Inside This Issue - Opinion
Simonís what Walmart needed
August 23rd, 2010
by David Pinto, Editor
It’s been a while since a personnel change in the retail community has had the initial, and initially positive, impact that the elevation of Bill Simon to president and chief executive officer of Walmart U.S. has exerted on both the retailer’s workforce and the mass retail community.
Simon, who came to Walmart in March 2006 as executive vice president of its specialty division, had previously been known primarily as the architect of the retailer’s $4 prescription drug program, an initiative that, though initially met with disbelief and disdain throughout the retail pharmacy community, has irrevocably altered the way prescription and over-the-counter drugs are marketed, priced and sold. Indeed, the $4 prescription drug program has found its way, in some form or other, to most of the mass retailing community.
Other than that, Simon has labored at Walmart in relative obscurity, at least in so far as the retailer’s competitors and suppliers judge these things. No longer. In his new post Simon is responsible for the retailer’s more than 3,700 U.S. stores. As such, he is now the retailer’s No. 2 U.S. executive, second only to CEO Mike Duke. Globally, only Doug McMillan, head of the retailer’s international operations, occupies that rarified atmosphere.
Simon comes by this job honestly. In his four years at Walmart, after having previously worked for Brinker International, he has, for both his effectiveness and his humanity, won the respect and affection of staffers throughout an organization that had in many significant ways become a house divided. Internally, then, his ascendancy to the top U.S. job was greeted with applause at the selection and relief that it had finally come.
Simon replaces Eduardo Castro-Wright, an executive who allowed the retailer to stray too far from its roots and its culture. Indeed, it was an open secret in the mass retailing community that Castro-Wright had embraced the wrong programs at the wrong time in the wrong economic climate, giving the retailer more of an upscale look, appearance and positioning during a period of economic downturn when it most needed to bond with its core shopper, a person who, living dangerously close to insolvency, was more heavily dependent than ever on Walmart’s product assortment and pricing policy for survival.
Then too, Castro-Wright had apparently all but forgotten the supplier community, one that had formerly been viewed and treated as integral to the retailer’s legendary success.
Clearly, then, the time for change had come — and, to their credit, both CEO Mike Duke and Walmart’s board of directors recognized that fact and, after vacillating for a year because of medical issues in Castro-Wright’s family, finally pulled the trigger.
To good effect. Simon’s first weeks on the job have been, by all accounts, very positive and productive ones. Internally, he has assured the Walmart associates that past mistakes of judgment and execution are being addressed and corrected, and that the retailer is quickly returning to those concepts that have made it successful.
But his biggest impact to date can be found in the open and honest way he has approached the company’s major suppliers. Initially, he asked his merchants to identify their most important vendors. Since then, meeting with suppliers both individually and in groups, he has delivered a consistent and consistently uplifting message.
Telling them candidly that senior management never realized that Walmart had gone so far off the rails in its relationships with suppliers, he assured them that the value the retailer had traditionally placed on supplier relationships would be restored, embraced and enhanced, that, going forward, supplier opinions, interests and concerns would be solicited, considered, and, where they could be shown to benefit the company or the customer, acted upon.
Within the supplier community, the initial reaction to this new openness on the part of this very important customer has been barely restrained joy mixed with the hope that this openness is but a preview of coming attractions, and that Simon will support his pledges with appropriate action. Still to be determined is how quickly Walmart’s merchants will reach out to suppliers they had come to ignore in recent years.
But here too, initial indications are positive, if only because many of the retailer’s longtime merchants had been openly critical of the directions the retailer had embraced of late, and more critical still of the leadership within the merchandising ranks that had taken Walmart down the path of vendor indifference (leadership, by the way, that has also been eliminated).
Thus, the stage has been set for Bill Simon’s acceptance into the mass retailing community. Associates and suppliers have already reached out to him, as he has to them. And even the retailer’s more enlightened competitors — those who had become particularly alarmed by supplier responses to the increasingly unrealistic and irrational demands America’s largest retailer had been making on suppliers, demands that affected business throughout the retail marketplace — quietly applauded the Simon promotion.
So if you believe in the theory that prosperity at Walmart ultimately means prosperity for the entire U.S. retail community, you have to applaud the retailer’s decisiveness in addressing an inflammation that was becoming serious enough to threaten its future, while insuring that future by giving the best candidate the top job. To paraphrase Winston Churchill, this may not be the end of Walmart’s struggle to regain its footing, or even the beginning of the end, but it is surely the end of the beginning.