retail news in context, analysis with attitude

As reported here on MNB last Friday morning, Walmart has announced that CEO Lee Scott will step down as the company’s president/CEO as of February 1, 2009, to be succeeded by Mike Duke, the company’s current top international executive.

Scott reportedly will continue as chairman of the board of directors’ executive committee.

Eduardo Castro-Wright, who runs Walmart’s US operations, has been named vice chairman of the corporation.

Most articles about the executive shift say that it reflects Walmart’s increasing dependence on international markets, and that Duke’s experience there will make him an ideal leader at this time.

The Financial Times this morning assesses the move, writing that “Mr. Duke will bring an entirely different style to the highly political position of head of the world’s largest company.

“He has been less comfortable in dealing with the media than Mr. Scott and has rarely acknowledged company shortcomings in public. However, he has won the loyalty of colleagues with his open management style, effectiveness and concern over poverty and social issues.”

FT also notes that “he will be Wal-Mart’s fourth chief executive, and the first not to have worked with Sam Walton, the late founder who died in 1992.”

Business Week writes that “the change as more of a victory lap than a forced departure for the 59-year-old Scott, whose tenure had been marred by disappointing results and controversy until this year.” While the slumping economy has helped Walmart’s sales and profits – it is a good time for an “always low prices” message – the general feeling seems to be that Scott’s vision for the company, even when unpopular, positioned it to be in the right place at the right time.

The magazine also suggests that the move could have repercussions elsewhere in the company. “Duke's appointment is disappointing news for two other executives considered candidates for the top job,” Eduardo Castro-Wright, who runs the company’s US stores, and C. Douglas McMillon, who runs the Sam’s Club division.”

Fortune puts the shift in political terms, noting that Walmart is getting a new CEO at the same time as the US is getting a new president.

“Not since the mid-term elections of 1994 has Washington seen such a seminal power shift, and that change is unlikely to favor the nation's largest employer,” Fortune writes. “President-elect Barack Obama and a Democratic-led Congress are widely expected to champion issues that Wal-Mart has long opposed, such as expanded health care insurance and labor reforms … Wal-Mart has not exactly had a cozy relationship with Democrats over the years. In 2000, when Scott was named CEO, 85% of Wal Mart's political donations went to Republicans and 14% to Democrats, according to the Center for Responsive Politics, a nonpartisan group that tracks political contributions. Although that gap has narrowed this year (53% to Republicans, 47% to Democrats), Wal-Mart's funding of political action committees still skews overwhelmingly Republican by a margin of more than 2-to-1. The company disputes those numbers, saying 55% of its PAC donations go to Republican organizations with 45% going to Democratic ones.

“By ushering in a new CEO, Wal-Mart has an opportunity to clean the political slate. At the moment, there is little to suggest that Duke, 58, a former department store executive who joined Wal-Mart in 1995, will be vastly different from Scott in his political dealings.

“He has personally donated money to the presidential election campaigns of Mike Huckabee, George Bush and John McCain as well as to other Republican candidates, such as Alaskan Congressman Don Young, according to Political Moneyline, a web site that tracks political contributions.

“But sometimes a symbolic gesture is all it takes to shift the debate.”

KC's View:
Now that I’ve had the weekend to think about it, here’s my take on the Walmart executive shift.

It proves that while a lot of companies wait until the last possible moment to make such critical changes, Walmart gets there early…and makes the move in a way that in forward-looking, not reactive.

That’s a critical difference.

I can’t help but think that Walmart resembles nothing so much as the Borg from ‘Star Trek” – the people in the company think and act as a collective, they assimilate and conquer pretty much at will, and no single person is bigger than the whole. It is all about momentum and singularity of thought and purpose.

And in most cases, “resistance is futile.” Unless, of course, one employs some “brilliantly unorthodox strategy” that Walmart cannot or will not replicate.

For the record, I’ve actually had the opportunity to interview Mike Duke … on the subjects of food safety and sustainability … and I found him to be personable, engaging and open.

One other suggestion. President-elect Barack Obama ought to call Lee Scott today. After all, he’s going to have some time on his hands, and he’d bring a unique and experience perspective to the new administration’s efforts to turn around the economy.