Business

Doug McMillon Answers Questions About Sharpened Focus on Stores

After a thorough review of Walmart’s nearly 11,600 worldwide stores, the company today announced plans to close 269 stores and clubs, including the company’s 102 smallest format stores, Walmart Express, which had been in pilot since 2011. Here, Doug McMillon, President and CEO of Wal-Mart Stores, Inc., shares more about the factors that led to this decision, how we’ll assist impacted associates and plans for future growth. 

Why is Walmart closing these stores and clubs?
We said in October at our analyst meeting that it's more important now than ever to review our portfolio and close the stores and clubs that should be closed.

Managing our portfolio is essential to maintaining a healthy business. This allows us to create an even stronger Walmart by winning with our proven store formats and deepening our relationships with customers. Ultimately, this is in the best interest of our company and reflects the priorities of our growth plan. That plan is focused on winning with stores, deepening our digital relationships with customers and enhancing critical capabilities through technology and data, a next generation supply chain and talent.

How were the stores and clubs selected?
We conducted a thorough review of our stores and clubs worldwide that took into account a number of factors, including financial performance as well as strategic alignment with long-term plans. In total, the impacted stores represent less than 1% of both global square footage and revenue.

The large majority of U.S. stores closing are Walmart Express stores. While we have learned a lot from this pilot, including a deeper understanding of the everyday needs of our customers, we have decided not to proceed with this offering. We feel we can better serve our customers by focusing on Supercenters and Neighborhood Markets and by investing in e-commerce and services like Pickup.

How many associates will be impacted by these closings? What will they do?Approximately 16,000 associates will be impacted, including around 10,000 in the U.S. Decisions like this one are difficult and we care deeply about the associates who will be impacted. We spent considerable time assessing our stores and clubs and don’t take this lightly. Our goal is to help these associates and we will take all appropriate steps to ensure they are treated well.

More than 95 percent of the stores closing in the U.S. are within 10 miles on average of another Walmart, and the hope is that these associates will be placed in nearby locations. All affected Walmart U.S. associates will receive 60 days’ pay and, if eligible, severance. Walmart will also help associates find their next job opportunity, with a goal of placing as many associates as possible who would like to continue with the company at other nearby locations. Our objective is to help all associates find their next job opportunity, whether with Walmart or somewhere else.

We will be giving impacted associates priority for open positions at other nearby stores. We expect that some associates will transfer to another location and others will take severance and pursue other job opportunities. As we’ve seen with other store closures in the past, the majority of associates who wished to transfer were able to.

How do these closings fit into your vision for where the company is going?
We are continuing to grow, and we’re making smart choices in managing our portfolio. Even with today’s actions, Walmart will continue to invest in its future, with plans to open more than 300 new stores worldwide over the coming year — in the U.S. Walmart intends to open 50 to 60 Supercenters, 85 to 95 Neighborhood Markets and seven to 10 Sam’s Clubs. We will also open 200 to 240 stores internationally.

We’ve said that it's more important now than ever that we evaluate our portfolio, and doing so will allow us to build an even stronger Walmart.  

We intend to win in our stores in the U.S. by strengthening the Supercenter format and optimizing Neighborhood Markets. We'll focus on adding capabilities to our supply chain by building out a fulfillment network to create a seamless customer experience. What Walmart can do that no one else can is marry e-commerce with our existing assets to deliver a seamless shopping experience at scale. That is our vision and our mission, and managing our portfolio is essential to accomplishing our goals.

Are you having to close stores and clubs because of Walmart’s investment in wages?
Not at all. This is about managing our portfolio smartly. Our investment in associate wages and training is a long-term investment that is already paying off. Our customers are benefiting from a faster checkout process, better in-stock across the stores, a clean shopping environment and friendly associates. As a result, we are seeing improvements in our comp sales, customer traffic and customer satisfaction scores.

Our customers have told us they’re happy with the improvements we’re making in their shopping experience, as evidenced by our customer experience scores. To date, 70 percent of our stores have achieved the initial clean, fast, friendly goal we set for them, and we’ll raise the bar for the coming fiscal year. As always, our people make the difference. And we’ll continue to make investments in them going forward.

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Business

Why Walmart is Positioned to Win the Future of Retail

Earlier today we had the opportunity to connect with members of the investment community about our company's future.

The reaction by the market – while not what we’d hoped – was not entirely surprising. We're making significant investments in our people and technology. These investments are critical to our current and future success as a company. Simply put, it’s the right thing to do.  

For the first time we shared a three-year growth plan that includes financial metrics and goals. We project our sales growth over the next three years will be $45 – 60 billion. Think about that. That’s like adding last year’s combined annual revenues of Netflix, eBay, Whole Foods, and Starbucks to our top line.

Our growth plan is the roadmap we will follow to win through FY19. It focuses on customers who shop with us not only in stores, but online too. These shoppers spend more and shop more frequently and they are the kind of customers everyone is chasing. Good news is we already have a relationship with many of them. 

At its core, our growth plan has one goal: Walmart will be the first to deliver a seamless shopping experience at scale. No matter how you choose to shop with us, it will be fast and easy.

We will do this by winning with our stores, deepening our digital relationship with our customers and adding critical capabilities necessary to drive growth. We will also continue to lean heavily on the strategic work already underway that strengthens our business:

  • Delivering value
  • Providing convenience
  • Being great merchants, particularly in fresh food and health and wellness
  • Focusing on our key geographies of North America and China
  • Appealing to customers in a blend of income levels

And we will continue investing in our people.  Today we shared details around the $1.5 billion investment we will make next year to bring the wage for current associates to at least $10 in the U.S. The return from the initial investment of more than $1 billion we made earlier this year is encouraging. We have seen associate engagement and customer satisfaction scores increase dramatically over the past eight months and comp sales are increasing. Bottom line - it's working.

We’re also investing in technology to improve our customers’ experience. In fact, you can see how our stores are transforming already with our first redesigned Supercenter and Neighborhood Market, both in Rogers, Arkansas. These investments are critical to our future and core to our strategy.

There are so many reasons to be optimistic about our future. We are uniquely positioned to win the future of retail. Our 2.2 million associates make the difference every day and that’s an advantage no one else can match. We run our company well today, which allows us to invest for tomorrow. And we’re making the right moves to give customers, like Carla below, what they want, in ways that work with their lives. These steps aren’t always easy, but they are building on our strengths and will deliver a seamless shopping experience for 260 million customers around the world.

You can find a complete replay and supporting materials from our Annual Meeting for the Investment Community here. 

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Innovation

A Passion for Taking Grocery Shopping Off Your Plate

When you’re in the business of packing and carrying groceries, those bags tend to get heavier during the holidays.

As e-commerce market coach for Walmart’s online grocery pickup service in Northwest Arkansas, I’m here to tell you that your muscles know it when they’ve been carrying around 14-pound turkeys all day.

But it's not all about weight. With everything from elaborate Thanksgiving and Christmas feasts to New Year’s Eve spreads ramping up, customers rely on my team to come through. It’s about picking produce that’s ripened to perfection. Selecting the right pecans for mom’s very own homemade pie.

As joyous as the holidays can be, they tend to cause some people a bit of stress – and Walmart’s grocery pickup service is one way we’re working to make things a little easier. For many, being able to place their order online and have us bring it out to their car is a blessing. It's one less thing they have to worry about.

I’m so thankful I had the opportunity to help Walmart pilot our online grocery pickup service. It really was a new concept for Walmart in the U.S. And what I’ve enjoyed most has been the conversation with customers while we're loading groceries into their vehicles.

One customer – a mother of four – comes to mind immediately. That family has gotten to know one of our delivery associates so well that, as the mother pulls in, the kids pop their heads out the sunroof and call for him by name. They look forward to seeing him and talk up a storm every time. In the process, we’re able to save that mother a few valuable hours each week in grocery shopping.

For one gentleman, this service has helped him achieve a sense of independence. He rides in his wheelchair to the pickup location down the street from his home a few times a week for his orders. It’s the highlight of his day because it’s something he can do on his own, without assistance from others. And his smile tells the story.

So I was thrilled when, earlier this year, the program was expanded to include select Walmart stores in Charlotte and Fayetteville, N.C.; Salt Lake City and Ogden, Utah; Nashville; Tucson, Ariz.; Colorado Springs, Colo.; and Atlanta. (It’s also available in several other markets – you can find out if your area is included by visiting walmart.com/grocery.) It's a fast, easy service with pickup that’s always free, and with no markups or subscriptions. But for me, it's so much more.

Helping bring this next phase of Walmart to life has been the best one and a half years of my life. It really has. Years ago, as an assistant manager with Sam’s Club, I helped develop a similar program, but for members who were small business owners. So the job I have now is right up my alley. I love the collaboration, the testing, the innovation that goes into creating a new facet of the business – especially when it’s all about making people’s lives easier.

I’m a country girl who grew up in southeast Missouri. I had no idea I’d be part of something like this, but Walmart continues to trust and open new doors for me. So I continue to do everything I can to make it the best possible experience for our customers. And, right now, that means taking a little weight off their shoulders during the holidays.

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Innovation

Grocery Shopping That Works with Your Schedule

Have you ever wished for a grocery drive-up service? Whether you only need a few things, or you actually need several things but only have a few minutes to get them, shopping online for groceries and then choosing a time to have them handed to you (or better yet, loaded into your trunk) is a fantastic convenience.

At Walmart, we know this for a fact because our customers continually ask for it. We’ve tested online grocery options – both pickup and delivery – in a handful of markets across the U.S., and each time we’ve added a new city, our customers begin using the service faster than they did in the previous one.

Free pickup in particular has been very popular, and so I’m pleased to share that starting this month, we’ll begin offering free online grocery pickup at select stores in new markets, including:

  • Atlanta, Georgia
  • Charlotte and Fayetteville, North Carolina
  • Salt Lake City and Ogden, Utah
  • Nashville, Tennessee
  • Tucson, Arizona
  • Colorado Springs, Colorado

Customers can simply shop their grocery lists online, choose a time to pick up their orders and then pull in to a designated parking area at their local stores, where associates will load the items into their cars. It’s all the convenience of a specially trained personal shopper, plus the things you’d expect from Walmart: the same low prices we offer every day in our local stores; no extra fees or charges; and the ability to place an order and pick it up the very same day.
With 70% of the U.S. population living within 5 miles of an existing Walmart store, this is an idea that simply makes sense for us. We have the locations already in place, and with our website and mobile app expertise, we’re able to combine those things in a way that helps our customers save time and still take advantage of our everyday low prices.

This new, easy shopping experience is an innovation that’s helpful for anyone with a busy schedule – particularly moms with small children. They can shop online and choose the pickup time that works for them, and they never have to unbuckle anyone’s seat belt.

In the coming weeks, we’ll add stores in even more markets to our list of pickup locations. We’re excited to make this new option available to even more of our customers, and to use our existing assets in a way that offers not only convenience, but another great way to save.

Is Walmart online grocery available in your area? Visit walmart.com/grocery to learn more and place an order – and receive 10% off your first purchase by using the code NEWORDER during checkout.

23 Comments