- Hello, and welcome to CES 2021. I'm so excited to bring to our digital CES keynote stage Doug McMillon of Walmart. Doug, thanks so much for joining us here.
- Thanks, Tiffany, thanks for having us.
- Yes now, you know, this is a little different CES 2021. But the great thing with technology is that we have the ability to still meet and still engage and have wonderful conversations and significant conversations about what's happening in our world today and the role of technology. And, you know, one of the things people may be saying is, you know, why is Walmart at CES. But as we say, every company is a tech company. And Walmart's no different when it comes to innovation. So, you know, I would love for you to kind of speak to a lot of the work that Walmart's doing and how technology is a central part to that.
- Yeah, well, it always has been, you know, I think the supply chain is one of the areas where people would recognize that Walmart's been a leader from the early days as it relates to how we put technology to work. That's certainly true today, but it's done in a different way than it was in the past. And it's very exciting, actually, the way the company has changed our way of working to put technology to work, whether that's software or the way we use our data, or increasingly, the way we use robotics in our business. There's a ton of innovation happening here and it's moving very quickly. And this last year has accelerated that because it had to, and our teams have done a terrific job, a really strong technology team. But the big change that's happened is the way in the way our merchants think, the way our operators go to work. I mean, it's it's a very different environment, and one that has enabled a lot of progress as it relates to how we serve customers. So the way we serve them today is multifaceted and quite different than what we were doing before. So we've been here working on modernizing our tech stack, changing the way that we work together as teams. And that's resulted in a lot of speed and a lot of innovation.
- So one of the things I think he's talked a lot about, like finding the new for Walmart, and particularly making sure you're looking outside. And whether it's your trip to Silicon Valley, you recognize that's important. So as you think of the new for Walmart, I know we'll talk a little bit about kind of what's been announced and what you all are working on. But how do you approach the new and sticking it out for Walmart? And how does that look for innovation?
- Yeah, it's always been true that as business leaders, we have to learn and apply. I think that's only sped up over time. And our view has had to broaden, I think our perspectives have to change as leaders and Walmart leadership hasn't been going through that as well. So we are a bit of a connected ecosystem in terms of where knowledge comes from. There are certainly good ideas that come from within our company from frontline associates and other leaders. But we get a lot of insight from folks outside the company, all types of people, business partners that we have, the suppliers that we work with, and other thought leaders. And we've tried to be pretty deliberate, especially in recent times about establishing those networks and being connected and learning together about what the future of AI will mean, or how robotics can change our business and how 5G's can impact how people want to live and shop and what that means to how we need to change our business. And one of the more interesting things to think about in my view is not any single technology that's changing the world. But it's how they all come together and making those choices about where we invest and where we don't. I mean, we've got to get better at forecasting demand. So artificial intelligence in the way we use data is really important. And we have to get better at saving customers time. And we've got to be able to personalize to do that. So we need to get better at the way we interact with our customers as it relates to data. Always earning their trust, never surprising them with how their data is used. But doing it in a way that makes their life simpler and easier. Robotics is another area, we've got automation that's happened in our stores in our distribution centers and more in front of us in the future. I was just traveling recently down to one of our distribution centers and looking at the next generation of automation. And it's really exciting to see what's what's happening. I think it'll help us improve in stock levels, help us with inventory turns. There's just so much change right now, I just celebrated my 30th year with Walmart. And there's more change happening right now than at any point in in those 30 years.
- I love it. So you all as far as the kind of new things that Walmart's working on, you all launched Walmart+, and that was a significant undertaking I'm sure. Can you tell us how it's going and kind of how the innovation was involved in that?
- Yeah, we're excited to finally launched and pleased with how things are going so far. It's just one more piece of the puzzle. You know, we we offer an everyday low price. Our philosophy is we want to manage our pricing strategies and our supply chain to smooth things out and reduce costs as we do that. And so Walmart+ is one component of us trying to serve customers better, give them services. On top of that everyday low price platform, things like delivery from our super centers and our E-commerce fulfillment centers with an annual membership so that you can save money on being able to get delivery. Customers want to save money on that, just like they want to save money on merchandise. And so Walmart+ will be an important way for us to build relationships with customers to have some data that we'll be able to use to serve them more effectively. We've also got a fuel benefit related to Walmart+, and also a scan and go function where people can check out on our stores without going through the whole checkout process. And there'll be other things that will come along to make Walmart+ more robust. It'll be unique based on our own assets and capabilities, not copying anyone else. And we see it as something will just grow in time, we've got to build capacity for delivery, for example, and we don't want to get too far ahead of ourselves as it relates to how many memberships we're selling. But it's growing nonetheless. And I think it'll be one important component of our strategy for a long, long time.
- Wonderful, so one of the reasons we're not in person in Las Vegas is because of the pandemic. And I know that Walmart has shifted considerably and particularly in the health care space, and even before COVID, it was something that was going to, that was very important to Walmart. And one of the things you've said that, you know, you have a goal to provide preventative quality, accessible health care. And so you all have a lot of partnerships particularly, you know, if you can talk broadly a kind of how Walmart is approaching health, and then particularly to the kind of burl down in what you all are doing with the pandemic and COVID-19.
- Health care has been important to us for a long time. You know, we help cover a lot of our associates, we serve customers with pharmacy and optical and Hearing Services in some locations. We've had some clinics for a period of time. They started out as urgent care. But lately, Walmart health, which is a clinic offer, has pivoted, as you said to a preventative approach, which which we think is really important. Our goal is to bring value, quality and price and everyday low transparent price for services to preventative care in a way that is easily accessible, not intimidating, transparent in terms of value and pricing. And so we've been opening these preventative clinics, Walmart health now for, gosh, maybe almost two years now. We started in Georgia, I guess it's been maybe a year and a half or so. We're now in Chicago. We've got one unit here in Arkansas and more plans going forward. That's one component of what will be an omni channel health care offer both digital and physical. There are obviously components of health care that will always be in person and personal and human in their orientation. But there are other components the way we use data, the way digital can play a role. Of course, Telehealth has exploded during the pandemic, that we can stitch together in a way that we think will be unique in terms of our approach and leveraging the assets that we have and the culture that we have to serve. So we're excited about that future. We're learning and growing and have new team members here helping to figure that out, which is really exciting. And it's been helpful to have that that capacity, a chief medical officer, for example, and other health care expertise within the company as we face the pandemic. And our journey started in China in January, as the pandemic began, and obviously has spread around the world. And we've been making all kinds of choices, you know, policy decisions to support our associates, protect their health, with operational changes, PPE, things related to leave policies so that somebody needs to be away from work to care for someone else, or they themselves have been impacted in some way all those things are being taken care of. I'm in the stores talking to our associates all the time, and I was talking with some associates in a store in Alabama a couple of days ago, and they're just being so courageous. You know, coming at time like this they just keep showing up and stepping up to serve. And it's tough to be in a store environment with all of the things happening with inventory levels and serving customers, some of which that don't want to wear a mask, even though we have a mask mandate. I mean, it's challenging in the real world to execute this, but they're doing such a beautiful job doing it. We've been learning as it relates to testing various forms of tests for our associates. But also now getting involved in vaccinations, and we're working state by state, New Mexico was the first place that we started, but we're now involved with quite a few states as they make decisions about which groups are in one A one B, two, how does that impact health care frontline workers, but also retail store associates like the ones that we have making sure that we can handle the Pfizer vaccine, the Moderna vaccine and do so appropriately and safely. And that's a learning process. And we're having to be flexible as we try to operate state by state. But we feel like it's absolutely the right thing to do to lean into this and help figure it out. And so that's the approach that we're taking.
- Excellent, you talked a little bit about kind of how the business has had to pivot with COVID-19. Can you share a little bit more particularly the business and the workforce, kind of how you all had to pivot, particularly you mentioned a little bit about kind of work hours and working in the stores, mask. But can you talk a little bit more kind of what's changed over the last several months, and how you all had to pivot to still continue to provide valuable services for Americans and well, not just here in the US, but globally?
- Sure, as with all of us, I suppose it was a bit chaotic and confusing in the beginning, a lot of uncertainty. We didn't have a playbook that was perfectly laid out before this began. So what happened is a kind of a few weeks in, it became apparent to us there were five priorities that we needed to have in a ranked order. And that helped us focus our minds and set priorities and make choices. The first priority was to keep our associates safe. So every day we're getting up visiting stores, listening to our associates, asking what more we can do. And that's where all the operational changes, that PPH, PPE changes and the other things that we did all came from, and that was fast. I mean, it's amazing to me how quickly our team was able to secure 10s of millions of masks, surgical masks for our associates in the early days. They put up plexiglass across our cashier stands in our pharmacy in a matter of days and weeks nationwide, which was incredible to me. There were times where our team was identifying something that needs to be done. And they would share with me how fast they thought they could do it. And my internal voice was, there's no way you can do that that fast. But I knew enough not to say that. And sure enough, they got those things done, and so quickly, which was just really impressive to me. So number one was protect our associates, keep them safe. That's the physical health, financial health, emotional health and support, all three dimensions are important. The second priority was to keep the supply chain moving. You'll remember especially in the early days, there was pressure on the country's meat distribution system. And there have been really a lot of challenges across food in the beginning and then general merchandise after that. I was in a store not long ago, where we're still really struggling to be in stock on adult bikes, and all the things that people want when they're at home. Or they want to, you know, get outside the house take care of their yard, all those kinds of things, those, the demand really changed on a lot of those items. So that created stress on the supply chain, and we turn inventory fast. So we weren't sitting on stock piles of things waiting for something crazy like this to happen. So it was a lot of work and our merchants did a fantastic job keeping the stores in stock and recovering through all of that. And the third priority was to manage the business well, I'm sorry, the third party was to help others. And we forgave rents, we gave suppliers different terms, we did other things, knowing that we had cash flow. And some of our partners and people that are part of our big supply chain needed help. And we did a number of things like we ended up hiring more than half a million people in a matter of months. And our people team figured out how to change our hiring process, including the background check and make it goes so much faster. What used to take a week was taking 24 and 48 hours. So we hired bar attenders that didn't have a job, we hired, you know all kinds of people that needed to come and work for a temporary period of time, some of which are still with us. Some of them have gone back to the jobs they had before as reopening has occurred around the country. Now the fourth priority was to manage the business in the short term and don't run into into any cashflow problems or things like that, which in the beginning were a concern. And then the fifth priority was to try and move forward on our strategy. And you know, the tailwinds that were created from this pandemic, clear there were headwinds. And a lot of challenges relate to this whole thing and none of us would want this to happen. But there were behavioral changes from shoppers that drove our E-commerce business and drove our our pickup business and delivery business from out of out of our stores. And so we were ready for that to a large extent. And were able to react. And I think many of those things that changed won't go back. You know, the pickup business and the delivery business are going to just be bigger and grow more and we're ready to make the most of that.
- And I think you're so on it that a lot of changes have been made, the speed at which we can do things has changed our understanding of what we can do. But some of the things, you talked a little bit about Telehealth, kind of the value of that we need to continue on this even after the pandemic. So really appreciate kind of what you all are doing. 2020 was, has been, you know, it was very tough year, but it wasn't just COVID, there were so many kind of other action force and events that really kind of laid bare some issues that we've been dealing with forever. But you know, I don't know if it was a combination of everyone being at home and seeing it, particularly when it came to racial injustice, to the death of George Floyd. It forced everyone to stop and to think and do things differently. And Walmart's no different. I know that that's something that you've been committed to for a very long time. And one of the things you said, kind of after George Floyd, you said, this is a moment. And you said we need to do things differently. And it's not just about charitable giving. And so Walmart and the Walmart Foundation, you all committed, I think, 100 million over five years. Can you speak a little bit about what was different about this moment and then kind of what changed with Walmart as far as your commitments and how you are approaching?
- Well, as you said, you know, we had been on our own Diversity, Equity and Inclusion journey before as a company and as individuals. And I think, you know, you kind of tell yourself, we're doing what we should be doing, we can see progress, yes, we can do more. And then something like this happens. And the murder of George Floyd captures everyone's attention. Obviously, this is a, you know, historic set of events. His is not the only one and many other people have suffered. So but George Floyd's moment where you said, we were all watching this really did create an opportunity to make more progress faster. And so we've been trying to seize that inside the company, and then also how the size of the company can be used to do good beyond our own walls if I can use that phrase. So there are lots of things inside the company that we're changing and accelerating. And this gave us the opportunity to be more bold and aggressive and to have difficult conversations with people because change actually starts from within each one of us. Our biases conscious and unbias need to be dealt with individually and collectively. And so we've had more difficult conversations, open, transparent conversations, engaged in training in a different way. All of our officers are going through a two day session, learning more about American history, some things for example, that I was not taught in school that are facts related to these various systems, the financial system, education system, health care, criminal justice in particular, that result all too often in inequity. And so we've been looking in the mirror and we've been studying and learning. And inside the company, we've done things like continue to change our processes related to promotions, pay, being more transparent about those things, we now create a mid year report, not just one at the end of the year, but at the middle of the year where we share a ton of data about the progress that we're making or not making and talk about it. Beyond Walmart, we've had success in the past, working on environmental sustainability and social sustainability in our supply chain with our policies. And the work that we've done related to carbon, for example, the climate. We're taking that model, and we've applied it starting back in end of May and June, to racial equity. So we've stood up four teams aimed at those systems I just mentioned a few minutes ago, led by African American black officers working on policy changes that Walmart can make, that should generate more equity and shape systems in a positive way. You know, where do we put our cash deposits at night? And if we put them in a black owned bank, what does that do for their lending opportunity and their growth opportunity? How do we engage with black owned advertising firms, not just marketing with the bigger firms to people of color, but actually think about ownership and equity. Lots of opportunities in terms of education that we can take advantage of. And these teams are working on these various things, health care included, overlapping with our earlier conversation. And we'll be making changes have already started to try and create those improved outcomes as a result of that work. And then as you mentioned, we've got this center for racial equity that's intended to make smart investments to unlock even more progress beyond our walls. So we're being persistent. This is something I'm spending a lot of time on, along with all the other leaders at Walmart and I'm encouraged by what we've done so far. But this coming year needs to be a year of even more outcomes.
- I agree, I guess I would ask, there're probably so many companies are struggling about how to proceed, like how do they govern themselves? How do they make change in companies? Not just the big ones, but small ones. I think everyone is kind of having those conversations. And what is your advice particularly for companies and CEOs? It has to start at the top, definitely. But kind of what advice would you give to companies big and small, who are trying to figure out how they make change within their companies. But also, to scale it, I think what you all are trying to do, particularly outside of your walls to scale is incredible.
- My advice would be to first start with your own personal learning journey, and put yourselves in situations where you are learning and developing. Beyond the two days of racial equity training that I mentioned earlier, which helped with US history. In the past, I've made multiple trips to Montgomery, Alabama with small groups, and gone to speak with people who were very involved in the civil rights movement in the 60s and visited the museums and had conversations with people like Bryan Stevenson and so many others about, you know, educate me, tell me not only what happened in the past, but tell me what you're seeing today. And as you personally invest in that, you can't help but be changed. And then that leads to kind of the second step, which is engaging your business, getting your people involved, and having those very honest, transparent, open discussions and being vulnerable and being, you know, taking a little risk that if you say the wrong thing and somebody criticizes you, you've built up enough goodwill to overcome it. Because I mean, a lot of people are afraid to have these conversations, because they're worried about saying the wrong thing. But if you don't have the conversations, you don't make any progress. So that's another step that goes through my mind. And then the third thing would be, put the business to work. We are good as business leaders at using data and having metrics. So take your data, create transparency, set some appropriate objectives and your legal teams can help you on how to do that. And then go to work and measure progress and do it in the right way and learn in the right way. And one things we're learning is that this is really about growing the whole pie. You know, this is not a zero sum game, where some people win and some people lose. Diverse teams win, inclusive environments are more successful. And if you grow the company, and you grow the pie, everybody benefits, even if you're a white male like like myself. So I think we just have to continue to press forward, make it a priority. And as you said, there's no substitute for having the leaders involved.
- Thank you so much. You talked a little bit of about what Walmart's doing when it comes to sustainability and climate change. And you mentioned an important thing as we talk about technology that runs through everything, how you all are using data. Not just to govern yourself, but also working with your suppliers. Can you speak a little bit about kind of how Walmart sees its role in combating climate change and how you're working again, with your suppliers to make sure that they can also make a change? Yes, and we have something that we started a few years ago called Project Gigaton, where we're trying to take a Gigaton of carbon out of our supply chain over a period of time and the suppliers in that instance and in the other cases that we've taken on whether it's getting toxins out of our products, or changing how we do packaging, things like that. They've really engaged and we got a large number of suppliers that have set their own goals. And we obviously are accountable for our own assets at Walmart and have our own goals. But we also work with our suppliers to set bigger goals collectively. And I find that the leaders of these companies are like minded and want to do this, have their own objectives. But when we work together, we can create even more benefit. So that's the way that we're thinking about it. And this year, we tried to take it a step further, and put a a big goal out for Walmart to become a regenerative company, meaning that we don't only offset some of the negatives that are in our supply chain but we do other things to protect natural habitat, whether it's land or the ocean, to give things back in a way that we start to reverse what's happening on our planet, and have it heal because of the work that business is doing. And that's a big challenge. We started this work really in a different way in 2005. So we've been doing it for a long time. And we're kind of comfortable with setting these big goals, and then just being really transparent about when we're on track and where we're not and what we're learning. And that took a little time to get used to because, you know, we're used to making commitments and hitting them. But some of these big things when we set these objectives, we don't know entirely how we're going to get there. We just make the bet that if we focus on it, our teams focus on it and we work with suppliers that will figure out how to get there. I'm excited about becoming a regenerative company. I think that's the right goal.
- One of the things in a recent interview, you were asked about kind of a about your Education pedigree. And you responded and said, you know, school here. But an important thing you said is that you were 29 years educated at Walmart. And I think that speaks to the importance of on the job training skills training, particularly as we look at making sure that our workforce has the skills that they need for the future, whether it's through apprenticeships. Can you speak a little bit to skills training. We do believe that, you know, it doesn't necessarily require a four year degree to get into tech, or even in other jobs, and we need to make sure that we're providing those skills to get into some of these jobs.
- Yeah, well, in our case, we've got 2.3 million people. And we've got all these jobs. Running a Walmart Super center that does more than $100 million in sales and employs 25300 people is a big job. And we have 1000s of those. But we also have health care jobs and data scientists roles and all these different types of jobs. And so we need to not only hire people who can do them, but we got to grow our own. You know, we've got, I think two thirds of our US store management started in the hourly ranks, I started as an hourly associate in a distribution center. And so many of the people I work with did too. So it's really important for our own growth that we have development programs and opportunities in place, obviously, what jobs you have prepare you for things, but also education and exposure, and feedback or evaluations, for ease we call them are all components of being able to grow your own. And in recent times, we've created academies across the US, about 200 different Walmart locations have classrooms in the back of our stores, that are really first class in terms of the technology they use and the way that we operate to teach curriculum. And we teach things not only related to retail Math and retail basics, but we teach things like how to be a coach, and how to be empathetic with customers and with associates so that you can develop some of those people skills that are necessary to become a leader. And we also created something called 'Live Better You' where for about $1 a day associates can earn their degree, and I was in a distribution center in Florida or Alabama, just a few weeks ago was in both. And one of our associates was showing me his certificate, his diploma from Bellevue, and telling me about the experience he's had with his education. He's a forklift driver in a distribution center but he's furthering his education as part of this program and has career aspirations beyond the job he's doing, which is great. We all do. So I think that's an important investment for us to make. And wages are certainly important, Health care investments are really important. But the way we think about the investments we make in our people is a holistic system, not just what's the starting wage rate for a part time associate. But what do you do for somebody who's been with you 5-10 years and is leading part of the store and on their path to being a store manager. Those compensation levels and those incentives matter just as much to us, as is where you start. Walmart should be a ladder, like once you get in, it's up to you how far you climb. And the system that we've set up enables, you know, meritocracy, and enables people to be able to do that.
- Wonderful, and I know we have to wrap up soon. So one final question, particularly on leadership. This past year has been tough. And so can you talk a little bit about what you've learned, and what you'll take into the 2021 and in the future when it comes to leadership?
- There are parts of it, I want to forget . But there are definitely going to be lasting leadership lessons. And maybe a couple that come to mind right now is just how capable our people are. And knowing that you can count on them and trust them, you know, as a leader, you can't make all these decisions. And certainly in a big business, there's no way I could try to make all the decisions that need to be made related to Walmart in any given hour. So we've got to have great people in all these jobs and support them. And during this past year, there were quite a few times where we were facing something that I didn't know the answer to. So we would talk as a team, and you could tell that people had thought about the issue and get a sense for who might be in the best position to make a call and just empower them to do it. You know, know when to not make a choice, but rather to say, Tiffany, this one's on you, you got it, I got your back, I'll support where you decide, go. Which creates the second thing, which is organizational speed. We touched on it earlier but the pace at which we've been moving is a different pace. And I think it's sustainable without too much fatigue. And fatigue is one of the things that we're talking about now and are worried about because this thing's not over and we got to keep going. But I think the run rate of the company going forward will be faster, forever as a result of what's happening.
- Well, Doug, thank you so much for joining us at digital CES. And we can't wait to welcome you back next year.
- Thanks for having me.