The City Wire editorial
When 47-year-old Doug McMillon became the new Wal-Mart Stores CEO on Feb. 1, he began a job responsible for more than 2.2 million employees and is expected to provide direction for a company under competitive attacks from all fronts and under a legal cloud related to allegations of corruption in foreign markets.
No pressure, right?
McMillon has been described as a “cool character” and a “very appealing leader.” He’ll need those qualities, and a truckload full of luck. To say Wal-Mart faces a unique set of challenges is to ignore the history of a global retail company that has emerged stronger and larger through a long list of challenges that the media often claimed were insurmountable. But the company does face serious challenges.
What we don’t know about McMillon is if he has an eye for talent. Sam’s success was largely driven by putting the right people in the right place at the right time. That’s a part of the job often overlooked by the Wall Street wizards. It’s the challenge that remains no matter the changes in technology, politics, world markets and the fickle nature of consumers.
It takes a lot of self-confidence and corporate political skill, aka ego and elbowing, to rise through and to the top of the ranks of the world’s largest retailer. And although the Walton family – Rob Walton remains a powerful board chairman – still has a lot of influence, McMillon will have a lot of say about the present and future leadership of the company. Will he, as did Sam, recruit, retain and promote smart people – irrespective of corporate background and academic credentials or the lack thereof, and sans the limitations of politically correct considerations?
Or will the ego and the corporate political skill cause him to be surrounded by Yes People and good suits and the superficiality of slick marketing concepts and focus-grouped talking point?
What we also don’t know about McMillon is how he will or won’t change the focus on key initiatives the company rolled out under other leaders – especially the effort by Wal-Mart to return some manufacturing jobs to the U.S. In 2013, Wal-Mart announced it would buy an additional $50 billion in American products over the next decade. Wal-Mart estimates that during the next decade the investment will total $250 billion. The program has been championed by Bill Simon, CEO of Walmart U.S., and McMillon’s chief rival for the Wal-Mart Stores CEO job.
There is precedent for Wal-Mart losing steam on previously hyped programs.
In 2007, then Wal-Mart CEO Lee Scott boldly said the retailer would open 2,000 in-store clinics by 2012. As of January 2014 Wal-Mart operated about 140 clinics in-store, and the company has had little to nothing to say in recent years on this effort.
In 2008, Walmart spent a lot of time on “Project Impact,” a plan to update store layouts and de-clutter the stores by reducing the number of items sold in each store. That effort fizzled, and by 2011 the company had returned thousands of items to Walmart U.S. stores.
Then there were the fashion and apparel reversals. In 2005, Wal-Mart bought ads in Vogue magazine – yes, that Vogue magazine – to launch a trendy new apparel line. Within a few years, the retailer quietly moved back to a “just basics” apparel line that focused on such glamorous items as t-shirts, jeans, socks and underwear.
The company was also going to spice up its apparel by moving its apparel division to New York City – yes, that New York City. After adamantly denying reports that it would move several employees from Bentonville to New York City, the company in February 2009 did just that. How did that go? Not well. The division was moved back to Bentonville in in early 2012.
Walmart U.S. announced in June 2013 a “Made in Arkansas,” “Made in Oklahoma” and “Made in Missouri” programs in stores in those respective states. Products made in-state were to be showcased. The program never really got off the ground, and not all store managers were compliant.
But let’s hope McMillon doesn’t lose interest in the Wal-Mart push to return manufacturing jobs to the U.S. The effort has already resulted in thousands of jobs returning to America and to Arkansas. If Wal-Mart is successful, the effort could cause other retailers to mimic the pledge.
Arkansas Gov. Mike Beebe and Mike Harvey, chief operating officer for the Northwest Arkansas Council, have said they believe Wal-Mart will stay committed.
“I think they are going to follow through. First of all, they don’t have any choice. … Once they announce this bold initiative … and put someone as high up as Bill Simon (president and CEO of Walmart U.S.) in charge of it, it has a lot of legs,” Beebe said in an August 2013 interview with The City Wire.
Harvey said he is “100% certain” Wal-Mart will remain committed to the 10-year effort. He also said the effort could cause the trend of U.S. manufacturing job losses to reverse course.
Harvey has much more confidence than we do. We’re never 100% certain with anything related to Wal-Mart. And that’s not a negative. Things change. Trends change. The world changes. What happens when Bill Simon is no longer the Walmart U.S. CEO?
So, what will Doug do? If we knew that we’d be buying or selling Wal-Mart shares instead of writing this editorial. For the sake of Arkansas’ economy and the future of manufacturing, let’s hope Mr. McMillon has a touch of Sam and a soft spot for manufacturing.
Much luck, Mr. McMillon.