Walmart held the series of events that comprise its annual meeting earlier this month on its home turf in northwest Arkansas, and, according to a well-established pattern, the occasion afforded the company the opportunity to celebrate its accomplishments, recognize its workforce and look to the future. Walmart’s eminence as the world’s biggest retailer has long ensured that the associate and shareholders meeting attracts a great deal of scrutiny, from both fans and critics of the organization, a fascination that has intensified along with the company’s rivalry with e-commerce giant Amazon.
This year was no exception. Vermont Senator Bernie Sanders, who is running for the Democratic presidential nomination, appeared at the formal business meeting where stockholders cast votes on proxy proposals. He used the forum to denounce the company’s compensation practices for hourly store associates.
“Walmart pays many of its employees starvation wages,” Sanders asserted. “Surely, with all that,” he added, alluding to the company’s half-a-trillion dollars a year in revenue and the wealth accumulated by the family of founder Sam Walton, “Walmart can afford to pay its workers a living wage of $15 an hour.”
Executives took the politically motivated appearance in stride. After acknowledging Sanders’ presence, chief executive officer Doug McMillon, who started his career at the retailer 28 years ago as a part-time worker, cited the steps the company has taken to improve compensation for associates. “We’ve moved up our starting wages in the U.S. by 50% in the last four years, and we continue to adjust on a market-by-market basis to recruit and retain the talent we need to run a good business,” he said. “In fact, over the last four years, we’ve invested an incremental $4.5 billion in pay, beyond our traditional wage increases, for our U.S. and club associates.”
McMillon went on to remind Sanders and other members of Congress that they too have an important role to play in how much compensation workers receive: “It’s clear by our actions and those of other companies that the federal minimum wage is lagging behind — $7.25 is too low,” noted McMillon. “It’s time for Congress to put a thoughtful plan in place to increase the minimum wage.”
McMillon’s response to Sanders’ comments typifies his approach to running Walmart — tackle an issue head-on; assess and, if the situation requires it, explain the company’s current position in relation to the challenge; and look for ways to enhance that position as part of an overarching process of continuous improvement. The plan of attack has brought about a new mindset at Walmart, one that has seen the quintessential discount store operator remake itself for a marketplace transformed by technology.
“Retail history teaches us that those that fail to adapt will struggle and eventually perish,” McMillon said at the annual meeting. “So these past few years, we’ve made significant investments to put us on a stronger path.
“We’ve invested in our associates with higher pay, training and education; in new technology for our associates; in lower prices for our customers; and in our e-commerce business to help ensure our future.”
Since McMillon became CEO in 2014, Walmart has, indeed, made great strides in all those areas. An insider who early in his career crossed paths with Sam Walton, McMillon has proven himself the right person to build on the company’s storied past by refashioning its guiding principles for the new digital era.
“Sam Walton was a problem solver,” recalled McMillon. “Sam thought people who lived in smaller towns deserved low prices on a broad assortment of quality merchandise, just like people who lived in larger towns. He saw the intersection of these ideas.”
Fast-forward to today, when McMillon and his team are applying the problem-solving mentality that motivated the company’s founder to the evolving needs of contemporary consumers. “Walmart creates opportunity,” McMillon said. “We don’t shy away from problems. They actually are opportunities. We embrace them. We grow and change. We adapt.”
Those words are an accurate description of Walmart in recent years. Thus far, the company has succeeded in reorienting a massive organization and aligning it with the imperatives of the new omnichannel marketplace in impressive fashion. The task they now face is maintaining and accelerating that momentum.
Competitors will not give Walmart time to rest on its laurels. Amazon, the catalyst for the latest revolution in mass market retailing, just as Walmart itself was for the previous one, remains a relentless innovator. And many of Walmart’s traditional rivals in the realm of brick-and-mortar retailing, including Target, Kroger and Albertsons Cos., are working hard to allow their customers to shop whenever, wherever and however they choose. McMillon understands that, in order to stay ahead of the field, Walmart will have to continue to innovate, and do so at an even faster pace than it has over the past five years.