The following conversation with Walmart CEO Doug McMillon is excerpted from our 2016 Annual Report, which was released today. Read the report.
Q: We’re now living in a new period of retail disruption, largely driven by rapid technological advances, and that change is likely to accelerate even further. What does the future look like for Walmart?
A: Our work starts and ends with the customer. Technology has changed customer expectations. Customers used to compare us with the store down the street; now they compare us with the best online shopping experience. And beyond retail, they compare us with every business they interact with in their lives. They compare our pickup experience to the speed and friendliness of the best drive-through. They compare our checkout process to the ease of paying with an app.
Customers should be able to shop on
their own terms – in a great store or club, with a quick pickup stop on the way
home from work, or with items reliably arriving at the front door. And
customers want to have some money left over to put toward their priorities: an
experience together as a family, a special gift every once in a while, or
savings for a rainy day.
Retail is not just about putting items on a shelf anymore. It’s about fighting for our customers, cutting out the hassles and advocating for them on price, too. We’re moving beyond just selling products to being the brand customers rely on to make their lives simpler and more meaningful as they save money.
Q: You’ve mentioned “seamless shopping” before. What does that mean, and how will Walmart deliver?
A: It starts with unparalleled assets that only Walmart has – our 2.3 million people; more than 11,500 retail locations; e-commerce websites and apps; and a dynamic, optimized supply chain. But it also requires new capabilities and fresh thinking.
This includes new digital tools for customers and frontline associates, as well as back-end software and platform work that benefits the entire enterprise. The use of data, algorithms, advanced forecasting capabilities – and more – is of extreme strategic significance.
We will put these pieces together in a way no one else can.
Ultimately, customers don’t care about what channel they’re shopping in, or about how we deliver them a product or service. They simply know they’re shopping with Walmart.
Q: What is Walmart already doing to make progress against this seamless shopping strategy?
A: To help our associates succeed and better serve our customers, we’ve made big changes – including investing approximately $2.7 billion over two years in higher wages, education and training to make Walmart U.S. a better place to work and shop. We’re already seeing positive results: our fourth quarter of fiscal 2016 marked six consecutive quarters of positive comps and five straight quarters of positive traffic at Walmart U.S. Everything we’re doing in omnichannel depends on customers having great interactions with us in our stores.
We're also accelerating e-commerce and technology advances globally. We expanded Online Grocery shopping to new markets, ramped up in-store and in-club pickup, fully acquired the Chinese online retailer Yihaodian, and began to add new mobile services such as Walmart Pay. We developed a technology platform that we can scale across the business. We improved our fulfillment capabilities with new centers that are helping us get orders to customers’ doors faster and more efficiently.
Q: It’s clear what these strategic investments mean for customers. How will they affect associates and the communities where Walmart operates?
A: As we work to win with our customers, we will also create a great place to work. We will create tremendous opportunities for people from all walks of life, with all kinds of skill sets and education levels. We’re striving to create a true meritocracy. No matter where you start from or what your unique and special characteristics are, you can fulfill your potential here. We believe in opportunity and that hard work, dedication and talent should be rewarded.
We will also use our size, mindset and policies and help make the world a better place. We create opportunity throughout our global supply chain – on farms and in factories, by buying more from women-owned businesses, by hiring veterans and by strengthening the retail industry workforce.
We work to be more sustainable, both in our own operations and in our supply chain. We have three big goals: creating zero waste, running on 100 percent renewable energy and selling products that sustain people and the environment. And we give back to the communities we serve – supporting American manufacturing, preparing for and responding to natural disasters and fighting hunger.
Q: What does this growth plan mean for investors?
A: We will win with a differentiated, disruptive strategy and a foundation of operational excellence. As we do, we believe shareholders will benefit by receiving above-average returns.
Although this will be another year of foundational investments, we believe we will soon be growing faster than the retail market. We are a growth company; we just happen to be a large one.
The road ahead will not always be easy, but by being customer focused, hungry, fast and accountable, we will win and have a good time doing it.