Business

Read Walmart CEO Doug McMillon’s 2017 Letter to Shareholders

The following letter from Walmart CEO Doug McMillon was taken from our 2017 Annual Report, which was released today. Read the report.

Dear shareholders, associates and customers:

As I sit down to write this year’s letter, I’m feeling proud of the progress we’re making at Walmart and, most specifically, the passion and hard work exhibited by our associates. I’m encouraged by the way we’re moving with greater speed to better serve customers.

Our business is getting stronger. In the U.S., we’ve delivered positive comp store sales for ten consecutive quarters and we’re hearing from our customers that their experience continues to improve. Sam’s Club comp sales improved throughout the year and members are increasingly using our digital tools like Scan & Go and Club Pickup. Outside the U.S., 10 of our 11 markets posted positive comp sales this past year. Across our business segments, e-commerce growth is accelerating. Our strategy to serve customers through e-commerce and our stores in a seamless way is gaining traction. The momentum we’re seeing is real and I’m excited about what the future holds.

We’re clearly living in a time of transformative change. The world is moving faster and the magnitude of the changes, and their influence on business, seem larger than I can remember. In retail, the things made possible by technology are fundamentally transforming this industry. These changes are creating compelling ways for customers to save time and gain easy access to products and services they didn’t have before. At Walmart, we’re harnessing the power of technology and the investments in our associates to create new ways of serving customers and provide associates with more opportunities to grow their careers.

We’ve been preparing ourselves to take advantage of the opportunities presented and we have four objectives that we’re focused on this year. First, we want to make every day easier for busy families. Customers are time-crunched, so we want their shopping experience with us to be fast and easy — truly seamless — in all the ways they want to shop: in stores, on their mobile device, or through pickup and delivery. I’m excited by many of our recent initiatives — like the free 2-day shipping offer with a $35 minimum order from Walmart.com, the expansion of online grocery around the world, and Sam’s Club’s launch of Scan & Go across the U.S. — because of the convenience these initiatives provide. The strategic acquisitions of Jet, ShoeBuy, Moosejaw and ModCloth, as well as the alliance with JD.com in China, provide customers with a broader assortment as well as more ways to save time and money. It’s truly been a significant year of progress on this front.

Our second key objective is to change the way we work. We’re focused on becoming more of a digital enterprise. We’re working to increase productivity with more efficient internal processes and creating more real-time information at our fingertips, supported by more advanced analytics. We’re providing in-store associates with the tools they need, like apps and tablets, to make it easier to gain insight into our performance. Our goal is to increase our speed, effectiveness for customers and productivity throughout the business. We’re also working to strengthen the performance mindset of our culture and fight bureaucracy that can plague large companies. A strong and effective culture is foundational to success and we’re shaping ours to drive performance and create even more opportunity for our diverse group of associates in an inclusive work environment.

Third, we will deliver results and operate with discipline. We were founded on an everyday low-cost mentality but we think we have opportunities to work in new ways and find a path to a lower cost base. This is vital for our future. We’ll be smart with how we allocate capital to drive long-term value for our shareholders. We’re after efficient growth. We will focus on growing more through e-commerce and comp sales in our current store fleet and rely less on new store growth in the U.S. We’ll also continually look at our portfolio to make sure we’re positioned to win. We’ll invest in our core business with store remodels, technology and customer initiatives like online grocery and pickup, while at the same time being open to divest non-core assets if it’s in our best interest.

The fourth objective is to be the most trusted retailer. During this time of change, customers are watching the companies they spend their time and money with more closely than ever. The way we earn their trust is through our associates doing the right thing every day — being creative, curious, ethical, service oriented and embodying our purpose of making lives better for others. If everyone could see inside the company I’ve come to love, they would feel even better about the company.

We’re doing things people would expect from Walmart: focusing on lowering prices — not by cutting corners, but by being better at delivering great items more efficiently than our competitors; and constantly innovating to save customers time as well as money. We’re also doing things that might surprise some people. We’ve made significant investments in our associates, providing the career opportunities they deserve and skills necessary to be successful at Walmart or wherever their career takes them. Over the last decade, we’ve become one of the most environmentally sustainable retailers (and companies) in the world and we’re raising the bar even higher. We’re investing in making our supply chain safer and more transparent so customers can be confident that the products they purchase are sourced the right way. And, we have embraced the journey towards the concept of “shared value” as espoused by Dr. Michael Porter of Harvard Business School, which challenges us to create a business model that is not just good for shareholders but better for everyone: customers, associates, suppliers, communities and society in general.

We’ve worked hard over the years to earn the trust of those we serve and do business with around the world. By no means am I saying Walmart is perfect. We’ll make honest mistakes along the way, but we won’t let up until we get it right. Our purpose is simple: we save people money so they can live better. We take both aspects of our purpose seriously.

We want to thank you for believing in us…for investing in our future. We are a company of the future. As I stated earlier, we’re operating from a strong foundation built by those before us and taking action aimed at strengthening our business this year and beyond. We’ll continue to strengthen our stores around the world, we’ll continue to build our e-commerce and digital capabilities, and we’ll put them together in a way that saves customers time and money. And as they choose to shop with us, we’ll be doing things behind the scenes to create shared value for all so they are confident that their trust in us is well-placed.

Honored to serve,


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Innovation

Uncovering How We’ll Shop in the Future

As new technology brings new possibilities, there’s been an explosion of ways to shop – smartphone apps, online grocery shopping and Scan & Go for easier checkout, to name just a few. To serve customers better, we need to stay ahead of the research that helps form the ideas that will continue to revolutionize how we shop.

I’m part of a small team that’s delving deep into research to improve the shopping experience for everyone. I’m a data scientist for Sam’s Club Technology, and I like to compare what we do to building a car: You have to start with the engine.

My day-to-day work is all about staying on top of new methods to build that engine. I look at ways we can incorporate emerging research in object recognition, detection and segmentation – technology that can make things like our Scan & Go app even smarter. For instance, instead of scanning a bar code, the app will be able to recognize products using photos taken by your phone’s camera.

Because this is such a fast-moving field, the research I work with is in its earliest stages. I might work with one algorithm today, and a couple months from now use a completely new model that’s even better than what we had before.

Tech is constantly evolving, which makes innovation essential for retailers. We have to continually adapt our business to our shoppers’ lifestyles. There’s a lot of coding, engineering and algorithm testing that goes into building something that works better than what people are used to. It’s challenging, but that’s why I’m lucky to work with such talented people.

Until I joined the team last year, I never realized the strong sense of pride that associates in the Walmart and Sam’s Club family have in what our business does. After studying at Yale, I worked in financial engineering in New York – I didn’t expect to find an opportunity to do such innovative work in Bentonville, Arkansas.

I’ve found that in the corporate world, it’s rare for a business to invest in cutting-edge research. But, from the start, Walmart has chosen to invent some of our own solutions instead of waiting for someone else to come up with them. In this new age of tech, we’re still evolving and inventing better ways to get from Point A to Point C.

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Business

Why Smarter Inventory Means Better Customer Service

When you’re getting ready to head to Walmart, you expect everything on your list will be ready and waiting on our shelves.

With millions of items for sale, ensuring that happens – for everything, every time – is quite a complex process behind the scenes.

Managing back room inventory – products that are stored in back rooms for days, sometimes weeks, before they reach shelves – can be a challenge. It requires constant monitoring, and can sometimes take associates away from the sales floor where they would otherwise be helping customers. So recently we’ve been experimenting with new and better ways to improve the process for everyone.

Top Stock is one of these new systems that we’re testing in stores. With it, we’ve moved a great deal of our back stock inventory to somewhere else very simple: the top shelves on our sales floor. By keeping additional merchandise closer to where it’s sold, we can maintain fuller shelves while keeping a better in-the-moment read on inventory.

I spent the first 12 years of my three decades with Walmart in replenishment and supply chain roles, so I understand the significance firsthand of how this makes storage and stocking so much easier. But there’s also quite a bit more that directly benefits customers:

  • All the extra space we’re opening up in our back rooms is making it easier for us to integrate services like online grocery pickup. While the demand for grocery pickup is obvious, finding adequate space within our existing stores had sometimes been a challenge.
  • Need something you don’t immediately see on the shelf? Waiting for an associate to check our back room during peak holiday shopping periods could soon be a thing of the past. By improving our inventory management processes, we’re bringing the products and services that customers need one step closer. In fact, the implementation of Top Stock has helped reduce our rental of temporary inventory trailers to a small fraction of what it was just a few years ago.
  • Our improvements in inventory management are getting more associates out of the back room and onto the sales floor, where they can help and interact with customers.
  • Perhaps best of all, our associates can use open back room space for career-building education. When one store in Morrisville, North Carolina, implemented Top Stock inventory management, they reduced back room inventory by 75% in two months, allowing enough new space to open an Academy for associate training.

What’s worked for our business in the past isn’t always what’s best for today’s shopper. When we commit to coming up with unexpected ways to do the small things better, we not only become smarter and more efficient, but create a big win for our customers at the same time.

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Innovation

5 Ways Walmart Uses Big Data to Help Customers

In many industries, big data provides a way for companies to gain a better understanding of their customers and make better business decisions.

Walmart relies on big data to get a real-time view of the workflow in the pharmacy, distribution centers and throughout our stores and e-commerce.

Check out the infographic below to see how Walmart uses big data to make the company’s operations more efficient and improve the lives of customers.

Whether it’s analyzing the transportation route for a supply chain or using data to optimize pricing, big data analytics will continue to be a key way for Walmart to enhance the customer experience.

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Business

Millennials Make Waves in This Episode of ‘Outside the Box’

Millennials are making waves.

They are now leaders of industry, business, media and retail. They are shaping the way we get information and goods. They can also be a bit controversial.

But whatever you think of them, you definitely can’t ignore them -- especially millennials as successful as Mic.com co-founder Chris Altchek and Natasha Case, co-founder of ice cream company Coolhaus. In Episode 4 of our podcast, Outside the Box, we sat down with them both to discuss their respective businesses, millennials and the stereotypes of that generation.

Chris, after years of taking wildly different political jobs, realized he was really passionate about finding solutions to people’s problems. So he decided to become a journalist – a job where he could come in without bias and help share the truth. Today, Chris manages a successful news site that reaches 60 million people – a lot of them millennials – a month, in an environment where he says trust in the news is at an all-time low.

Natasha, whose goal was to make architecture cool and accessible, found that mixing food and architecture did the trick. Starting with a broken-down food truck at Coachella, her business Coolhaus now sells architecture-themed ice cream at over 6,000 locations across the U.S.

As with any stereotype, it’s dangerous to lump everyone into one bucket. So what do Chris and Natasha think about the labels some have put upon their generation? Check out the episode to hear for yourself.

Listen to previous episodes and subscribe, and tell us what you think in the comments below.

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