Published on: November 26, 2013
As reported in an MNB Breaking News alert yesterday, Walmart announced that Mike Duke, 63, is retiring from his job as CEO of the company, and will be succeeded by Doug McMillon, 47, who has been running Walmart's international business.
The change is scheduled to take place in February 1. McMillon will be just the fifth CEO of the company founded by Sam Walton since it went public in 1970.
Some analysis of the leadership changes….
• Bloomberg Businessweek
: "McMillon has some well-chronicled challenges to address, from an increasingly competitive retail landscape to the collateral damage of bribery allegations in Mexico. That could mean he starts out playing defense. Let’s hope not. McMillon has an even bigger opportunity to build on Wal-Mart’s strengths. To do that, he needs to foster a different mindset in Bentonville and focus more sharply on a few areas. The biggest and most pressing challenge: figuring out how to win online.
"The world’s largest retailer has an underwhelming record on the digital front. Yes, Wal-Mart was late to the e-commerce party and let Amazon steal the digital thunder. Having recognized that, retail giant has since invested heavily in building out a digital presence. What’s perplexing is how little it has achieved. While online sales grew 40 percent last quarter, it’s likely to account for only $10 billion in sales this year. For a company that’s expected to ring up $480 billion in sales by the time its fiscal year ends on Jan. 31, that’s hardly a stunning success. Amazon, for one, is likely to generate sales of $75 billion in 2013. Some of that will come areas like web services, of course, but there’s no reason Wal-Mart couldn’t find new revenue opportunities online, too.
"With its mantra of 'everyday low prices' and a famously efficient supply chain, Wal-Mart should be unbeatable in cyberspace. It’s not. One reason could be that its logistics operations are largely focused on serving its bricks-and-mortar stores. Anyone who has dealt with the inconvenience of having to pick up goods at a store or FedEx location will know what I mean. The website itself is also oddly clunky and impersonal while Amazon greets users like a familiar friend. That’s something McMillon can potentially fix by ramping up investment and forging innovative partnerships."
• Washington Post
: "He will take the helm of Wal-Mart at a challenging moment for the world’s largest retailer. The company is struggling to grow same-store sales in the United States. It also has been the target of repeated job actions by workers and outside organizers, putting it at the center of the growing movement to pressure employers to raise the pay of low-wage workers.
"Workers and their backers are planning protests at 1,500 Wal-Mart stores — including those in the Washington area — when the company hosts its annual Black Friday sales event, which marks the official start of the holiday shopping season the day after Thanksgiving. They hope to use the Black Friday protests to draw attention to the plight of Wal-Mart workers, who they say are underpaid, given less than full-time hours and receive few benefits.
"Last year, hundreds of Wal-Mart workers walked off the job in 46 states on Black Friday, according to OUR Wal-Mart, a group advocating for Wal-Mart workers. The giant retailer has been hit with new job actions in recent weeks, including walkouts in Miami and Tampa, according to protest organizers."
• New York Times
: "The choice to name Mr. McMillon — who will be the youngest chief executive to lead the company since its founder, Sam Walton — elevates an insider with deep roots in the company. He joined Walmart in 1984 as a summer associate in a distribution center, then rejoined in 1990. From 2006 to 2009, he was president of Sam’s Club, Walmart’s warehouse stores division … At the shareholders’ meeting in 2012, Mr. McMillon told a story of receiving a Post-it note about the price of trilene fishing line from Walmart’s founder, 'Mr. Sam,' in 1991, on his first day on the company’s merchandising team. Kmart’s price, the note said, was just a bit lower than Walmart’s.
“'This is from Sam Walton,' Mr. McMillon’s new boss said, he recounted. 'Have you fixed it?'
"At Walmart, a connection to 'Mr. Sam' is currency."
• And, this analysis from an MNB reader with some experience:
"It was great to see Doug be appointed by the Wal-Mart Board as the next CEO. This wasn’t the best kept secret; many who have been associated with Wal-Mart for years have always thought Doug would be on the short list when the time came. I believe Lee Scott deserves a lot of credit for mentoring Doug although I’m sure Lee won’t get the credit he deserves for putting this succession in place.
I think Doug is an excellent choice. His appointment could be best characterized as 'no left turns, no right turns,' just stay true to what Wal-Mart is all about. He’s a merchant at heart but has a great sense for how the functions within Wal-Mart operate together to 'sell more.' I’ve experienced him to be tough when it was required but always fair. He listens carefully to the Vendor community and has very solid and deep relationships there. I think he’s done a great job of extracting fair-share + resources from Wal-Mart vendors, even better than his predecessors. My own sense is that he’s not involved in the long-standing bribery scandal. Hopefully, the Wal-Mart Board will see the last few months of Duke’s time in the role as the time to prioritize scandal closure, so that Doug has that behind him. It’s probably not that easy nor clean, but it would be the best gift the Board could give Doug over the coming weeks.
"With a 47 year old CEO at the head of the world’s largest retailer, one of Doug’s priorities has to be to ensure robust succession planning exists in all Wal-Mart’s business units. It is likely some Org changes at the top of Wal-Mart business units will occur as current leaders assess their own career paths; this is natural for any major corporation. Assuming Doug performs admirably, it’s likely that his own replacement could be someone in the middle management tier who may not be a “headline individual” today. This is an exciting prospect for the high performers in these roles today. I hope Doug makes succession one of the things for which his own legacy as CEO is remembered.
"There is no doubt that Doug will be humble in telling his co-workers, vendors and business partners that he needs them now more than ever. Sam, Lee and Mike (amongst other Wal-Mart leaders) role modeled that approach. Given Doug’s age, good people management and some luck, it’s also not unfathomable that Doug could well be head of the worlds first $1T company. No one person can ever achieve that without help from everywhere."