Walmart CEO Doug McMillon: To Drive Same-Store Sales, We Had To Build Up E-Commerce
It sounds counterintuitive, but with 15 straight months of same-store sales growth, McMillon, speaking at the NRF Big Show credits bringing bricks and clicks together.
Walmart CEO Doug McMillon took the main stage at the annual 2018 NRF Big Show to bat away notions of a “retail apocalypse” by attesting that global investments and e-commerce expansion have promoted local, brick-and-mortar business.
In an interview with NRF President and CEO Matthew Shays, McMillon corrected his interlocutor by pointing out the retail leader is on its 15th month of same-store sales growth at its 4,600 U.S. locations instead of 12.
When pressed for what “Walmart’s doing right,” McMillon pointed to the chain’s presence in 28 countries, including China, China, India, Japan, the U.K., as well as nations throughout Africa and the Americas.
Where Walmart Can Win
But the new era of Walmart’s growth was set with the purchase of Hoboken, NJ-based e-commerce startup Jet.com for $3.3 billion August 2016. In particular, McMillon praised the influence of Jet.com founder Marc Lore’s oversight of all things digital at Walmart for turning Walmart into an omnichannel force.
It’s worth noting that as Walmart is increasingly ramping up its challenge to Amazon, Lore had previously been an executive at the e-tail giant after it acquired his e-commerce portal, Quidsi. Amazon eventually shuttered Quidsi and Lore formed Jet.com.
“What we saw in Jet.com was a strong team,” McMillon said. “Marc is a merchant first, not a technologist. The first time we met we spent more time talking about customer merchandising than we did tech. So we really clicked. And that wasn’t just Marc, but many of the leaders within Jet.com. It really felt like kindred spirits and a culture that would naturally fit together very well.”
Jet.com’s Smart Card has also had an impact on the omnichannel focus for Walmart generally, McMillon noted.
“If you’re a customer on Jet.com, you can save money as a customer by making decisions that help us lower costs,” he said. “The Smart Card was a big idea. You use a debit card/credit card to save money, you get a return privilege on a consumable you’re never going to bring back. And as you do that, the retailer ends up with a bigger basket. And because of the value of ‘basket vs. reach,’ we’re happy to share those savings with the customer. The way that Marc and his team built that feature was really attractive to us.”
After Jet.com, which initially struck retail observers as incongruous since Walmart was viewed as a company that is as top-down traditional as it is large, Walmart moved to pick up what it viewed as other complementary brands and and tech platforms, including Bonobos, Moosejaw, ShoeBuy, and ModCloth, which is all overseen by Lore.
“We’re building up with the speed of an e-commerce business, and working together through people like [VP of creative] Greg Warren, who has done a masterful job of getting the stores teamed up with Marc to develop more seamless [online/offline] solutions for customers,” McMillon said. “That’s where we think we can win.”
What Retail Apocalypse?
At one point, Shays asked how Walmart regarded the threats of massive store closures — though the two didn’t touch on the planned shuttering of roughly 60 Sam’s Club, a Walmart’s subsidiary, over the next few months — and the talk of a “retail apocalypse” and “the death of retail.”
“To say that is to underestimate the creativity of those in this room,” McMillon said. “They only constant is change and that goes for predictions of retail’s demise. If you’re bored right now, you haven’t been paying attention.”
Nevertheless, despite saying “Walmart’s in a good place,” McMillon acknowledged the nature of change is never to get comfortable.
And that explained his investment philosophy when it comes to tech since becoming CEO in 2013.
“What’s happening is that we have brick-and-mortar stores that we want to keep making better,” McMillon said. “You can constantly be working on that, including making them more digital. We have an e-commerce business that we want to build, make bigger and stronger. We have a lot of work to do there, but we’re going on the fundamentals.
“What we think is so promising for us is that the customer, in the way they live their lives today and in the way we think they’re going to live their lives in the future, actually brings that store experience and that e-commerce experience together. There are many ways you can help people save time and have access to merchandise by using a combination of the two.”