June 3, 2016

The story of Walmart

Remarks as prepared for Doug McMillon       

     I want to start today with a story. It’s about a customer-driven company that was founded with a purpose.

            In Chapter 1, Sam Walton set the wheels in motion. With his family and his growing team, he develops a discount store that brings low prices to underserved towns in the middle of America. Sam knew the importance of hard work. He knew the value of a dollar, and he wanted to help other people stretch theirs. This is where it all starts – helping customers get access to value, great merchandise and friendly service.

            In Chapter 2, Sam and the family attract strong leaders around them. It's impressive that Sam gives others room to shine. And it's even more amazing what they do with that opportunity. Together they launch a membership club business and they invent the Walmart Supercenter. One-stop shopping is incredibly convenient and the Supercenter becomes America’s favorite store. We learn new ways to use technology and share information with our suppliers, and we develop a national, best–in-class logistics capability.

            At around the same time, we see the opportunity to expand beyond the U.S. We believe the formula we’re developing will work in other countries. No one said it better than Sam Walton as he accepted the Presidential Medal of Freedom in March of 1992, just 3 weeks before he passed away. Listen to his words and see if you can hear our purpose:

"I thought we were quietly living our lives down here and getting by with it. It’s just wonderful to be recognized and awarded this way. We’ve had a lot of great leaders in this company and the greatest thing is we have ideas from all 380,000 people in the company. That’s the best part. We’re all working together. And I hope we can keep it going that way. That’s the secret, that’s the key.

If we can, we’ll lower the cost of living for everyone, not just in America but we’ll give the world an opportunity to see what it’s like to save and have a better lifestyle and a better life…a better life for all.

We’re proud of what we’ve accomplished. We think we’ve just begun. I can’t tell you how much we appreciate you coming to Arkansas. It’s the highlight of my career and I think the entire company. Thank you for this day. It will be a memorable day for Bentonville, Arkansas, forever and ever, and we’ll always remember and appreciate it. Thank you, sir.

            Did you hear him? He said: “We'll give the world an opportunity to see what it's like to save and have a better lifestyle and a better life…a better life for all.” Save money, live better. Our purpose is clear.

            In Chapter 3, the business continues to grow and our mindset continues to mature. We learn that we can, and we should, use the size of the company to influence the world for good. This is an exciting idea!

            We engage in sustainability. We improve the products we sell and the packages they’re sold in, and reduce our waste and energy use. We work with others – our suppliers, NGOs and universities – and together we do even more. We embrace our opportunity and responsibility to have a global impact for good...and we lead.

            Today, we’re writing Chapter 4. It started years ago and the headline is about technology. The Internet, mobile devices and the use of data have made new and exciting things possible. Some we can already see happening as e-commerce grows, smartphones change our lives, self-driving cars and virtual reality begin to appear, and digital assistants like Siri begin to connect us to information using only our voices.

            It feels like if we can imagine it, we can do it. What does that mean for us? It means we have the opportunity to reimagine retail, again. So, that’s what we’re out to do, and I’ll describe the work we’re doing in three steps.

Associates

            Step 1 is to support and enable our people: our associates. Our business began with our people as the first priority. That’s how it was, that’s how it is and that’s how it will be.

            We have been asking you what you need and doing our best to give it to you. Our investments in education and training, store structure, wages, hours and sales floor technology are to support you and enable you to serve your customers and members.

            Every associate has a role to play and when we all work together, the actions of 2.3 million of you add up to something big. Every time you put on the badge, you make a difference. When you smile at a customer and serve them. When you take pride in doing a job well. When you support and encourage your fellow associates, and do it all in a way that's consistent with our culture and our values. You're making a difference in the lives of your fellow associates and your customers, and, just as importantly, your own.

            Our people make the difference is not just a phrase we use. It's what we believe.

            I want you to meet Dwight Blanton. Dwight works in our Supercenter in Jacksonville, AR. He’s worked with us for five years and is known for his great customer service. He’s going to school to get his degree and he’s a Walmart scholarship recipient. He’s supporting his parents, and he volunteers at a homeless shelter in his community. And get this, he’s a veteran and serves in the Army Reserve! 

            One more thing, Dwight recently applied for a promotion. Dwight – How would you like to be an assistant manager? Congratulations, Dwight.

            You know, a lot gets said about Walmart. What I see is a lot of special people in this company like Dwight – people who are working hard to build a better life for themselves and for their families. I think it's cool that 75 percent of our U.S. store management started as hourly associates. More than a quarter of a million people like Dwight earned a promotion last year. And we spent more than four times as much on associate wages and benefits last year as we made in profit.

            As the world becomes more digital and we have such a focus on technology, it will be the humanity of Walmart, the associates of Walmart, who make us special. It will be you.

Customers

            So, step 1 is all about you, our associates. Step 2 is about our customers. We serve nearly 260 million customers each week in 28 different countries, through multiple store formats, apps, and e-commerce sites.

            So what do customers want from us? And what can we dream up on their behalf?

            Customers count on us for low prices. We will always save people money so they have something left over each month for their children’s education, to make a mortgage payment, or do whatever they want with it.

            Remember what Sam said: We’ll show them what it’s like to save money and have a better life. We save people money so they can live better. Say the “live better” part with me: We save people money so they can live better.

            What does it mean to live better? Part of living better is not just about money but time. It’s about being able to invest your time in the people and the life you love.

            My dad is here today and when I was younger he’d say to me: “Doug, one of the differences between us is that I’ll spend time to save money, and you’ll spend money to save time. The problem is that it’s my money, son.” He was right. There were times when I’d spend his money, and now my own, to save time.

            Dad, I’m not the only one! Busy families are prioritizing their time. They’re juggling competing demands from kids, their work, staying fit and just having some fun.

            So, sometimes it’s easier to stop at a Neighborhood Market or place a pickup order on their phone and grab it on the way home from work. Customers want to be able to shop on their terms – not ours. By connecting the online world with the offline world, we can make our customers’ lives easier and more enjoyable.

            The customer you see on the screen is named Robyn. She lives in Kentucky. And over the course of her typical month, she shops with us in a Supercenter, a Neighborhood Market, with grocery Pickup and on the app. And I want you to see this Facebook post of hers from a few months back:

            She wrote: “Luke started running a fever at school today, so I was SO glad I finally broke down and ordered my groceries online last night. Having someone bring your groceries out and load them up for you while you sit in the warm car with your sick baby is priceless. I need to find out who came up with this brilliant idea and KISS THEM ON THEIR FACE. #lifechanger”

            This is our ambition globally: We want to make every day easier for busy families. We’re connecting all the parts of Walmart into one seamless shopping experience: with great stores, easy pickup, fast delivery, and apps and websites that are simple to use.

            So how are we doing? We’re making progress around the world. I’m excited about our work in China. We’ve strengthened our stores, built a modern supply chain, and are moving aggressively with pickup and delivery. In the U.K., where this all started for us, our grocery home shopping service at ASDA now covers almost 99% of the country! We are developing pickup or delivery capabilities in 11 countries across the globe.

            Here in the U.S. there’s a renewed strength in the business. Our associates are more engaged, the merchandise is improving, and our inventory flow is better. We’ve rolled out online grocery pickup in nearly 40 markets. We’ll have Walmart Pay in every store by the end of this month to make our checkout experience faster and easier. And we’ve recently made announcements about: an unlimited two-day shipping option from Walmart.com and the rapid expansion of our online assortment. And this morning we’re excited to announce we’re working with Uber and other innovative partners to test deliveries to customers from our stores and clubs.

            We’re moving fast, and there’s more to come. We’ll be there for our customers – making their lives simpler and better. And customers will choose Walmart because we’ve earned it.

Communities

            What else does it mean to live better? It’s about more than just money and time, so the third step is about serving communities.

            Our customers care about their neighbors, their planet, and their children’s future. They want to buy products that are good for the environment and the people who made them. They want items that are safe and healthy for their families. And ultimately they want to spend their money with a retailer they trust. Trust is our most important asset. We earn trust by operating ethically and compliantly, in a way you and your family can be proud of. We'll do that, and more.

            Let me give you an example. Take an item like breakfast cereal. Many cereals come from corn, and here in the U.S. we get much of our corn from the Midwest. The challenge is that too much fertilizer for crops like corn, wheat, and soybeans can be a major source of pollution. In this case, it affects drinking water locally and wildlife downstream in the Gulf of Mexico.

            So two years ago, we convened some of our strongest supplier partners and NGOs, and we began working with farmers like Tim Smith, who has been a leader in this effort. Over two dozen of our suppliers committed to work with us to optimize fertilizer usage, and to employ other practices like crop rotation and cover crops. By taking these steps, we can help improve yields, retain nutrients in the soil and protect the water supply. And we can help many more farmers like Tim make a difference in their communities.

            We have efforts like this all across the globe. We’re working with small farmers in Costa Rica, Brazil, China, South Africa, and many other countries. We’ll help meet the challenge of producing food for a growing population while reducing environmental impacts and improving farmer livelihoods.

            Customers want food they can trust, and we’re the place to get it.

Results

            So that’s what we’re doing: moving with purpose in those three steps. As we do these things well, our shareholders benefit. Our total revenue last year reached $482 billion. We generated nearly $16 billion in free cash flow and returned more than $10 billion to shareholders.

            We’ve now had seven straight quarters of positive comps at Walmart U.S. and, as we said in October, we aim to add $45 – 60 billion in new growth over a three-year period. That's like adding last year's combined annual revenues of Netflix, eBay, Whole Foods, and Starbucks to our topline in just 3 years!

            There’s momentum building in the business. It’s real. We can feel it. And with all 2.3 million associates around the world pulling in the same direction, we can build on this momentum.

Closing

            So let's do something a little different. I want to bring even more of our associates into the conversation right now by going live on Facebook.

            I want to say hello to every Walmart associate out there watching. We wish you were here with us. I’ve got some of your fellow associates who want to say hello!

            I’ve been coming to Shareholders meetings since I was 16 when my dad bought some shares in Walmart. I’ve always dreamt about having all of us here in one room. We’ve never been able to do that – but we're trying today virtually.

            Now that we’re all here, first and foremost, I want to say thank you for everything you’re doing. I want you to know we care about you and that you’re appreciated.

            I also want you to know this group of associates has represented you well this week. I hope you’ll all share your experience and bring this energy back to your stores and clubs. Tell them about our purpose. We save people money so they can live better! And living better means saving not only money, but time too. We want to make every day easier for busy families like yours.

            So I have one ask of you: engage your customers. Say hello. Ask them about their day. Thank them for their business.

            It can be a hectic world, and you can make every day a little easier.

            Thank you.