Walmart's Judith McKenna on Synergy and Simplicity

Carol Spieckerman's between-the-lines take on Walmart COO, Judith McKenna’s recent presentation.

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Seven weeks after being appointed Walmart’s new COO, Judith McKenna addressed the Bentonville Bella Vista Chamber’s WalStreet supplier group with the ease of a true Walmart veteran. Although new to the COO position stateside, McKenna has over two decades of experience at Walmart, primarily within its largest international subsidiary, Asda, where her diverse responsibilities included logistics, e-commerce, financial services, and mergers and acquisitions. More recently, she served as chief development officer for Walmart U.S., with a primary focus on ramping up Walmart’s small-format growth and synergizing the retailer’s scale, both physically and digitally. The former goal is a fait accompli as Walmart’s once-modest Neighborhood Market site count recently raced to 600 locations, with 33 launched the day before McKenna’s presentation. In the release announcing McKenna’s promotion, Greg Foran, Walmart U.S. president and chief executive officer, cited McKenna’s expertise in “managing store operations, small-format growth, logistics and e-commerce” along with her knowledge of “global best practices” as key assets to Walmart' U.S. operations.

Reverse Osmosis

Foran’s mention of global best practices points to a subtle strategy shift that continues to gain traction at Walmart: gathering inspiration, innovation and human capital from outside the U.S. McKenna’s move across the pond came only a few months after Mr. Foran’s appointment as Walmart’s U.S. president. As McKenna noted, Foran is a “Kiwi” who joined Walmart’s international division from Woolworths, the leading retailer in Australia and New Zealand. The company just confirmed the appointment of another Asda veteran, Mark Ibbotson, to the role of SVP, innovations for Walmart U.S., working under McKenna. Walmart’s current CEO, Doug McMillon, is a true Walmart insider, having spent the majority of his post-college career in various roles at the company, yet his ascent to the top also came following a multi-year stint in the retailer’s international division.

Walmart clearly values global experience, and the new executive bench that supports this broader vision is already bringing a fresh perspective to its U.S. business. From day one, Foran has emphasized the importance of mastering block-and-tackle basics, with no detail too insignificant to escape his scrutiny; during an October investment meeting, he referred to everything from shopping cart wheel functionality to seasonal merchandising displays as “moments of truth” that, if properly executed, can add up to a sizable sales uptick.

“Pilots with Purpose”

Unquestionably, McKenna has played a significant role in accelerating Walmart’s small-format rollout and in getting other innovative format betas up and running, yet she also emphasized the importance of refining the “good suite” of ideas already in play before branching out into new territory. Her “pilots with purpose” mantra underscores Walmart’s intention to strike a balance between inertia and haphazard experimentation as the pace of retail change accelerates.

Walmart is currently perfecting several purposeful pilot programs, including its first Walmart to Go convenience store and its Pickup Grocery, both Bentonville-based betas, along with the multiple tests being run and refined in select markets such as Denver. Walmart’s Pickup Grocery only carries 2,000 well-chosen SKUs and according to McKenna, is already resonating with busy moms and single men. Small-format forays, particularly those focused on grocery services, have been all the rage among U.S. big box retailers, but they’re nothing new in the markets where Walmart’s newly-minted chiefs honed their craft. Tesco, Waitrose, Sainsbury’s, Woolworth’s and many other non-U.S. retailers are multi-format operators, and innovators. Walmart’s own Asda division continues to bring fresh updates through its established click-and-collect concept. McKenna’s international experience (Walmart operates 71 banners in 27 countries) and familiarity with faster-paced, early-adoption markets can’t be over-estimated, particularly as Walmart seeks to synergize its digital and physical assets.

Scale and Synergy

McKenna referred to digital/physical integration as a “big growth driver” for Walmart. Although the “tethering” fulfillment model, presented by Gisel Ruiz to the WalStreet group, has since been abandoned, the promise of leveraging thousands of physical locations to facilitate millions of online orders is alive and well. McKenna referred to in-store pickup as Walmart’s “key differentiator” and she can't be accused of hyperbole as dollar stores remain digital laggards and Amazon’s retail store count still sits at zero (although that could change in the blink of an eye and it just opened an inventory-less drop-off and pickup depot at Purdue University).

McKenna spoke of her affinity for simplicity several times and her belief that even difficult tasks can be accomplished in simple ways. She called on suppliers to bring “new items at great prices,” to focus closely on how products get into the store, including pack sizes, and to recommend fixture solutions that have worked well for other retailers. In general, she is asking suppliers to double-down on small-format-friendly supply chain efficiencies. At first glance, that  might seem a bit retro for one of the world’s global logistics leaders but not when Walmart’s ambitious next-stage convergence goals are thrown into the mix.

Like this article? You'll probably enjoy Carol's takes on other WalStreet executive presentations:

Walmart's Andy Murray Gives Creative Calls to Action

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10 Retail Positioning Hacks: A Cheat Sheet for 2015

Last year was a real retail thrill ride filled with heady ascents, stomach-churning drops, bold business model inversions, and shiny objects so blinding that even some of the most forward-looking companies were left squinting. Hold on tight. Retail is on track for more twists and turns in the year ahead, but that doesn’t mean you have to get thrown for a loop. Whether you trade in brands, products, solutions or services, I’ve curated a timely list of hacks and predictions that will keep your retail business development on the fast track as we hurtle into 2015 and beyond. 

POSITION TO THEIR PLATFORMS. Retailers are no longer companies that sell stuff – they’re platforms that tie together digital, social, and mobile outreach, partnerships and acquisitions, services, content, big data and more. Their reach now extends way beyond hundreds or even thousands of stores or millions of hits on a website. It’s exponential. Yours can be too, but only if you stop pitching and start positioning your assets in the context of retailers’ overarching platform goals.

RIDE IN THEIR WAKE. Back when retailers were just boxes that sold others’ brands, most were happy to plug your marketing campaigns into their platforms. It was a free pass. These days, retailers consider themselves brands, so they have a point of view. Smart brand marketers will tie into retailers’ top initiatives and themes rather than creating disembodied programs. The days of plug-and-play have passed.

STUDY THE SPECTRUM. Think all retailers are motoring on mobile? Are you sure that everyone’s vibing on video? Not so fast. Retailers’ platforms are more diverse than ever, but no two are following the same path or playing at the same level. For example, some are churning out digital innovations right and left while others are playing a mean game of catch-up. Some are tapping into recognized social media platforms exclusively while others are creating their own. It’s time to ditch assumptions and go deeper with your research.

GET READY FOR THE RETAILER-MANAGED ERA. Retail is “post-POS”. Transactional point-of-sale data is no longer the Holy Grail as user-based insights derived from social media, mobile and other sources take center stage. As I tell my clients, user marketing will be the new shopper marketing. But here’s the challenge: back when “vendor managed” was the rallying cry, retailers relied on you for insight. Soon, they’ll transition to hoarder mode as their caches of big data become more valuable and they hone their internal analytic capabilities. Retailers will be more discriminating about who they share this new data with and more demanding in terms of the actionability of what comes back to them when they do. In other words, you’re going to have to earn access.

MAKE PROCESSES PROPRIETARY. Retailers will still rely on insights from third party data providers in order to arrive at the much-coveted “combined view of the customer”. The rub is that no two retailers will take the same approach to carving up the data and acting on it. They’re going to become more possessive, not just of the data itself, but of the processes for gathering and leveraging it. Algorithms will be the hot new intellectual property, and retailers will expect protections around processes.

LOSE THE LAYERS. The technology start-ups that retailers are gobbling up in record numbers will soon influence more than digital strategy. As technology permeates every aspect of retail, the hierarchical, merchant-centric structures of the past will be compressed. Suppliers that maintain byzantine decision-making structures will start to stand out, and not in a good way, as the world of retail gets flatter.

REFRESH YOUR REFERENCES. “Brick and mortar” may describe a location, but it no longer accurately describes most retailers (increasingly, the same applies to “e-commerce”). Many companies are still compared with or referred to as “manufacturers” even though they no longer make anything (or on some cases, never have). “Channels” are no longer a relevant way to segment shopping behavior (but the term will take on new meaning as retailers evolve into media companies and content providers). As the pace of retail change accelerates, traditional definitions will become obsolete more quickly. Stay on top of transitions in terminology, and pay attention to the parlance of particular retailers.

MASTER THE MESSAGE, MEDIUM AND METRICS. Even though mentions of content and content marketing were ubiquitous in 2014, retailers are still in early stages when it comes to crafting strategy. Suppliers tell me that they are confused (“Who should we be talking to about this stuff?”) and retailers say they are getting frustrated (“Why aren’t suppliers coming to us with a plan?).  On the first point, retailers are creating new positions that center around, or incorporate, content planning right and left (get used to seeing “in the newly created role of…”). Watch for announcements and expand your relationships accordingly. As for retailers' frustration, they know that they can’t create all of the content they need to power their platforms, nor do they want to. They need your best thinking on which messages and formats work best in particular mediums, how those messages should be orchestrated across multiple consumer touch points (not just on a pet platform), and the metrics that make sense for each. Talk about opportunity!

SCORE WITH STORYTELLING. From retailers’ newly insatiable appetites for STEM talent to algorithms, robotics, beacons, and IOT, a litany left-brain concepts and skill sets have infiltrated retail. If crafting narratives is your niche or your greatest gift is gab, then you might be tempted to look for a new line of work. Hang tight. Retailers want stories that support the statistics and are beginning to value those who can articulate how data impacts or empowers diverse stakeholders. When it comes to retailers, numbers and inputs they’ve got, framing and context they’ll need. Calling all wordsmiths!

SEPARATE TABLE STAKES FROM SECRET SAUCE. In a recent interview, Chris Rock noted that “not enough people try to take into account what you’ve heard already.” Although he was venting about the current state of stand-up comedy, his words ring true in retail. Information is ubiquitous and instantaneous these day, and facts and figures that used to cost retailers a pretty penny are just a click away. “Passing along” news stories to retailers or posting them on social media without comment is a ticket to “meh” (chances are they’ve already seen it). Unless you’ve conjured up some fresh conclusions, presenting observation-based information or readily-available statistics at conferences or in retailer meetings is a yawn-fest waiting to happen. The bar for insights has been raised. Edit ruthlessly, and make sure to add your own twist!

Want to get a head start on hacking your 2015 retail strategy? Sign up for Carol's Retail Master Class at the Kidscreen Summit in Miami, February  23-26, or ping Carol directly to learn more about her Retail-ize workshops and Retail Trajectories presentations. 

What do the Golden Globe wins really mean for Amazon.com?

Carol's latest Retail Wire weigh-in on how Amazon's Golden Globe afterglow highlights a fundamental flaw.

Amazon's foray into original programming marks another profit-less market share grab move for the platform. Amazon's got the eyeballs, now how or where is going to make the money required to keep them? Wooing creators like Woody Allen to bolster Amazon's sophomore line-up won't come cheap, increasing Prime membership fees (again) may not fly and viewers won't take kindly to Amazon breaking up their binge watching sessions with advertising intrusions. Scale sans profits. How long will it work?

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