Walmart served up dozens of its top executives to the media this week for two days of store tours and briefings in advance of the company’s shareholders meeting, which began Friday, June 6 at 7 a.m. What follows are 10 key takeaways and select nuggets from the meetings before the meeting.
10. Walmart’s supply chain is more efficient than ever. The 700 million miles Walmart’s roughly 7,500 truck drivers drove last year is about 300 million fewer miles than were driven in 2007 even though the company shipped 830 million more cases. “We are delivering more and driving less,” said Elizabeth Fretheim, Walmart’s director of business strategy, sustainability and logistics. “The greenest mile is the one you don’t drive.”
9. The digital future has been thoroughly embraced and Walmart is putting a lot of mental energy against the opportunity to integrate physical and digital. The company gave a tour of its high security technology center named after former CEO David Glass. Roughly 3,800 people work in the structure which is in the midst of a major remodel (windows have been added) to make it more inviting place to work. That is in addition to the approximately 4,000 employees who are part of the Global eCommerce organization worldwide, roughly half of whom are located in the San Francisco area. “We research 500 new technologies each year,” said Cory Gundberg, VP of strategic planning, Walmart technology. Discovering the next big thing is one of the challenges. “We want o understand what is the wearable technology going to be that is as pervasive in the future as mobile is today.” Speaking of which, 65% of Walmart shoppers have smart phones, but that figure swells to 80% when looking at those under 35.
8. Walmart wants to understand what its shoppers need and want before they do. About 90% of customers come to Walmart stores with a shopping list and many inevitably forget certain items. To solve that problem and grow sales in the process the company is developing a predictive shopping list capability on top of a recently created e-receipt platform. “The best shopping list is the one the customer doesn’t have to create,” said Gibu Thomas, SVP of mobile and digital for Global eCommerce.
7. More new more often is the mantra at Sam’s Club as the retailer looks to rebound from a challenging first quarter. Sam’s is increasing how often is change the merchandise offerings in clubs to five times a year from three times and has adjusted its labor model to accommodate the heightened emphasis on newness. Super high definition 4K televisions are one example of new. Sam’s plans to offer four different models by later this year ranging in size from 55 inches to 75 inches. Don’t be surprised to see televisions get even larger. “You would think we would get to a point where it is too big, but we haven’t got their year,” said Charles Redfield, Sam’s EVP of merchandising.
6. Neighborhood Market is poised for dramatic expansion. Walmart U.S. president and CEO Bill Simon didn’t specifically say so, but the handwriting is on the wall. With 367 units in operation currently and posting steady same store sales growth, plans call for another 180 to 200 this year. Details about 2015 expansion plans won’t be revealed until October, but Simon did offer the following. “We see the opportunity with Neighborhood Markets to go much faster than we have been. We are confident that Neighborhood Market will have a positive material impact on the company.”
5. Walmart To Go is an impressive concept with great potential. Every C-store operator in the country should be wary of the 5,000-sq.-ft. WTG concept. The company will need to take some costs out of the uncharacteristically elaborate physical structure to make the numbers work, but the format is attracting 2,000 customers daily, including 1,500 who come inside the building to partake of an extensive offering of freshly prepared food and a walk-in cooler. The traffic numbers are distorted by the store’s location in Walmart’s home town of Bentonville and the fact that the retailer runs a shuttle bus from its nearby home office at lunch time. Those factors aside, the value proposition for shoppers in other potential markets is classic Walmart: a convenience store experience without convenience store prices.
4. Speaking of small formats, it is a matter of when not if smaller Neighborhood Market type stores come to Canada. Walmart needs to complete the rollout of supercenters and the conversion of discount stores, but then the logical growth concept is something smaller. “It is one of the things we would consider,” said Walmart International president and CEO David Cheesewright. For further insights into what might be in store for Canada, keep an eye on the executive chosen to replace Shelley Broader as president and CEO of Walmart Canada. She was recently elevated to the role of president and CEO of Walmart EMEA and her soon-to-be named successor will be tasked with finding ways to serve Canadian shoppers.
3. Disruption in the health care space could be coming. Walmart opened its first owned health care clinic in Copperas Cove, Texas, recently and introduced a pricing model eerily similar to the flat rate $4 and $10 generic drug programs launched eight years ago. Except in this case, Walmart associates can see a primary care doctor at the clinic for $4 and customers pay $40. The clinic will serve about 4,500 employees who work in proximity to the store, according to Labeed Diab, Walmart’s president of health and wellness. It is a way for Walmart to provide convenient and almost free access to health care for associates and because Walmart avoids the expense of having associates visit other doctors it can used the saving to offer a reduced price to customers.
2. Walmart may be a house of brands, but the need to demonstrate value has prompted to the company to expand a private brand offering introduced last year called Price First. It is the opening price point in a good, better, best strategy and first showed up last fall in 400 stores in the Southeast. It was recently expanded to 700 stores and is headed for a national rollout. It joins the mid-tier Great Value brand and the top quality Marketside brand vying for shelf space with leading national brands that are relied on to showcase price leadership.
1. Watch out for Judith McKenna. She spent 18 years with Walmart’s ASDA division, last serving as COO, before spending the past 15 months as EVP of strategy and business development for Walmart International. Now she is in a new role as chief development officer for Walmart U.S. This is noteworthy because in that capacity she oversees new format development and innovations. One of those innovations is the Walmart To Go concept which is both the name of the retailer’s new convenience store and a grocery pick-up and home delivery service being tested in Denver and San Francisco. McKenna led the development of ASDA’s wildly successful Click and Collect service which allows shoppers to order online and pick up their purchase at a store. That service, launched just two years ago, is now available at 300 locations and will be in 600 locations by year end. Walmart has learned a lot from extensive testing in two U.S. markets and with someone with McKenna’s background in a leadership role it is not inconceivable that a meaningful expansion to new markets could be announced later this year.