Walmart EVP merchandising Duncan Mac Naughton spoke at two events this week in Northwest Arkansas, and he said essentially the same thing on both occasions. Two weeks earlier during a supplier summit event at the retailer’s home office, he said basically the same thing, according to those in attendance. And the comments at the supplier summit were essentially the same as those shared with members of the financial community during a mid-October analysts’ meeting or back in August.
Consistency is a good thing these days in the context of Walmart. When it comes to strategy, the drumbeat out of Bentonville has been unwavering of late, and all indications suggest it isn’t likely to change for awhile. EDLP, EDLC and broad assortment are all anyone needs to know about Walmart these days, because the company’s current senior leadership team is convinced the path to domestic growth is strict adherence to the same strategy that first propelled the company to greatness. But therein lays a challenge perhaps as great as any competitive threat from Target, the dollar stores, Amazon.com or the collective efforts of conventional food and drug retailers.
Exercising rigid expense control, continually telling people to do more with less and making other hard choices, such as reducing employee healthcare benefits, isn’t fun, but it is essential in an EDLC environment. It requires an extreme amount of discipline to constantly say, “No,” to requests to increase budgets. The same is true of adhering to an every day low price philosophy. There is relentless temptation to engage in promotional activity, because doing so can generate a quick sales lift, and if buyers know they aren’t like to be around to manage a category the following year and incentives aren’t properly aligned the whole EDLP thing can go wrong.
That’s why anyone who has heard Mac Naughton, or any of Walmart’s senior executives, speak lately or at any point in the coming year shouldn’t be surprised if they hear a very familiar presentation. It is a daunting challenge to keep an entire organization aligned behind arguably the least sexy, but most effective retail strategy ever invented, especially in the midst of a highly promotional competitive climate where the quick and easy solution would be to fight fire with fire.