Inside This Issue - Opinion
New Walmart CEO to face early tests
February 5th, 2014
Doug McMillon has his work cut out for him.
The 47-year-old executive, who took the helm at Walmart on February 1, begins his tenure at a moment when the world’s largest retailer is beset with problems. The day before McMillon succeeded Mike Duke as president and chief executive officer, Walmart scaled back its earnings outlook for the fourth quarter and fiscal 2014 by 10 cents a share, citing continued soft sales at its eponymous U.S. stores, unexpected weakness in demand at Sam’s Club, and onetime charges related to global operations. If dealing with those issues were not enough of a challenge, McMillon will have to address Walmart’s battle with the National Labor Relations Board over the company’s disciplinary action against employees who took part in a series of intermittent strikes and the specter of unresolved allegations that in years past bribery was involved in expansion efforts in Mexico and other countries.
Protecting Walmart’s preeminent position in the rapidly evolving retail sector is another test for McMillon. While the company’s sales of $469 billion remain more than four times those of Tesco, its nearest global rival, finding new ways to grow the business has proven difficult, and the mantle of innovation has passed to Amazon and other Web-based merchants.
Too often in recent years Walmart has found itself playing defense. Even some high-profile initiatives, including the augmentation of its e-commerce capabilities and the development of the small-format Express stores, can be seen more as a response to what other merchants were doing than an attempt to lead. One of McMillon’s top priorities should be to put Walmart back on the offensive, creating the conditions where it once again sets the agenda for mass retailing.
Indications are that he may be equal to the task. McMillon started his Walmart career in 1984 working at a distribution center during the summer. After joining the company on a full-time basis as an assistant store manager in 1990, he held a number of important leadership posts, including head of Sam’s Club and CEO of Walmart International. McMillon has firsthand experience of the company’s evolution from the entrepreneurial operation founded by Sam Walton to the big business that it is today, giving him an ideal perspective from which to judge what Walmart needs to do to remain at the top of the field.