Walmart just announced its most recent earnings report, and the results have people talking.

For one thing, comparable sales at  Walmart's U.S. stores grew by 4.5 percent--its strongest growth in more than a decade. But it's another statistic that's most impressive:

Walmart's U.S. e-commerce business grew at a rate of 40 percent.

This is no easy feat, considering the company's digital retail efforts had showed signs of a slowdown earlier in the year. But Walmart CEO Doug McMillon is a firm believer in the plan he's presented to shareholders, and he's sticking with it. 

Not everyone has bought into McMillon's strategy over the years, but these recent results indicate the company is heading in the right direction.

Seeing the future.

McMillon took over as Walmart's chief executive in February 2014. At the time, most shareholders were happy with Walmart's performance, with an annual profit of $16 billion and hundreds of new stores opening across the country.

But McMillon saw big problems.

For one thing, he felt the company wasn't doing enough to compete with Amazon. The attitudes of consumers were changing, with more and more people shopping online. Additionally, many stores looked run down, and the shopping experience was lacking. Processes were old and broken, and employees lacked motivation.

In McMillon's view, while Walmart appeared to be in great shape, in reality it was sick--suffering from the disease of complacency.

The new CEO knew changes were needed. The company announced plans to invest heavily in e-commerce, an improved shopping experience, along with higher wages and employee benefits. 

Investors thought McMillon was crazy. The stock price dropped to its lowest amount in years. 

But fast forward, and the plan seems to be working. For example, take note of the following changes Walmart has recently made:

Drastically increased e-commerce presence.

To better compete with Amazon, Walmart spent over $3 billion on e-commerce company Jet.com, and $16 billion on Indian e-commerce behemoth Flipkart. More recently, Walmart formed a strategic partnership with Microsoft to accelerate its digital retail efforts.

The company also gave its website a complete makeover, streamlining the shopping experience, which has no doubt helped contribute to the 40 percent increase in online sales.

Highlighting of premium brands.

Walmart's reputation has traditionally been based on an inexpensive, off-brand shopping experience, but the company recently forged a partnership with Lord and Taylor, allowing it to stock premium brands like Calvin Klein, Donna Karan, and Tommy Hilfiger, among others.

Additionally, Walmart spent millions acquiring niche clothing retailer Bonobos and online footwear outlet ShoeBuy (now rebranded as Shoes.com). 

Blended shopping experience.

In the past, Walmart's huge amount of real estate was seen as a weakness in its efforts to compete in e-commerce, but the company is trying to turn its stores into a strength--by combining the digital and brick-and-mortar shopping experiences.

For example, many Walmart locations now feature devices called Pickup Towers, which hold merchandise a customer has already ordered online. After completing an order at home, a customer can come into the store and use the Walmart app to retrieve their items from the Pickup Tower.

Walmart also features pickup discounts for certain items purchased online. And some stores give customers the option to order groceries online, which they can then pick up in the store (or have delivered).

Employee empowerment.

Walmart has also taken noticeable steps to invest in its people. 

Here are just a few initiatives Walmart has already announced or implemented:

  • Starting salary raised from $9 to $11 per hour
  • Expanded maternity and parental leave benefits
  • An adoption benefit of up to $5,000 per child that may be used for expenses incurred in connection with adopting a child
  • An education program that provides discounted college tuition, books, and fees, along with access to a coach to help guide employees through the process of choosing and applying to a school
  • The Walmart Academy, a two- to six-week training program geared toward helping supervisors, department managers, and assistant managers advance

Through these initiatives, McMillon and company have demonstrated emotional intelligence by showing employees they're serious about having their backs, and giving them the tools they need to be successful.

It's not easy to pull off major change in a public company, especially when most shareholders are happy with the status quo.

But by identifying the rapidly changing retail landscape, McMillon had the vision not only to see that Walmart could do better, but that in order to survive, it had to.

Published on: Aug 20, 2018
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