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[MUSIC] We're incredibly excited to have you here, and we have a lot of material that we wanna cover today.
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I figure we'll spend about the first third talking about Walmart's business globally.
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The second third, talking a little bit about your personal leadership experience.
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And then we'll save the last third for question from our audience.
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Before we get started though, I'd actually like to hit on some news from last week.
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In a blog post on the Walmart website, you announced that starting associate store, sources you pay in the US, was going up to $9 an hour this year, and next year to $10 an hour.
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Along with the variety of other changes to the way you manage your associates.
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I'm curious why this change and why now? >> Why not?
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[LAUGH] We've, we've been joking, the leadership at Walmart about how cool it is to go to work on a day and give 500,000 people a raise.
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[LAUGH] I hope you get to do that some day, it's really, really pretty great.
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We, we are just trying to run great stores.
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And for those of you that don't have experience in retail, I think you'd probably be surprised at how many decisions we make, how many variable there are. >> Mm-hm.
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>> So you just think about a store or example, you've gotta have engaged associates, who've got to care about what they're doing.
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So you need to think about the wage rate, you need to think about the opportunity that they have, you need to think about health care, you need to think how many hours, about how many hours you're scheduling and I could go on, and on, and on.
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But the changes we announced last week here in the US for Walmart and Sam's Club, are largely aimed at creating a better store experience.
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And, and I'm sure we'll talk some about the internet, and about how technology is changing the business.
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But our strategy is to find ways to bring stores and technology together in a way that exceed customer expectations, and excite them.
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So to do that, you've gotta have great people who are very excited about their opportunity at Walmart and that's, that's what this is, it's designed to do. >> Great.
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And in your explanation of the changes that covers for shareholders, you explained it largely in economic terms, those are largely the terms you used here, that better store associate pay leads to a better store experience and, eventually, more profit for Walmart.
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Now there's another line of argument about associate pay that focuses on, in a very different logical tract, focuses on ethics, that says that.
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That Walmart has a moral responsibility to give a living wage or that there's, you know, other considerations beyond the, you know, store experience and the profit to Walmart.
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I'm curious to what extent did those considerations also enter the decision.
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Was it largely driven by economic reasoning? >> It's, it's both. >> Mm-hm.
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>> But it's mainly about running a good business.
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Our, our philosophy is if we run a great business, society will benefit.
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Communities will benefit.
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Now, we are using the size and scale of the company to engage in sustainability, social and environmental sustainability.
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In fact, we were here today, having a milestone meeting with our folks in our e-commerce business that was broadcast around the, the, this hemisphere I suppose, talking about what we're doing as it relates to the environment.
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Because it relates to the obligation we have from people.
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The way we think about it is, we're trying to design a meritocracy.
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So you heard that I started out unloading trucks.
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Eventually got into the buyer training program, worked as an assistant manager in a store and then was lucky enough to move into her home office and start managing categories, which was a lot of fun.
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More fun than I would've dreamt.
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I mean, I just fell into it, I wasn't planning on being in retail, didn't have a design to be at Walmart, it just kind of happened.
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But, but what happened for me and what has happened for many other people. We, we employ 2.
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2 million people around the world.
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Is that you get in and you have an opportunity to exceed your own expectations about what's possible.
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So our design is one where we try to create the first rung of the ladder to be one that people can reach.
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So you could say Walmart should pay a living wage to every associate.
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And then that first rung would go up, but there would be many people who couldn't reach it.
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And they might not have jobs.
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And they might not have an opportunity.
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So if you want to start as a cashier in Walmart and learn how to work in retail.
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Learn what it means to give good customer service.
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Learn what it means to keep a store in stock, etcetera.
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Then you can move on to becoming a customer service manager, you might become a department manager, which next year will pay 15 dollars an hour.
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You might become an assistant manager and start making 50,000 dollars an hour.
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You might become store manager and make 150, 180,000 dollars an hour.
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And just work your way on up in the business to do whatever it was that you dreamt of or you're capable of doing, let's say.
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So we want a meritocracy, we want a ladder of opportunity and I'm proud of that.
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I don't have any issue with explaining that to people and do all the time and really, I think it's the American dream.
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There, there are people, and I met one the other day.
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We, we had our, what we call our Year Beginning Meeting, with store managers.
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We pulled them all together in Orlando.
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And we were talking about this phase that's existed in the company way back to 1979 our people make the difference.
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That was one of the subjects that we were covering at that meeting, and when it was over with, this store manager walked up to me and she said, Doug, I just have to tell you thank you for the opportunity that Walmart's given me.
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I live in North Carolina but a few years ago I was divorced, my husband took all the money, I literally became homeless for a while.
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But so and so, and she called out the store manager's name, gave me a chance to work in the in the store as an hourly associate.
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And now, I think it was four or five years later, she's running a super center and making a great living.
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And you know, there's a tear in her eye and it starts to become a tear in my eye.
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[LAUGH] That's, that's what Walmart is about. And I'm proud of that. >> Yeah.
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But it's clearly been a, you now, great platform for you to develop your career, and I'd like to delve into that a little bit later but right now I'd like to actually focus on the scope of the business globally.
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So before you were CEO, you ran Walmart's international business and under your leadership it grew to be more than 6,000 stores in 26 countries outside of the United States.
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Some major acquisitions were the mass mart acquisition that brought you into many parts of Southern Africa.
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But also some bumps along the way.
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Is the re-evaluation of the JB in India, and pulling out of Korea and Germany.
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So I'm curious given lots of experience in many different countries.
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What did you learn about failing at business globally, as leader of Wal-Mart International?
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>> It can be complicated.
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[LAUGH] You learn from experience, and I think our organization has learned from experience.
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If I, if I started with Germany, which goes way back we tried to install our culture too fast into that organization.
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We tried to teach them the Walmart cheer and hand them the, our technology and say, let's go, like, all at once and it just blew up.
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We had two companies that we bought, we tried to put them together.
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And the way we were thinking about the business was not sophisticated and we didn't listen enough. >> Hm.
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>> And I, it was just purely out of ignorance.
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We had the best of intentions but it didn't work.
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So if you fast forward to the last few years.
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Government rules play a role if you look at the situation in India, where currently multi-brand retail isn't allowed from a foreign direct investment point of view.
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You have to have a JV, you have to have a relationship and that relationship can be complicated and the government can shift policies sometimes in subtle ways that, that change the, the ground rules.
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And our case today, we've got about 20 cash and carry units in India, they serve the Corona's, the small business owners.
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In India, we would like to have a much bigger business, but right now, about all we can do is just grow those cash and carry units and then, and then we'll see if the rules change.
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In Africa we used a principle that we've developed over the last few years which relates to scale. >> Mm-hm.
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Some of the downsides of an acquisition can be a cultural alignment issue, you can buy a business that doesn't believe what you believe and that'll create all kinds of problems.
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In the case of Massmart we found one that was very culturally aligned to who we were.
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And that scale, buying a business that's big enough that you can start to do business the way you want to do business.
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So, for example, we like to practice everyday low price which has a lot attached to it including how you negotiate with suppliers, we would like to, not be paid to run advertisements.
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We would like to have a lower cost everyday, and pass it on to customers everyday, which creates supply chain efficiency and helps our productivity work.
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We'll, you can't do that if you have two stores.
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None of the suppliers will listen to you.
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So, there are times when we need to grow through acquisition to achieve some level of scale.
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There are other times where the government situation or other requirements prevent us from doing so. >> Interesting.
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So you mentioned, does, Walmart's taken a variety of different strategies to enter these markets.
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You mentioned acquisition.
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Some are green fields, some are JV's.
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So it sounds like you're taking a portfolio approach in the past, and your strategy is to continue doing more of the same.
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That there isn't necessarily one dominant way to enter a new market that you've learner works best.
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>> Yeah, I think the way I would think about it is on the front end closest to the customer things need to be unique.
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While its true that products are becoming more common globally, you know, I'm seeing Pampers everywhere.
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You can't go to a country without finding Colgate.
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I mean, that these brands are global in nature.
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But the decisions around what you carry subtleties around fresh food or spice or things like that, require us to have a local relevance, and that means we've got local buying teams.
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So in the country, we have local talent making decisions about how we go to market, where we set prices, what items we carry, running the stores and all that kind of stuff.
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But on the back end, there are things we've learned about retail. >> Mm-hm.
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>> Things related to technology or the supply chain, or the business model itself, that need to be applied over time.
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So what we do is we hire great talent to run the markets, and then we give them tools and resources that over time results in more of a common culture, and more of a common business model.
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And just one last thing about that, the internet is changing things dramatically, and the, the commonality of what people read, how they consume media, what they think, what they hear about, that's pulling people together and also causing retail to become more alike in some ways.
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The way that, that mobile and stores come together is going to be more common around the country than it is different.
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>> Mm, it's interesting, and then you mentioned culture as part of one of the things you try to keep relatively common across your different countries.
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And it's been something that you've spoken quite a bit about as a leader in Walmart.
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I'm curious what specifically do you do to try to ensure consistent global culture? >> Mm-hm.
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>> Cuz it sounds like they'd be difficult given the, 800,000 employee's abroad in, you know, 26 different countries. >> Yeah.
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Some of you have a lot of work experience, some of you may not.
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I don't think you can overemphasize the importance of culture.
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And, and what we mean by that is behavior you can have the most beautiful image of your values on your website or on your mobile app and that means nothing if people don't actually believe those things and act that way.
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And our culture comes from our founder if you trace it all the way back, the characteristics of our founder, Sam Walton were strong and positive.
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And then even today, even though he passed away in 1992, you can find characteristics of Sam Walton in our business in Guatemala, characteristics of him in China.
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Things like, a customer-service attitude, a sense of urgency, listening to your associates, those things have caused success, and they will cause success in the future.
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And the way we articulate the things that we talk about at Walmart is we, we typically start with our purpose.
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I'm not sure I can remember exactly what year it was but one of the presidents named Bush came to Bentonville and gave an award to to Sam before he passed away, the presidential medal of freedom.
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And he was sick with cancer at the time, and he passed away fairly shortly after that, but he stood up out of his wheelchair and said a number of things.
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But one of them was if we work together, we can help people around the world to see what it's like to save money and have a better life.
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And that phrase became save money, live better, and that's our purpose.
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So around the world we're proud of that core deliverable from the company.
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Our purpose is important, it's real, it's meaningful.
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And if you click down to values, we have four core values.
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We, we have service to the customer, striving for excellence, respect for the individual relates to things like listening, and acting with integrity, and I think those are universal truths that stand the test of time.
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And what we're trying to do at Walmart is to get our every day behaviors of new associates we hired in a country or those that had been around for awhile, to just match up with those values.
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And when I go into a Walmart store and it's not in good shape, customer's aren't being treated well, it's not in stock, maybe the store's not as clean as it needs to be, it, it, you know, breaks my heart.
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And I'm always trying to figure out, okay, what could we have done better to create a situation where that store manager and those associates could have done a better job so that Walmart lives up to its potential?
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Doing that across 27 countries, now that we're 52 years old is harder I think than what it might have been a decade ago.
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>> And what about the challenge of maintaining those core values or maintaining the same focus on the customer, given the e-commerce disruption of traditional retails.
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Walmart's business is changing, and retail as a whole is changing to be more online.
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How do you, how is your business changing and how do you keep those core values, or do those values have to change actually-. >> Yeah.
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>> As, as the business changes.
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>> I think the, the core values stay the same.
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I think some of the behaviors probably change and the way we go to market clearly changes. I'd tell you a story.
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About a few months ago I was talking to a person from Silicon Valley who's brilliant and if I said this person's name you would know their name.
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And their interoffice in Bentonville and they do some contracting with, with us.
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And they were writing on the whiteboard how they run their business and how they design their algorithms and what they try to do and what their purpose is and stuff like that.
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And we were talking about the future of, of business and it dawned on him after talking about our mutual businesses for a few minutes that in some ways we've already done the harder part.
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So if, if you wanna reach a large number of customers, and grow a business that's almost $500 billion, you've got to be positioned to add a lot of volume to be able to grow that company so you've gotta be able to not only serve customers the way you used to serve them in stores or clubs, but you've gotta reach them in new ways.
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And so mobile becomes more important, et cetera.
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And his point was, you know, you've already got 2. 2 million people.
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You've already got a culture that when it, when it's carried out correctly at store level, this DNA results in good customer service.
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You've already got the physical supply chain.
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What you don't have is the code, and the code's easier to write than it is to go build all the physical assets that you already have.
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And I think there's a lot of truth in that. >> Hm.
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>> So I, it will come back to people, the way people are treated and, and in turn, how they serve customers, whether it's through some sort of digital experience or it's a phone bank or it's the text response they send back to you or it's the person, in person contact you have with someone in a store.
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Those things are still gonna matter.
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So our culture has got to be even stronger in the future as we grow than it's been in the past.
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>> There's so much more we could touch on the future of Walmart, and technology, and markets abroad.
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But I'd actually like to shift a little bit now and focus on your career specifically.
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And the leadership lessons that you might have to share with the MBAs in the audience.
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One of the things that Dean Rajan mentioned is that you spent nearly your entire career at Walmart, and I think many of the MBAs in the audience have already had three or four employers.
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So I'm curious, what's kept you at Walmart for so long? >> It's challenging.
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And I mentioned before I didn't plan on doing this.
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I certainly didn't plan on retail.
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When I was 16 my dad moved our family to northwest Arkansas to start a dental practice.
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And I went to say goodbye to my girlfriend which I thought was the end of the world cuz I thought she was it.
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And I'm standing in her driveway they're probably both crying or whatever, you know and her dad walks out and he says so what's going on?
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And I said we're moving to this little town called Bentonville. I've never heard of it. I don't wanna go there. My dad's making me.
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I'm not happy, I'll be back.
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And he said you're gonna end up working for Sam Walton. And I said who?
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And he said well you shop at Walmart, don't you? And I said yeah.
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And he goes well you're gonna end up working for that company because that's all their is in Bentonville.
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>> [LAUGH] >> Turns out that was true. >> [LAUGH].
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>> Literally all there was when I moved to, when we moved to that town there was one stoplight, there was a McDonald's, one pizza joint and Walmart was it.
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And so, you start hearing about Sam Walton, and you, it was a little town so you'd run into him or run into other people just, you know, being there.
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And I needed a summer job.
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So, the warehouse was hiring at 6.
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50 an hour and, and, I took that job because it paid more than McDonald's.
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But I ended up meeting this guy the day that I started, it was summertime, it was hot.
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And there was this guy named Johnny unloading trucks with me and Johnny was bragging about having $200,000 in profit sharing.
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And I thought, whoa, this dude unloads trucks.
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He doesn't even have a shirt on [LAUGH].
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Maybe I need to pay attention to where I am, you know.
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And you connect all the dots.
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What I learned about retail is it's really hard. It's really challenging.
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It's a narrow margin business, you have customers to deal with.
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You've got to think about marketing, merchandising, operations, logistics, finance, legal, real estate, compliance, ethics, culture, global business, now technology.
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You know, I, I meet young people who are excited to be in the Valley and I come out here quite a bit these days and the start up thing sounds cool to me but I haven't heard one yet that is more challenging than what we're trying to do. I mean if you want hard.
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Try to take a 52-year-old business that's at this size and change it. That's hard. And it's worthy.
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I mean creating a situation where 2.
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2 million people stay employed, and have a life. That's a big deal.
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So, if you wanna work at Walmart, give me a call.
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[LAUGH] I promise you it'll be hard.
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>> One of the, you may get some emails now, be careful.
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One of the interesting things about your career, is you're the youngest CEO that Walmart's had since Sam Walton.
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And you've risen very quickly through the ladder.
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Starting with unloading trucks to now being CEO.
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To what do you attribute the fact that you rose so quickly through the ranks at Walmart?
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>> Well I'm not the only one.
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I mean I ended up in this job so you know people pay attention to it.
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But if you were inside our company you would meet many, many, many people who've had opportunities and a lot of people who say I didn't want to be at Walmart, I just wanted a job.
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Or I needed to pay my way through school or whatever and they end up being here 20 or more years. What was your question? How did it happen? [LAUGH] >> Yeah why?
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>> I'm still trying to figure that out.
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It was a step at a time, you know?
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I loved merchandising, I fell into a situation where the challenge of the work was something I really liked, so I ended up getting together with Sam's Club, I've actually been at international twice, then was given the opportunity to lead our international business and each one of those steps kind of prepared me for the next.
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But if I had to answer it in one word, I would say, I think it's just because I love it. >> Mm.
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>> I really like it, and I'm still learning a lot.
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And so I think that the company needs us, this current leadership group, to respect the past.
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And to not forget the things that made the company special.
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And to be very selective about what we carry forward.
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So, you know, does that distribution center the way it works provide value to society, to our business, to the customer in the future.
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If it does keep it, if it doesn't get rid of it.
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That kind of attitude, forward looking, willing to change.
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I did not work for Sam Walton personally, I didn't get to know him a lot but I was around him a few times and got to talk to him a couple of times and he, if he were here, would be driving change.
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I mentioned earlier, if this were, if there are a few Walmart people here, if you say to Walmart people, the only thing that's constant, they say, change.
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That's a great platform to operate off of.
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It gives you the freedom to go do things differently and that keeps it exciting.
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>> I mean it's clear your excitement for working at Walmart, but one of the things you haven't mentioned is, kind of surprises me, is that you haven't talked about the role of ambition in your career at Walmart.
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You know because it wasn't, staying at Walmart wasn't part of you know, your calculus when you joined and that, you know, aiming for the top job wasn't necessarily something that you were looking for.
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>> I wanted to be chief merchant someday. That was my aspiration.
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I was a buyer and loved merchandising, and I kind of overshot it.
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[LAUGH] >> When did, when did that change and what, what caused that change?
20:58
Well I was, I was a chief merchant at Sam's Club and I worked for a guy named Kevin Turner, who was our chief information officer and, and he got promoted to run Sam's. We were both in our 30s.
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And Microsoft recruited him away, and Kevin's currently the chief operating officer at Microsoft.
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So when he left Lee Scott was our CEO, and Lee, Lee came over and he said hey, you're about to hear, in the next day or so, that Kevin is leaving to go to Microsoft.
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We'll, we'll be putting someone new in Sam's Club.
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It probably won't be you.
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I'm sure you're good with that.
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I said, yeah, I love my job, and whoever you send over here, I'll help. And he said okay.
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So a few days go by and he comes back and he says we thought about and we really don't have anybody else we want to put over here so you get to be the CEO of Sam's Club.
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[LAUGH] It's true, that's how he said it. Lee, Lee's [UNKNOWN].
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I could tell you a lot of these Scott stories.
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But that's, that's how that happened.
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So that forced me to learn a lot about things other than merchandising.
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And if I hadn't been given that opportunity, I probably would not have been given the opportunity to, to lead international.
22:04
Which was the most mind-blowing experience ever.
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I mean, yeah, I'm a kid from Arkansas, and certainly I've traveled a lot.
22:13
Sourcing and buying stuff I've traveled around the world for a long time now, but to be responsible for a business in 26 countries that's $140 billion with 700,000 people in it and get to enter Africa and get to deal with some of the complexity of that is just extraordinary. Really blessed.
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>> Actually I'd like to talk a little bit more about the role of travel in your career.
22:33
You know, one of the core Walmart management philosophies is CBWA.
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Which is Coaching By Walking Around.
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The idea that managers need to interact with associates and problem solve on the, on the store floor.
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But when you're running an international business.
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You have employees, you have associates all over the, the world.
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How did you balance trying to efficiently run a global organization, when you led the international business, with the need to be physically present in all of those different locations? >> Yeah. Well, first of all.
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You, you can't be everywhere.
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So you have to have great people. >> Mm-hm.
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>> And we have a deep team.
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We've got talent in the all the markets.
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You know, that, that we're proud of.
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But there is no replacement for really understanding the businesses.
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So I traveled for five years, you know, a lot. And loved it.
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Enjoyed being on the ground.
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I've been to places I never really thought I would have or ever get to go to.
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You go into stores in Nigeria that are ours wow, what an experience. All over Latin America.
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We learned a lot about China.
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Don't profess to understand China, but I've been there a lot and, and I'm fascinated by it.
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So you have, you have to be there. >> Mm-hm.
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>> But my responsibility was, you know, do we have the right management talent at the top?
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Do we have the right culture within that organization.
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And I do spend a lot of time talking about culture.
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Are we positioned to win?
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Are they getting the resources that they need?
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And, and what I ended up doing in the role that I had is to get our leadership team to focus on the things that we had in common. >> Mm, hm.
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>> Maybe this is a good way to to answer the question.
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When I moved into the job everybody told me, you really need to understand what's different.
24:07
You got to focus on the local differences, don't try to run it from here.
24:11
I think some of the lessons from Germany were probably playing out in that, in that direction.
24:17
But after doing it for five years, all I can tell you is everybody's the same.
24:21
People around the world are thinking about the same things.
24:24
They're thinking about their family, they're thinking about their career, they're thinking about, you know, the vacation they're gonna take, they're reading a lot of the same media.
24:31
They're, they're, we are more and more the same.
24:34
Even during the five years that I was international, I could see a difference in people and, I mean, I remember one morning getting up in Japan and reading the same news story I read the day before in the US about Angelina Jolie.
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I'm like okay, we're all on the same page here but. >> [LAUGH].
24:49
>> Products are becoming more the same.
24:51
And the last year I was international, I started asking people when I was in a store, I did it once in Costa Rica for example, I would say show me something that is uniquely Costa Rican in this store.
25:03
And they would look at each other and say, okay.
25:05
So they took you over to this bottle that was labeled salsa. It looked like A1 sauce. >> [LAUGH].
25:10
>> And when I turned it around, it said Unilever on the back.
25:13
And people just increasingly had a hard time showing me anything that, that you need.
25:18
Now, local produce, locally grown product, things that are, you know, produced really near a store still matter and we wanna source those things.
25:27
But I can see kind of a global wave of commonality happening and that was fascinating. >> Wow.
25:34
You mention one of the things that is common, people you meet all around the world, is they're, everybody's thinking about work and family and trying to balance these things.
25:41
And I'm curious especially cuz you had a career that involved so much international travel, and so much responsibility.
25:47
I think that many of the MBAs in the audience are also thinking about how to balance their careers with other obligations they have in their life. >> Yeah.
25:54
>> So, I'm curious, you know, what have you learned to try and make that balance work, cause you have a family and sons in Denville.
26:01
And, you know, how, what advice do you have to give to MBAs who kind of been embarking on trying to start that, figure out that balance after they graduate?
26:08
>> Well, I think it's personal, and you guys have to solve it for yourselves based on what's important to you.
26:12
For me, life came in phases.
26:15
So there's a period of time where my kids were little.
26:17
Shelly and I have two boys, and I did not want to miss like those little three on three soccer strums with the six year olds, you know?
26:24
So being there at that age mattered a lot.
26:28
By the time I was responsible for international, my boys were teenagers and they were like, you've been gone, dad?
26:33
I mean, didn't miss me that much.
26:34
[LAUGH] It was very different then when they were in elementary school and stuff.
26:38
So, there's probably a time and a place for everything and you just need to manage that. Pay attention to it.
26:44
Pay attention to yourself.
26:46
You know, are you getting the right rest?
26:48
Are you taking care of your body?
26:49
Are you right minded in, in, in the jobs that you're gonna have your decisions will really matter.
26:59
So you've got to be prepared to make important decisions and you can't do that if you're exhausted, at least you won't do it very well.
27:07
So I think you need to know yourself and know what's important to you whether it's family or faith or whatever it is.
27:13
You've got to, you've got to be right.
27:16
>> On that note, in making important decisions as, you know, CEO of the world's largest company, your decisions have a lot of weight.
27:22
They affect a lot of people.
27:24
There's a lot of, just, big dollar amounts at play here.
27:26
Can you tell us a story of a difficult decision that you've had to make over the course of your career? >> Yeah, yeah.
27:34
I mean, just the round of decisions we got through making and announcing last Thursday are the first things that come to mind, because they're recent.
27:43
The, the importance of having great people around you, a good team that can help you think about an issue, you will not face very many things where you have 100% of the knowledge.
27:55
And the image that pops into my mind all the time.
27:57
We were having this conversation yesterday with the leadership team about the future of our supply chain. >> Hm.
28:02
>> And we had e-commerce leaders and people who were steeped in logistics in the room.
28:08
And what you literally saw play out, on a whiteboard, is people putting pieces of a puzzle together.
28:13
And the people that had been doing it for a long time said here's what it looks like.
28:17
And the e-commerce people said yes, but you're missing this piece.
28:19
And then another person said, what if we do this?
28:22
And all of the sudden a picture emerged on the board of the future of our supply chain that was better than it would have been with any individual.
28:29
So, in this latest reign set of changes that we've made, there were different people, people from within our HR or people area that contributed to training in a big way.
28:42
There were other people who said, for us to run great stores we've gotta change the structure.
28:46
There were other people that said you know, the starting wage needs to be really thought out and here's how we should think about it.
28:55
And, when people make great decisions, you just need to let them. >> Mm-hm.
28:58
>> You know, I don't make every decision in Walmart, don't wanna make every decision in Walmart.
29:02
If I do my job well, I'm not making very many decisions because the team is doing it.
29:07
But every once in a while, I've got to make some and they better be right, and I need to have listened to others to, to try and sort it out.
29:14
Many of them are unclear.
29:15
By the time they get to my desk, if they were easy, somebody else would have solved them.
29:19
So knowing sometimes this isn't gonna get any clearer, there's more, there's no more data that will help me make this decision.
29:26
I'm just gonna have to go with my gut.
29:28
You have to do that sometimes. >> Well.
29:29
I have a lot more that I could ask.
29:32
A lot more things I'm curious about but I want to make sure that we give our audience a chance to ask some questions.
29:35
I think we'll start with a question from Twitter.
29:38
>> What do you think the future of the US grocery market will be in five to ten years and more specifically, are you worried about the rise of the discount stores?
29:49
>> Future of grocery, that's a big question.
29:51
I, I think grocery will be more food, will be more focused on quality.
29:56
In some ways, it will be more local, definitely there's huge trend towards, you know, organic and gluten-free.
30:04
That's where the growth is.
30:05
And quality, the way you handle the supply chain, the way produce is handled all the way through the process is going to be increasingly important.
30:13
I do think grocery home delivery will play a role, although I don't think it'll be in the United States more than 10% of business anytime soon.
30:20
In the UK, we've been doing grocery home delivery for 15 years and it's, it's still well under 10% of our business.
30:27
Picking up your groceries in the parking lot or at an offsite pickup location, that will happen, and is happening.
30:33
We've got experience with that in the UK.
30:34
You may have read we recently announced some pilots here in the US for grocery pickup and grocery delivery in Denver and Phoenix, some other places.
30:44
So, we've got testing going on.
30:46
The way customers will take product will be different than what they've done in the past.
30:50
We got a a pick up location we opened in Bentonville last year where you can't go in the store and shop.
30:56
You order on your mobile device ahead of time and you just go through and drive into a slot and we put it in your trunk for you, and that test is going well.
31:04
And Dan just reported to me his wife had an experience today.
31:06
And no substitutions and less than a five minute wait, so we're making progress on learning how to do that.
31:12
So, grocery is gonna change.
31:14
I think we've got the team to help sort it out.
31:16
We don't have the reputation that we want to have today for quality.
31:19
That's a big area of focus but it's achievable. >> Okay. Let's go here first. [BLANK_AUDIO] >> Hi. I'm Ben. I'm an MBA one here.
31:35
First of all, thanks so much for coming to, to speak with us.
31:38
So there was a report released last year that said US taxpayers subsidized Walmart to the tune of $6.
31:43
2 billion in food stamps Medicaid, welfare.
31:47
I guess, how do you respond to the, the critics who, who are saying, you know, whether it's 6 billion or 3 billion or whatever the number is.
31:54
Biggest country in the world, the wealthiest family in the country should be paying it's workers and not that, that money doesn't need to be there at all.
32:02
>> Yeah, I understand the criticism.
32:04
First thing that comes to mind is, we pay almost 2 percent of the corporate taxes in the country, so I don't feel very subsidized, okay?
32:10
[LAUGH] But the issue you're raising, it goes to respect and it goes to opportunity.
32:15
And what I was talking about earlier is how I feel about it.
32:18
We're a company that gives people an opportunity to go do more.
32:22
Now where we put that first rung on the ladder matters, and I don't know the statistics about how many Walmart associates are currently on government assistance, but we don't want any of them to be on government assistance, because we want them to be able to move up that ladder.
32:34
You know, we wanna set that first ladder in the, in the right.
32:36
First rung on the ladder in the right place.
32:38
So we think about things like healthcare and accessibility to healthcare. Starting wage rate.
32:44
What we do with a 401K program.
32:46
So that people who can save have an opportunity to save.
32:49
Helping them with an education.
32:50
Helping them get their GED if they don't have it.
32:52
Providing skills for people who are learning English as their second language.
32:57
We're trying to create that meritocracy that I described.
33:01
And I think the decision we made most recently to put a billion dollars into our U. S.
33:06
associates is an indication that we do care, and that we are listening.
33:11
And, you know, we're always gonna have critics, and critics have their own agenda.
33:16
I don't expect to ever escape that.
33:18
But if our associates and our customers know that we have good hearts and that we are well intentioned and that we are taking action in the right direction.
33:24
I think we will be in good shape. >> Hi I'm Daniel. Is this working? There we go.
33:31
I'm Daniel, I'm an MBA1 as well, I'm interested to here you talk about outside scrutiny both from a media perspective and also from the Wall Street stock analyst perspective.
33:42
As CEO, you know, you're the steward of shareholder value obviously.
33:48
Over the long term you're probably never have the New York Times and you'll always have Fox news in your corner >> I doubt it, if they [UNKNOWN] anybody in our corner that'd be great. >> So, who, who knows.
33:56
But so, in more recent times, we've obviously seen this incredibly exciting announcement.
34:02
As an avid Wal-Mart customer, you know, I'm very appreciative of what you've done for your employees, but every single press announcement has also said, and the decision coming after 6 quarters of same store sales being down. Right?
34:17
What link, you know, is, is this coming because as a management team you have to be really sensitive to what the street is saying, and what the press is saying.
34:25
Or at the end of the day do you have to take a 52 year view or a 152 year view and say, they'll always be critical to us in cycles, and we have to keep our eyes on the prize. >> That's a.
34:36
Keep, keeping your eyes, your eye on the prize and thinking a bit longer term is the way we feel about it.
34:42
And you mentioned the Walton family.
34:43
One of the benefits of having the Walton family own as much of the company as they do, is that you get to take a long term view.
34:51
So this is a family who benefitted greatly from the creation of Walmart.
34:56
Who cares about our culture, cares about our associate, cares about sustainability.
35:01
So we have a Board of Directors including our Chairman Rob Walton, who asks us to think about the long term and to do what's right for the business for the long term.
35:11
So sometimes, I will say, something like.
35:14
A big part of my job is to help position the company to be here 50 years from now.
35:19
I'll never make it in this job anything near 50 years.
35:22
So, really I'm worried probably about the next 10, you know, in a more tangible way.
35:27
So whether it's the investment in people or the investments in technology.
35:31
I mean we, everybody knows we're losing money in e-commerce in the short term to build capabilities that will help us in the long term. That mindset is vital.
35:39
And it's vital to surviving.
35:41
If you look at the history of retail, you could take a snapshot of the top 10 retailers in the world by decade, and I carry this around on a PDF on my phone to remind me-- it changes a lot, and fast.
35:55
So you'll see a company like JC Penny or Sears, or others who rise to a top spot and then they fall.
36:02
Big challenge at Wal-Mart is to be relevant in a way for customers, such that we can grow five years from now and ten years from now.
36:07
Because history is actually against us.
36:10
But the advantage that we have is that we can think long term. And we have resources.
36:13
If you make the right choices, invest in the right places, you can do it.
36:18
But these choices do matter. >> Hi, Emily, I'm Rose.
36:24
Thanks much for coming to speak with us.
36:25
I'm really interested in hearing how you think about Walmart relative to Amazon.
36:29
So, what scares you about Amazon?
36:31
How do you think Walmart competes with Amazon?
36:33
And, ultimately, how do you think Walmart beats Amazon? [BLANK_AUDIO]. >> Is Jeff here? >> [LAUGH]. >> [LAUGH].
36:46
The way that I was taught to think about competition in Walmart is that you should do everything you can to learn from them.
36:52
So, you can feel threatened by a great competitor if you wanted to, but it's actually more productive to think about.
36:58
What are they doing that the customer likes that we can learn from.
37:02
And I think Amazon and others have shown us that the customer wanted access to a broader assortment.
37:08
They love being able to do it in an easy way.
37:10
You know, doing it online and increasingly mobile has much less friction than getting in your car and driving to a store when you don't want to.
37:17
So we-, we've been thinking about these four different dimensions.
37:21
The first one I might call it as the breadth of assortment, and when we started opening super centers Scott, 120,000 SKUs versus a grocery store or a category killer, it, it, it out assorted those competitors.
37:35
You could do one-stop shopping more effectively, so we're winning on assortment.
37:39
But now the Internet's changed what assortment means, and assortment looks more like tens of millions of items than 120,000 items.
37:46
Value's different, price transparency's increased. Access is different.
37:50
You can get more delivered, you can pick more up in the future than you did in the past.
37:55
And then the experience has changed.
37:57
You know, we have a lot of customers that are using a home devices on the floor of our store.
38:03
They're using it for navigation, they're using to search, they're using it to buy an item they couldn't find in the toy department when they were looking for it, those kinds of things so the way we ultimately win against anybody.
38:14
Is we work across those four dimensions in a way that's unique, leveraging the supply chain and the assets we have, so that we end up giving customers a better value across a broader assortment, and help them save time, and hopefully surprise and delight them with a couple of things along the way.
38:29
So the investment digital matters and the way we put it together with stores is how we'll win.
38:35
Next question from Twitter, perhaps.
38:38
>> So you mentioned that going into national is very hard, one of your biggest investments has been in [UNKNOWN] which is a UK grocery market.
38:47
How successful do you think that investment has been and how do you think [UNKNOWN] will fare going forward?
38:53
In the changing retail landscape in the U. K.. >> Yeah.
38:56
I didn't answer the second part of the discounter question, and, in the U. K.
39:00
is, certainly seeing all the unleadle and the discounters do very well.
39:05
So, we feel their presence as it relates to Asda and our business in the UK.
39:09
By the way, if you don't know, we've got.
39:11
Over 50 different retail brands around the world and in the U. K.
39:13
where known as, as [UNKNOWN].
39:15
So what we have to do in that circumstance is to make sure that our opening price points, the entry level price points into each category, are strong and the quality is right.
39:26
Then we have to offer service, or assortment with a premium product that, enables us to win on assortment.
39:32
So, going back to those competitive dimensions that I was just describing, some combination of those four for applied in a market delivers the winning formula.
39:40
And we may have to tweak it here and there depending on what customers are, are offered from competition in a particular market.
39:47
Azda's been a great investment terrific talent.
39:50
Our current Walmart US chief operating officer is British, her name is Judith McKenna and she's now responsible for 1.
39:54
3 million US associates, which is fun, because she uses British phrases that most of us don't understand.
40:06
We're teaching a new form of English, but you know, this acquisition has been one of our better ones. Yeah.
40:15
>> Hi my name is Mihay Russ and I'm an MBA too.
40:19
You talked about e-commerce and the importance of the digital platforms and I was wondering if you could elaborate a bit more about your omni-channel strategy and how do you plan on breaking the organizational silos in a 52 year old organization where your e-commerce department and your retail branch are so far apart. >> Yeah. That's hard.
40:38
We've got some members of our e-commerce team here now.
40:41
And if, if you asked, you know, what could threaten Walmart, one of the answer I would give you is internal ways of working.
40:49
We have new ideas that may emerge from California but we have knowledge and experience in, in our core business a lot of it in our home office in Bentonville.
40:58
And how do you get those people to work together in such a way that the outcome's better than it would have been individually.
41:03
That's one of our big challenges.
41:05
So, we, we currently have some work underway to look at incentive alignment and how strategies are pulled together to make sure that they are cohesive and do work together.
41:16
A lot of it boils down to trust and relationships and people being willing, willing to listen to each other.
41:23
So, I was talking to somebody recently, and.
41:25
And they are on one side of the house.
41:29
But don't cross both sides.
41:31
And I said, you know, you may have 80% of that figured out.
41:34
The problem is, I don't know which 80%. And neither do you.
41:38
The other person in the room may know the other 20.
41:41
Your job is to help communicate what you think about the 80, but also listen.
41:46
So that you can find the other 20.
41:48
And, attitudinally, that's kind of what we need from our leadership team right now and I think we're generally getting there, but there's some things we need to do to make it easier so that it doesn't feel like it takes decision by consensus, which can kill you because speed matters too.
42:07
So if you worked inside Walmart today, this would be one of the hot topics.
42:11
There's a phrase that's emerged this year. Who owns the d?
42:15
Which means, ultimately who is the decision maker, because people wanna know so they can move with speed.
42:21
And I'm trying to help us figure out how do we move with speed but also use the appropriate collective wisdom.
42:27
Marissa Myer is on our board and we were talking in board meeting about this a while back.
42:31
And she said something like, you know, within our business there may be, just making this up, eight people who should really weigh in on a decision.
42:40
And sometimes we seek feedback from 40.
42:42
And I'm just gonna quit worrying about the 40.
42:45
Worry about the eight, make the decision and get moving.
42:47
And if the other 32 have something to contribute, they'll have to jump in front of the bus and try to stop us.
42:52
Because we gotta keep moving.
42:54
And it feels like within Walmart too.
42:56
We gotta get the right few people in the room to make the best decision and then get on with it.
43:00
And in a business of our size and our age that's a challenge. Great question. >> Another one up front. >> Hi.
43:07
I'm Nathalie, I'm a first year medical student.
43:10
And I'm really interesting in the rise of retail health.
43:14
Walmart is clearly a big player in this space.
43:16
So I was just wondering if you could comment on the future of Walmart with regards to breaking into the health care industry?
43:23
>> Yeah, the healthcare industry looks complicated from here.
43:27
[LAUGH] We are just a retailer, but the long standing pharmacy and optical businesses that we've had, we've got some Sam's Clubs that do a judge out with hearing and hearing aids.
43:41
Clinics we are, are doing.
43:44
We've tried several things with clean, clinics.
43:45
Third parties, partnering at hospitals in some cases doing more of the infrastructure on our own. Our customers want it.
43:54
Because they want affordable healthcare that's accessible and easy.
43:58
And so I think what you'll see us do is continue to slowly move into healthcare.
44:03
In the appropriate ways and a way that serves customers and helps us with traffic, but I think we should be very thoughtful and cautious as it relates to what we do to make sure that what we deliver builds trust with customers.
44:21
If we rushed into clinics and tried to put them in too many stores too fast, I'm certain the quality wouldn't be what we need it to be.
44:28
So who we partner with and how we go about it matters.
44:31
And we're learning, and we'll keep moving that direction because we think our customers want us to.
44:38
>> Healthcare's complicated up close, too.
44:40
I think we have time to one more audience question in the back corner here. Hi, I'm Nadine, I'm MA1.
44:46
You mentioned the Walton family's commitment to sustainability, and I was wondering how you thought that has played out at Walmart.
44:52
If it ever doesn't make short term business sense, and how some of those decisions might play out in a company that doesn't have that kind of family commitment and ability to think long term. >> Yeah.
45:03
One example would be capital investment.
45:05
So if you think about, renewable energy, I think we're at about 28% renewable energy globally at the moment.
45:14
Around the world, some markets are ahead of others.
45:17
Mexico is actually one of our leaders in this space.
45:19
They do a great job with renewables.
45:23
Capital investment in LED lighting in a store for example, which might have a higher upfront level of investment, but pay back over a period of time.
45:32
We're very comfortable making that kind of decision, so.
45:35
We were the first retailer to go to China with LED lighting, for example.
45:39
What we invest, related to refrigeration and the type of refrigeration that cuts down on greenhouse gases, that has a little bit of a short term negative impact, maybe more than a little bit, but we do it for those reasons that you decided.
45:54
So I think that's an example of where long term disposition helps and that does ultimately flow back to our board of directors.
46:03
>> I'd like to conclude by asking a question that has become a bit of a tradition here at Stanford.
46:08
All of the MBAs in the audience will have answered this question as part of their applications to the GSB.
46:18
What matters most to you and why? >> Oh.
46:19
>> [LAUGH] >> I'm still trying to please my grandmother.
46:22
[LAUGH] >> [LAUGH] >> That was a little too personal, wasn't it?
46:24
>> [LAUGH] >> That's probably true.
46:25
And my, you know my family matters a lot. >> Mm-hm.
46:28
>> So the faith, family matter a lot to me.
46:37
I'm also a very competitive person and I like to win.
46:39
And falling into Walmart has just been a, more than I could have ever dreamt.
46:47
So I, you know, I don't know what you guys are all gonna go do but I hope you find a place where you know you're in the right spot.
46:54
And if you're not move and go somewhere else.
46:57
We will probably all eventually end up at Walmart which would be fine. [LAUGH].
47:01
>> Well thank you for ending up at Stanford.
47:04
It has been a pleasure to host you.
47:05
Please join me in thanking Doug for joining us here today. [APPLAUSE]. >> Thanks. >> Thank you. [MUSIC]