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Doug McMillon versus Jeff Bezos

Walmart International president and CEO Doug McMillon isn’t due to replace current Wal-Mart Stores president and CEO Mike Duke until February, but when he does the most pressing matter on a long list of priorities will be executing the company’s digital vision.

Being the CEO of Walmart is a job unlike any other. Walmart president and CEO Mike Duke’s successor will need to manage all the challenges inherent in an exceedingly complex global enterprise of 11,000 stores and more than two million employees with annual sales poised to surpass $500 billion. Adding to the challenge is the fact that Walmart has taken the position that it will leverage its size to be an agent of change on a range of societal issues. Consequently, the next CEO has an additional set of nontraditional stakeholders to satisfy beyond investors who want profits and dividend growth, customers who expect quality products and low prices and employees who require fair wages, benefits and advancement opportunities.

While an abundance of challenges await Walmart’s next CEO, e-commerce is the single most and winning in a digital world promises to be the issue that defines Walmart’s next CEO. Duke and his predecessor Lee Scott have both expressed regret at various times regarding Walmart’s e-commerce efforts. Scott lamented not recognizing the digital opportunity sooner during a nine year tenure as CEO that ended in 2009, while Duke has expressed regret for not accelerating e-commerce efforts earlier during a tenure that will have spanned five year when it ends in 2014.

More recently, the company has attempted to make up for lost time. During the past 18 months, Walmart appointed Neil Ashe as president and CEO of Global eCommerce, completed multiple acquisition of innovative companies that brought new talent and fresh thinking from the digital world. Major initiatives such as development of a new search engine were pursued and the e-commerce unit went on a hiring spree. Investments in e-commerce this year will impact Walmart’s earnings per share to the tune of 10 cents and Ashe is now a regular participant in the company’s quarterly conference calls where he recaps digital efforts.

The flurry of recent activity means Duke’s successor will have an e-commerce base on which to build. Walmart currently fares better than any of its old line brick and mortar competitors. Walmart.com typically ranks among the top 25 most frequently visited U.S. Web sites each month as tracked by comScore Media Metrix and the company has projected online sales this year will total $10 billion. Further evidence of Walmart’s heightened commitment to e-commerce and multichannel integration is likely to be evident during the upcoming holiday season which promises to be the most digital ever.

Even with the progress to date, there is a sense that Walmart is only scratching the surface with e-commerce while Amazon.com maintains breakneck growth, enters new categories and rapidly expands distribution capabilities to accommodate faster deliveries. Meanwhile, Walmart remains the most brick and mortar of the brick and mortar retailers. Its 11,000 stores encompass nearly 1.1 billion square feet, or roughly 38 square miles of selling space, 15 million square miles than the 23 square mile land mass of Manhattan.

Walmart’s vision – largely unrealized to date – is to leverage that expansive collection of physical assets to deliver a uniquely Walmart multichannel experience that can’t be replicated by competitors. Doing so will allow the company to drive global growth by gaining share of wallet with existing customers and attracting new ones to the fold. It will be up to Walmart’s next CEO to capitalize on new growth possibilities and ensure the company’s physical presence becomes an even more valuable asset rather than a liability.

This article first appeared in the fall edition of Walmart Supplier News and has been modified slightly as it appeared prior to the McMillon’s appointment as CEO.

 

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