Walmart's Judith McKenna on Synergy and Simplicity

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

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