Wal-Mart’s plans for U.S. and international growth are closely tied to vast changes in consumer behavior, Lee Scott, former chief executive officer, said in a presentation here.
The retailer’s strategies, ranging from urban store growth to expansion in emerging markets, are built around major shifts in customer profiles, he explained.
“The stage has been set for the most volatile and complex times in world history,” said Scott, a 30-plus year veteran of Wal-Mart who served as CEO from 2000 to 2009. “Technology and social networks are driving equality–creating a customer that will know more about your store than you do.”
Scott’s remarks came during a session at the American Bakers Association Convention, where he was interviewed in front of a supplier audience by David Orgel, SN editor-in-chief.
Scott said Wal-Mart’s strategy for success in this new milieu hinges on looking to where customers will be instead of where they have been. This equates to being fast to act, nimble, and willing to widen perspective and commit to change in order to evolve with consumers.
Wal-Mart’s new, urban model is evidence of tieing into consumer demand. Uncharacteristically small store footprints of 20,000 ft. are planned to mine retail spaces in areas such as downtown Chicago and Philadelphia. New York City has been a moving target evading Wal-Mart’s sights due to union disputes, but Scott disagreed with those who believe the New York City market is an absolute necessity for Wal-Mart. “There are a lot of places for Wal-Mart to grow,” he said.
Scott’s vision for Wal-Mart also involves the global growth of a middle class in emerging economies such as Brazil, China, Russia and India, among others, which are experiencing fast growth in consumer spending, he said.
The company faced an image problem during Scott’s tenure as CEO. Charges levied against the retailer related to poor labor conditions and a perceived assault on small, private businesses.
Scott helped lead Wal-Mart to make gains in a number of progressive initiatives, including sustainability. The green initiative has been no easy task, but it’s indicative of how Scott approaches problems. “Sometimes you can over-think things to the point where it paralyses you,” he says, noting senior management were concerned about pursuing goals that might be unattainable.”
Instead, Scott set aspirational, ideal-world goals that were unlikely to be hit, but they got the company out of gridlock over the sustainability question. “We set crazy goals and sought to improve every day. That’s what gave us the power,” he said.
Over time Wal-Mart increased engagement with local communities, and better-polished social and environmental policies, moves that seemed to decrease the level of negative public perceptions.
According to Scott, a company doesn’t have to choose between doing good for itself and doing good for the community, country or world. “It’s at that intersection that we see the most challenges, but also, the most opportunity,” he said.
Scott carefully dismissed questions about a potential foray into politics, citing an unwillingness to be unauthentic, and quipping that if he were to run for president, he’d first “have to go back and relive parts of [his] life.”
Scott credited his success in growing Wal-Mart with a unique company culture that abhors egos and promotes teamwork, all the way up the corporate structure. In fact, Scott credited his rise with hiring the right people, and then ensuring they got all the credit for successes.
“Don’t be afraid to hire someone who’s better than you. And sharing the credit is a cop-out; give it all away,” he says. “Someone once told me that anyone giving out so much credit must be quietly responsible. Well, I wasn’t.”
Wal-Mart currently employs 2.1 million associates, and operates more than 7,000 unites in 16 countries. The retailer tops $260 billion in yearly retail sales in the U.S. alone.