[Image of: RetailWire Logo and Tagline (for print)]

BUSINESS TIPS

ChannelAdvisor:
Online Selling Strategies
RR Donnelley:
In-Store Marketing
LoyaltyOne:
Enriching Customer Relationships
 
[13 comments]

Simon out, Foran in as new Walmart U.S. CEO

July 24, 2014

After six straight quarters of traffic declines and five in which same-store sales declined, Bill Simon is out as the president and CEO of Walmart. In an announcement made earlier this morning, the retailer announced it has promoted Greg Foran, a 35-year retail industry veteran who joined Walmart in 2011, to run its most important business unit.

"Greg is one of the most talented retailers I've ever met. His depth of knowledge and global experience will bring a fresh perspective to our business," said Doug McMillon, president and CEO of Walmart, in a statement. "His passion for fresh food, experience in general merchandise and commitment to e-commerce will help us serve our customers even more effectively for years to come."

Mr. Foran held a number of high level jobs at Woolworths, the leading retailer in Australia and New Zealand, before joining Walmart. He has served as president and CEO of Walmart China since March 2012.

Mr. McMillon, doesn't seem concerned with his new hire's lack of experience in the U.S. market.

"I've worked closely with Greg for the past few years and I've seen firsthand his passion for retail. I'm confident that Greg's strong leadership skills and alignment with our culture will serve our customers and associates well," Mr. McMillon said. "I'm excited about what he will bring to this important part of our business."

"The needs of our customers are changing dramatically and we have an enormous opportunity to serve them in new and different ways," said Mr. Foran in a statement. "We must be fierce advocates for our customers, work meticulously to exceed their expectations and earn their trust every day."

Mr. Simon has been credited for advancing Walmart's small format agenda, launching its $4 prescription drug program, and pushing the company's role in bringing manufacturing back to the U.S. He was not, however, able to find a fix for many of the company's problems, particularly significant out-of-stocks in Walmart's stores.

Mr. Simon blamed most of the company's problems on a down economy and cuts to programs such as SNAP for needy Americans.

"People think we do better in a down economy," Mr. Simon told Reuters earlier this month. "We don't. We do better when the GDP is growing, when the economy's good and we really need that in the long run for the business to improve."

FINANCIALS:     [NYSE:WMT] [ ]

Discussion Questions:

What will the biggest challenges facing Greg Foran as he steps into his new job as president and CEO of Walmart U.S.? What do you see as the greatest opportunities?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Will Greg Foran's lack of experience in the U.S. be a positive or negative as he takes over as the new president and CEO of Walmart U.S.?

Comments:

Besides learning to drive on the right hand side of the road, Greg will need to find a way to get people to shop at Walmart. The recession is just about over and many shoppers are moving up the food chain so to speak. I did think Bill did a great job of remodeling and cleaning up the clutter in the stores but forgot to look at the sales. If Greg can get the sales up he will be next in line to run the entire company.

[Image of: View Braintrust Panelist button]
Frank Riso, Principal, Frank Riso Associates, LLC

Walmart's U.S. operation's appeal has aged. Its pricing is no longer overwhelming. New ideas and breakthrough concepts are needed. Hey! That sounds like yesterday's Kmart when it was larger than Walmart. Does it follow that Walmart U.S. might be decaying in the contemporary world?

Greg Foran has been handed staleness, which I believe is the greatest challenge facing him as the new leader. And his greatest opportunities lie creating new beginnings just as Sam Walton did in 1962.

[Image of: View Braintrust Panelist button]
Gene Hoffman, President/CEO, Corporate Strategies International

I still think Walmart's core problem remains the same—a saturated market, and plenty of competition that's close enough or better on pricing in more convenient formats. But that's not its only problem.

The out-of-stocks were apparently caused by cutting payroll too lean, which of course was done to hold earning steady and please the Street. Will the board of directors and the market tolerate lower earnings while payroll is put back in the store? If so, the company has a chance to improve its return on inventory investment. If not, the problems will remain the same.

[Image of: View Braintrust Panelist button]
Paula Rosenblum, Managing Partner, RSR Research

The biggest challenge facing Mr. Foran is how to revitalize the shopping experience at Walmart. Cleaning up the clutter in the stores may not have been the best idea that Walmart had, as their transaction amounts and same-store sales have suffered due mainly, in my opinion, to less impulse purchase opportunities and unacceptable levels of out-of-stocks. These require training and investment. It will be interesting to see how the new regime does.

[Image of: View Braintrust Panelist button]
J. Peter Deeb, Managing Partner, Deeb MacDonald & Associates, L.L.C.

Walmart is boring. They have category managed and EDLPed themselves into becoming a place that lacks excitement. Some people like clutter. Some people like finding unexpected displays of product at unexpected prices, even if it isn't the top item in a category. Some people want retail to look a little crazy. Yes, Kmart did not invest in their stores and lagged in tech, and that hurt them, but they also forgot how to excite their customer base. Planned end-caps, no side stacks, predictable pricing with a margin-first go-to-market focusing on higher-margin categories; yawn, yawn yawn. Can Mr. Foran put fun and excitement, even if sloppy, back into the stores? I doubt it. These strategies are out of vogue and it seems today's CEOs are scared to be bold or to go back to old, proven ideas

Tim Cote, VP of Marketing, Plaid Pantry

Greg Foran's major problem will be how to entice people with a little more-than-average income to shop at Walmart. The typical Walmart customer is now older and in many cases having problems even getting to a store nearby. The younger customer with a little more disposable income doesn't necessarily need to shop at Walmart to get what they want. Walmart also has many stores in less-than-desirable locations, thus limiting the spendable income of their average customer.

[Image of: View Braintrust Panelist button]
Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

Walmart's announcement to replace Bill Simon has little to do with the decline in same-store sales. The fact is saturation and demographics are working against the Walmart core business. As Baby Boomers retire to fixed incomes that are in many cases inadequate, they are not being replaced by young people entering the workforce at the same rate. Further, other studies show that the younger the generation, the more of a tendency to shop with alternative forms of retailing.

If the objective is to generate increased business for the core Walmart stores, it is a waste of time and effort, and certainly resources. I would speculate the removal of Bill Simon has more to do with other events.

The appointment of Mr. Foran, I believe, has everything to do with where the business must go to grow. Walmart has 55 percent of their units in 26 countries. These units generate 29 percent of Walmart revenues. In both cases, the numbers are increasing. It only makes sense that if the business is going to be international, an international CEO is appointed.

Walmart is following other large companies in the U.S. as S&P reported: six years ago, large U.S. companies generated about a third of the revenue internationally. Today that number is up to 46 percent and continues to grow at a rapid rate. Further, Mr. Foran joins international CEOs at such iconically "American" companies as Pepsi, Coke, Kellogg's, Dow and Alcoa. There are more to come.

International is where the future is for Walmart.

[Image of: View Braintrust Panelist button]
Gene Detroyer, Professor, Independent

Walmart would do well to remember that success plants the seeds of failure and failure, in turn, can present the path to success.

In some ways, Walmart is a victim of its own tremendous success. Its singular focus on "Low Prices, Always" drove that success. In trying to constantly expand store counts, super-size formats and carry every possible item, they needed to carry vast inventories and created the environment for out-of-stocks. In always promising the lowest prices, they became vulnerable to the growth of lower-cost operators like dollar stores, and were major victims of the growth of online sales.

The new management will need to reestablish a clear identity for Walmart with shoppers and rebuild the store experience consistent with that identity.

[Image of: View Braintrust Panelist button]
Raymond D. Jones, Managing Director, Dechert-Hampe & Co.

The core same-store sales issue at Walmart is out-of-stock. Not only are they losing the transactions associated, they are losing frustrated customers to the competition. All of the fresh e-commerce and general merchandise initiatives are add-ons to the basics. Out-of-stock issues created by in-store execution and high turns must be solved to create a foundation to strap on new initiatives.

Gary Doyle, Founder, The Doyle Group LLC

Mr. Foran will need to get in touch quickly with the marketing sensitivity and advertising levers to pull, in the short term. There is no reason for Walmart to lose foot traffic in this still very price sensitive economy, except a focus on margin.

Come on guys and girls; get 'em in the door, then add on and up-sell with great merchandise, prices and displays.

I predict Walmart will get its mojo back in short order!

'vgallese'

Opportunities? They need to be as good or better than more focused competitors in every area of the store. The store-within-a-store culture needs to be revived. Also, customer service is suffering from unrealistic labor scheduling and budgeting. The stores need more labor hours. Last, price only doesn't cut it with aging baby boomers and younger generations. Even as price driven as Sam Walton was, price never trumped friendly service.

Greg Gilkerson, President, Professional Datasolutions, Inc.

The biggest challenge he will face is not listening to all the people at headquarters that tell him he cannot fix Walmart's OOS problems. Additionally, he has to address his PL pricing which is often as much as 30% more than competing grocers.

The first can be solved with incentives—tie every bonus in a significant way to OOS reduction, the second can be solved by surveying competition or offering a bounty to employees who find cheaper product elsewhere.

This isn't brain surgery, but it does require work. You aren't going to fix it by sitting behind a desk. Get the people who ACTUALLY DO THE WORK to solve the problem. You can't fix this with a software program or a quick fix solution. Get in the stores and ask the people how things can be made better, at the same time helping them understand that their future is brighter when customers are happy (no OOS, no out-of-whack prices).

Walmart used to have an advantage in a slow economy, but many (myself included) don't even put certain items on my list because my experience is they are priced well above the market.

Ed Dennis, Sales, Dennis Enterprises

Mr. Simon came into the CEO position with the economy declining for five years. Fiscal year 2014 is the worst one yet for this no-end-in-sight depression. A quick look at Walmart's financial reports shows cost cutting and staff reductions as the primary means to boost profits. With over all market sales declines being the new norm, market share and new market venture is the only way to capture revenue that will maintain acceptable profit levels and grow the business.

In these performance requirements Mr. Foran must first pull the business up from an unstable nose dive. His business plan must have been a sight to see. The financial reports for next eighteen months will be eagerly awaited by all, especially the vendors and banks.

'gjarnoldjr'

Search RetailWire
Follow Us...
[Image of:  Twitter Icon] [Image of:  Facebook Icon] [Image of:  LinkedIn Icon] [Image of:  RSS Icon]

RetailWire's
Getting Started video!

View this quick tutorial and learn all the essentials...

RetailWire Newsletters