-Gazette

Musical artist Gwen Stefani performs Friday during the Wal-Mart Shareholders Meeting at Bud Walton Arena in Fayetteville.

McMillon laid out what he described as the "new Wal-Mart" during the retailer's annual shareholders event, held at Bud Walton Arena on the University of Arkansas, Fayetteville campus Friday morning. He told the crowd of about 14,000 -- including employees from around the world, members of the Walton family, board members and shareholders -- that Wal-Mart's hefty investments in e-commerce and technology have been vital to its reinvention.

McMillon stressed technology isn't the answer to everything, indicating the company's success also will rely on its workers as Wal-Mart continues to battle other retailers for customers and sales.

"We will compete with technology but win with people," McMillon said. "We will be people-led and tech-empowered. We will win because we are purpose-driven, with clear and meaningful values and an effective and resilient culture. It will be our humanity that drives our creativity, powers our competitive spirit and keeps us out in front."

[VIDEO: Click here to watch full shareholders meeting in larger version]

McMillon's address was one of the final segments of the three-hour meeting, which blends business and entertainment each year. The event was no exception with country music star and television personality Blake Shelton serving as celebrity host. Gwen Stefani, Shelton's girlfriend, performed along with The Band Perry, Ne-Yo, Rachel Platten and Mary J. Blige.

Wal-Mart's primary emphasis during its pep rally was recounting the steps it has taken to prepare for what board Chairman Greg Penner described as the "tectonic changes in retail."

Penner opened the morning by pointing to headlines referring to the current climate as the "retail apocalypse" with other traditional brick-and-mortar companies closing stores, laying off employees and struggling to drive traffic and sales because of the rise of online competitors like Amazon.com.

Penner said Wal-Mart has positioned itself for success because of a number of decisions, including its $3.3 billion acquisition of Jet.com, e-commerce expansion and an emphasis on technology designed to both help workers do their jobs better and improve the shopping options for customers.

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Photos by Jason Ivester

The results have shown in the company's recent financial performances. Wal-Mart reported a 1.4 percent increase in U.S. same-store sales for the first quarter of the fiscal year, the 11th-straight quarter of growth. Traffic also increased for the 10th-straight quarter. At the same time, Wal-Mart reported a 63 percent growth in its U.S. e-commerce sales.

"Our business is moving in the right direction," Penner said. "The changes we made -- big and small -- are starting to pay off. But there's still a long way to go. This is no time to be timid. We have to continue swimming upstream."

Wal-Mart remains confident that the ability to blend its network of stores, distribution centers and e-commerce sites will be a winning strategy against the likes of Amazon.com.

McMillon and other executives highlighted some of the initiatives that have been adopted, introduced and tested by the retailer to accomplish it, including Thursday's announcement of a pilot program in which employees can earn extra money by volunteering to deliver packages to customers on their way home from work.

The delivery test is being conducted in three stores -- including an unspecified location in Northwest Arkansas -- and is voluntary for workers. McMillon said Wal-Mart will move slowly with the test, but executives are optimistic it will help speed the delivery time for items in those areas and help cut typically expensive final-mile costs.

"Just imagine associates all over the world delivering on the way home from work," said Marc Lore, the Wal-Mart U.S. e-commerce chief. "This could be a real game-changer."

Wal-Mart also revealed it has recently started testing a 24-hour automated grocery pickup facility in Warr Acres, Okla. The self-service test will let customers place orders online, drive to the facility and pick them up at an unmanned, drive-up kiosk. Orders are collected in 60 seconds or less.

Wal-Mart also continues to roll out its curbside grocery pickup service with plans to expand it to 1,100 stores by the end of the year. The company offers free two-day shipping on online orders totaling $35 or more and is giving customer an opportunity to earn discounts on online products if they choose to pick them up at one of the retailer's 4,700 stores.

"The historic trade-off between price and service doesn't really exist anymore," McMillon said. "We're creating a better shopping experience for customers and a better working experience for ourselves as we strive to serve them."

Some still believe Wal-Mart still has a lot of ground to make up to close the gap with Amazon.

"Wal-Mart is experimenting and trying to leverage its physical resources," said Annibal Sodero, an associate professor at the Sam M. Walton College of Business at the University of Arkansas. "But the only way for them to remain relevant will be to deploy a true omnichannel strategy across its entire supply chain to become more efficient and effective. They know that. They got that. They are just not there yet and they are losing the battle in both fronts."

Throughout shareholders week, Wal-Mart executives took time to reassure workers they remain an integral part of the company's equation, and McMillon continued to do so Friday.

The company is coming off a two-year, $2.7 billion commitment for wages and training for its employees and believes those efforts have made a difference in creating more efficient stores. In addition, executives continued to highlight a number of technological improvements that have been designed to empower workers as they serve customers.

McMillon encouraged employees to be "lifelong learners" as the company continues to lean on its workforce. He also highlighted a handful of workers who have excelled at their jobs, including a store manager in Canada who was informed by the company's CEO that he had received the promotion he had been seeking.

But McMillon said later Friday during a question-and-answer session with the media that it's possible the company has reached its peak with about 1.5 million U.S. workers.

McMillon said there may be fewer employees over time -- many through attrition in stores -- as the company learns how to be more productive with the help of technology. Those jobs could become better-paying positions, though, that involve technology in a variety of ways.

"The shape, the composition of our team may change," McMillon said. "I think that's to be determined."

Still, McMillon sees Wal-Mart as a "ladder of opportunity" for employees and said they'll remain critical to the company as it begins to "invent the future of shopping again."

"This is our moment," McMillon told employees during the shareholders meeting. "Our plan to win is clear and it'll be you who will make the difference. But it's always been that way. Our people make the difference."

A Section on 06/03/2017

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