Doug McMilllon, Wal-Mart Stores, Code Conference

Asa Mathat

Commerce


Liveblog highlights:

  • Walmart is still a retail giant; it has 11,000 physical retail stores in 27 countries, and is a $473 billion business.
  • The company has “geofenced” its stores, sending prompts and local ads to customers’ smartphones as they enter to shop.
  • McMillon sees wearables and connected homes being potentially big categories for Walmart in the future.
  • Walmart’s advertising spend on Facebook is actually returning a positive return on investment, McMillon said.
  • The company gets “attacked regularly” by cyber-attackers (similar to Target), though McMillon said Walmart keeps vigilant on defending its data.
  • Despite lots of negative attention, McMillon said only around 30,000 of Walmarts 1.3 million retail associates make federal minimum wage.

Walmart CEO Doug McMillon admitted that the world’s largest retailer has a lot of work to do on the digital side of its business, but said physical retail stores of varying sizes will continue to be an important part of its long-term plans.

Walmart is the world’s largest company. With fiscal year 2014 revenue of $473 billion, its annual sales easily top those of Apple, Google and Amazon combined.

And the company’s e-commerce sales grew 30 percent to more than $10 billion in the last fiscal year, surpassing Amazon’s growth for the first time in recent memory. But it was only two percent of total sales and just a fraction of Amazon’s — the No. 1 retailer in the minds of a new generation of shoppers lured by the prices and convenience of purchasing anything and everything from the comfort of their couch.

“Clearly Amazon is teaching the world what’s possible,” McMillon said on Wednesday at Re/code’s inaugural Code Conference, playing the role of admiring industry observer more than cut-throat competitor.

McMillon, who has worked at Walmart for more than 20 years, became CEO in February.

“We’re not as aggressive on some things as we should be,” he added. But he highlighted ways in which the biggest retailer in the world has been integrating new ideas and technologies across businesses.

Within stores, Walmart is using mobile technology to give customers the answers to common questions: Is a product in stock? Where is it?

On the subject of home grocery delivery — a hot topic right now in Silicon Valley 15 years after the first wave of companies tackling this opportunity failed — McMillon said that Walmart has been aggressive in this line of business in some overseas markets, but is still in test-and-iterate mode in the U.S.

“We don’t know exactly which geographies it’ll work in,” he said. But the feeling you get from McMillon talking about it is that delivery is a business Walmart will expand.

Still, he talked up the idea of ordering online and picking up in store as a digital option that Walmart shoppers seem interested in. And that response, conveniently, also indirectly shines a light on why physical stores should remain relevant.



Jason Del Rey May 28, 201410:25 am

We’re just a few minutes away from having Kara Swisher and Doug McMillon join us onstage. 

Jason Del Rey May 28, 201410:26 am

Fun fact: McMillon’s first job at Walmart was a summer hourly position at one of the company’s distribution centers. 

Jason Del Rey May 28, 201410:30 am

What I want to hear about: Competition with Amazon. While Walmart’s e-com business grew faster than Amazon’s last year, it’s still a fraction of the size.

Jason Del Rey May 28, 201410:32 am

Here we go. 

Jason Del Rey May 28, 201410:32 am

“Walmart is the most powerful retailer in the country and possibly the world,” Kara says.

Jason Del Rey May 28, 201410:32 am

Another fun fact: Kara covered Walmart in the early 90s for the Washington Post. 

Jason Del Rey May 28, 201410:33 am

“Amazon drones,” Kara begins. “Are you going to have Walmart drones?” Asks him what he thinks.

Jason Del Rey May 28, 201410:34 am

“Today, seems like almost anything we can imagine is possible” – McMillon says of Amazon drones.

Jason Del Rey May 28, 201410:34 am

Walmart has 11,000 stores, $473 billion business.

Jason Del Rey May 28, 201410:34 am

Kara wants to know what Walmart’s approach to physical stores will be going forward.

Jason Del Rey May 28, 201410:35 am

“Our purpose is to save people money so they can live better,” McMillon says. “It’s not a store-centric company; it’s a customer-centric company.”

Jason Del Rey May 28, 201410:35 am

“Stores will be necessary in the future … sizes will change” — McMillon says.

Jason Del Rey May 28, 201410:36 am

“Do you imagine a time when there won’t be a store?” Kara asks.

Jason Del Rey May 28, 201410:36 am

Walmart has for 10 years had a grocery home-delivery business in the U.K.

Jason Del Rey May 28, 201410:36 am

But McMillon says pick-up in store is gaining popularity.

Jason Del Rey May 28, 201410:38 am

Walmart continues to push the idea that pick-up in store can make more sense because shoppers end up adding products that they forgot to order ahead.

Jason Del Rey May 28, 201410:38 am

“The basic questions that customers ask are the same: do you have it? where is it?” – whether online or in the store, McMillon says.

Jason Del Rey May 28, 201410:39 am

“I don’t think customers want to stand in some place and buy an item” – McMillon says about not having interest in kiosks.

Jason Del Rey May 28, 201410:39 am

“Sergey should program those things to only go to Walmarts and Sam’s Clubs” – McMillon says of self-driving cars.

Jason Del Rey May 28, 201410:40 am

“There’s not a lot I would rule out” – McMillon said about whether they would purchase their own self-driving cars and other technologies.

Jason Del Rey May 28, 201410:40 am

McMillon admits revenue from e-commerce is way behind Amazon’s. No surprise.

Jason Del Rey May 28, 201410:41 am

Focused on grocery home delivery in London, McMillon says. Also talking about home delivery in Shanghai.

Pete Mall May 28, 201410:41 am

Jason Del Rey May 28, 201410:42 am

What are the plans for home grocery delivery in the U.S.? Kara asks.

Jason Del Rey May 28, 201410:42 am

“Don’t know exactly which geographies it’ll work in” — Walmart CEO says of home grocery delivery in the U.S.

Jason Del Rey May 28, 201410:43 am

How do you look at Amazon? “We have a long list of our competitors … Kroger, Costco,” McMillon says.

Jason Del Rey May 28, 201410:43 am

“Clearly Amazon is teaching the world what’s possible,” McMillon says of Amazon. Also mentions Alibaba.

Jason Del Rey May 28, 201410:43 am

Walmart has 400 stores in China, McMillon says.

Jason Del Rey May 28, 201410:44 am

“I’m trying to learn, be a student,” McMillon says about why he has taken three trips to Silicon Valley since Jan. 1.

Jason Del Rey May 28, 201410:45 am

“3-D printing is interesting to me,” McMillon says. Also says wearables and the connected home will be big businesses for Walmart.

Jason Del Rey May 28, 201410:45 am

Could use 3-D printing for replacement parts. “In some cases we may make acquisitions,” McMillon says.

Pete Mall May 28, 201410:46 am

Jason Del Rey May 28, 201410:46 am

“We sell a lot of movies and music … we have room to improve” on digital side, McMillon says. “I’d like to see us better, more aggressive.”

Jason Del Rey May 28, 201410:47 am

Do you need to make shows or a device, Kara asks?

Jason Del Rey May 28, 201410:47 am

McMillon says he doesn’t know about shows, partnering on devices.

Jason Del Rey May 28, 201410:48 am

“We’ve got  to be contemporary; entertainment is part of being contemporary” — McMillon says of getting better at digital entertainment offerings.

Jason Del Rey May 28, 201410:48 am

“My wife coaches me through Pinterest” — McMillon says. Just starting to experiment there, he says.

Jason Del Rey May 28, 201410:49 am

What works on Facebook? Kara asks. “Customers want to know when we have fresh strawberries” is the response. Okay.

Jason Del Rey May 28, 201410:49 am

“Twitter, Facebook, Pinterest … we need to be present everywhere,” the Walmart CEO says.

Pete Mall May 28, 201410:50 am

Jason Del Rey May 28, 201410:50 am

Kara reading quote from Sam Walton about being skeptical about technology.

Jason Del Rey May 28, 201410:50 am

“All these guys love to talk about how I never wanted any of this technology, and how they had to lay down their life to get it. The truth is, I did want it, I knew we needed it, but I just couldn’t bring myself to say, ‘Okay, sure, spend what you need.’ I always questioned everything. It was important to me to make them think that maybe the technology wasn’t as good as they thought it was, or that maybe it really wasn’t the end-all they promised it would be. It seems to me they try just a little harder and check into things a little bit closer if they think they might have a chance to prove me wrong. If I really hadn’t wanted the technology, I wouldn’t have sprung the money loose to pay for it.” — Sam Walton

Jason Del Rey May 28, 201410:51 am

“It’s clear that the level of investment we have … needs to change and change fast,” McMillon says. Few details.

Jason Del Rey May 28, 201410:52 am

Speed, risk-taking is important, McMillon says. But says it’s easy to get more cautious as a company gets as big as Walmart is. 

Jason Del Rey May 28, 201410:52 am

“We’re not as aggressive on some things as we should be” – McMillon says.

Jason Del Rey May 28, 201410:53 am

“It’s a daily battle and a risk point … we get attacked regularly”  — McMillon says of credit card hack attempts.

Jason Del Rey May 28, 201410:53 am

Q&A opened up to crowd now.

Jason Del Rey May 28, 201410:54 am

Adam Lashinsky from Fortune up now. “Could you … help this room understand the difference between two audiences [Walmart customer and tech crowd].”

Jason Del Rey May 28, 201410:55 am

“The average customer in our store … is living paycheck to paycheck” — McMillon says.

Jason Del Rey May 28, 201410:55 am

“They need help, they need us” – McMillon says.

Jason Del Rey May 28, 201410:56 am

Is tech out of touch? Kara asks.

Jason Del Rey May 28, 201410:56 am

“All of us live in our network.” – McMillon says. 

“Take what you read in the media with a grain of salt.” Asks audience to visit a Walmart store in the middle of America.

Jason Del Rey May 28, 201410:58 am

“We want to be tough but we want to be fair” – McMillon says about working with suppliers and vendors.

Jason Del Rey May 28, 201410:58 am

Brad Stone up now. “How are you thinking about improving the lot for Walmart employees?” 

Jason Del Rey May 28, 201410:58 am

Also asking about the propriety of withholding product, regarding Amazon-Hachette book battle.

Jason Del Rey May 28, 201410:59 am

McMillon says, “Opportunity is what we offer. … We want people to move into management.”

Jason Del Rey May 28, 201410:59 am

“We’re looking at the whole [compensation] package” to see what can change to get better. 

Jason Del Rey May 28, 201411:00 am

Not surprisingly, he won’t comment directly on the Amazon-Hachette situation. 

Jason Del Rey May 28, 201411:00 am

Kara says: “You do use leverage around partners.”

Jason Del Rey May 28, 201411:01 am

McMillon essentially says they want to get volume and with that there’s the tradeoff on margins. So yes.

Jason Del Rey May 28, 201411:01 am

And that’s a wrap. Thanks for joining us. Follow the rest of the conference with the #codecon hashtag.



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