The future of retail with Walmart U.S.’s President & CEO John Furner

On the most recent Walker Webcast, Walker & Dunlop's CEO, Willy Walker, was joined by John Furner, President and CEO of Walmart U.S., to converse on the future of retail, brick and mortar shopping vs. online shopping, the pandemic's impact on retail, teambuilding, and how John manages the strategic direction for more than 4,700 stores and more than 1 million associates.

A bit about each speaker:

Willy Walker
Willy Walker

Willy Walker is chairman and chief executive officer of Walker & Dunlop. Under Mr. Walker’s leadership, Walker & Dunlop has grown from a small, family-owned business to become one of the largest commercial real estate finance companies in the United States. Walker & Dunlop is listed on the New York Stock Exchange and in its first ten years as a public company has seen its shares appreciate over 800%.

John Furner

John Furner serves as president and chief executive officer of Walmart U.S., where he is responsible for the strategic direction and performance of more than 4,700 stores and more than 1 million associates.

From 2017-2019, John served as president and chief executive officer of Sam’s Club. During his time as CEO, Sam’s Club had 11 consecutive quarters of positive sales comps, while increasing memberships. John started with Walmart as an hourly associate in 1993, at Store 100 in Bentonville, Arkansas. He has held important roles throughout the company, including assistant store manager, store manager, district manager, buyer, regional general manager, divisional merchandising manager, VP of global sourcing, general merchandise manager, head of marketing and merchandising for Walmart China based in Shenzhen, and chief merchant for Sam’s Club. 

He serves on the boards of directors for the Congressional Medal of Honor Foundation and National Retail Federation. John has a bachelor of science in marketing management from the University of Arkansas.

If you have any comments or questions about the evolving economic landscape and how it is impacting the CRE space, our experts are available and fully operational to help. Additionally, if you have topics you would like covered during one of our future webcasts, we would be happy to take your suggestions.

Webcast Transcript

Willy Walker: Thank you, Susan, and good afternoon everyone and welcome to another Walker Webcast. I had a terrific discussion with Stephanie Linnartz of Marriott on the last Walker Webcast discussing the hospitality industry and how it will recover in 2021 and beyond, and I’m really excited and honored to have my friend, John Furner, President and CEO of Walmart US joining me today to discuss the retail industry. 

Next week, we will have Wharton Professor Mauro Guillén on to discuss his best-selling book, 2030: How Today's Biggest Trends Will Collide and Reshape the Future of Everything. I’ve read 2030 and would strongly suggest anyone listening today to pick up a copy and join us next week. The book is packed with data and insight that truly can't be ignored. And then the following week we'll have Michael Bush, CEO of Great Place To Work®; and McKinsey Chairman, Gary Pinkus, join us to talk about what makes great companies great. So, it's quite a lineup over the next three Walker Webcasts and I hope everyone can join us again. 

A couple quick anecdotes from me, before I turn my questions to John. I did an interview on Yahoo TV last week, where I said I think people will get back to business travel much quicker than many expect. That statement was picked up by several media outlets and one article compared my comments about a quick snap-back to Bill Gates's comments that 50% of business travel will disappear forever due to the pandemic. First, I’ve never had anything I’ve said compared to something that Bill Gates said, so that was both an honor and kind of fun. But whether Gates is correct or I’m correct, I’ll give a couple quick thoughts about why I have a strong conviction about a fast rebound. 

We held Walker & Dunlop’s first client event since the onset of the pandemic week before last. Everyone who came to ski got a COVID PCR test prior to arriving; we took over a lodge so it was just our group; and not only did everyone come and go without any health issues, but the event was likely one of the most impactful client events we have ever had, due to everyone being locked down for almost a year. Now every competitor of Walker & Dunlop’s who just heard me say that, is saying to himself or herself, “We got to get going.” That's the competitive landscape shifting, and as the vaccine gets more widely distributed, and we get back to life closer to normal, travel will snap back. I also traveled to Miami last weekend. Our hotel was packed. The pool was packed. The beach was packed. And mask wearing was…let's just say sporadic. But people are desperate to get back out there. And finally, on my way back to Denver, I had a meeting with four of my colleagues from Walker & Dunlop while I was in Florida. We had not seen one another, since February 4th of last year. And while we have Zoomed with one another almost every workday over the past year, just sitting around a table and truly laughing, breaking bread together, and looking one another in the eye, it's simply irreplaceable with regard to human interaction, friendships and culture. So, I’m more convinced than ever that travel, both leisure as well as business, will snap back quickly as soon as we have either achieved, or think we've achieved, herd immunity. So, with that, let me turn to my guest, John. 

John Furner is President & Chief Executive Officer of Walmart US, where he's responsible for the strategic direction and performance of more than 4,700 stores and more than 1 million associates. From 2017 to 2019 John served as President and Chief Executive Officer of Sam's Club. John started with Walmart as an hourly associate in 1993 at store 100 in Bentonville, Arkansas. He has held important roles throughout the company, from Store Manager to Head of Marketing and Merchandising for Walmart China in Shenzhen, China. So, John, first of all, thank you so much for joining me today. And there's this amazing stat I read that 85% of senior management at Walmart started their careers inside a Walmart store. What advantage do you think that pedigree and on-the-job-training brings to Walmart?

John Furner: Hey, Willy. Well, thanks for having me. I’m sure there are many advantages and I’ll try to talk about a few of them, because I am one of those people. I started at a Walmart store – in fact, I was in the same store I started at this morning with a few associates, it's just across the street from our Home Office. we refer to it as Store 100. We number all of our stores and we love our acronyms and numbers. I started working here in college. To be completely open, I aspired to be a rock musician. That was going, really, absolutely nowhere. And like many things in life, things like needing to stay on a budget, and have a paycheck stepped in, as I was studying marketing at the University of Arkansas. And so, I went in and started at the store here locally, thinking I’d stayed for a summer, maybe for a year, and fell in love with retail. Retail, at that time and through the years and now, and the future, changes so quickly, that you can do about anything here. So you know, for our team who, just an amazing group of people, a very large number of our managers did start in stores. This company provides amazing opportunities for people all over the country and all over the world, and I’m just really fortunate to be a part of it and to be one of those people who started at the bottom and fortunate to be where I am today.

Willy Walker: Well, you started, actually before you –if you will, using your words – ‘at the bottom’ you actually became part of the Walmart world when you were three-years old. I very rarely have a guest on the webcast who's been involved with a company for as long as I’ve been involved with Walker & Dunlop because it was a family company. But you know, your dad worked at Walmart and you've watched the company grow and you've watched it grow from even when your dad joined it, it was still a very significant company, but it's just, you know, the last 40 years has been an incredible run. What's the, what's the biggest difference, other than just the sheer scale, of Walmart, when you can first remember being sort of part of it, to where it is today?

John Furner: Well, well, you're reminding me, in fact, a few of us were just having this conversation the other day, I wonder how we get credit for all the years of service that we have been part of it. My first memories were when I was about three-years old, so I learned a lot about the foundation of the way we operate as a business as a kid, and I learned it at home. I didn't learn it in a store or in a car, I learned it at home. And the things I learned at home were things like respecting individuals; taking care of the team that are doing all the real work on the front line; having this obsession with serving customers and trying to figure out where customers are going; and operating with integrity. And there's just core values that I heard about for years, for 15 years before I went to work for the company. And those things haven't changed. We wake up every day and we know we're here to serve others; we're here to serve our customers; we're here to serve our associates; and we want to do it with respect and we want to operate with integrity. I think what's really changed, though, is just commerce in general, and I don't think it'll stop changing, I think that once you found what it is a customer enjoys from your services or what's working, it's great until they find something better. I sometimes kid with, or joke with my team that loyalty in retail is at times the absence of something better. But you know I think that's true. It’s not to say that we're paranoid, but it's good to have a level of healthy paranoia just to consider that customers are finding new ways to be served all the time, and in the technology that we have available at our fingertips, and the way we use algorithms and data, it's really changing the way that we can be more predictive so that customers can spend less time on the things in their life that cause friction in their life. And you know, they want time to spend on things they enjoy doing the most, and if we can help give them some time back and fill their needs, that's what we're going to continue to try to do.

Willy Walker: So, I want to spend a bunch of time during our time together talking about exactly all those things that you're talking about. How customers have changed, and what you're doing to change the way Walmart's meeting their needs. But before we jump to that, I want to spend a little bit more time on the culture that you just talked about. I mean, Walmart's now the largest employer in the world, and yet, the legacy of Sam Walton still lives on. I get asked a lot about Walker & Dunlop and the unique culture in Walker & Dunlop and what happens when we grow from being 1,000 employees to 5,000 employees, and I kind of I kind of laugh at thinking about the fact that you have over 2 million employees at Walmart; yet, you have been able to maintain that culture that Sam Walton embedded in the company so many years ago. What, what is it? I mean, I’m assuming if I walked around Bentonville and your headquarters, that there are plenty of images of Sam Walton and the roots of the company, but you've got to kind of eat, sleep, and breathe that every day and make sure that the 2.2 million associates that are inside of Walmart worldwide understand exactly what that is. That just seems like a monumental task.

John Furner: Well it's not something that I do alone able to do, it's a collection of, it's a lot of people who follow every day the basic values and support the things we think about. And I remember early in my career, I was, I was working in a store in North Carolina and the first time I got to go to what we call this Year Beginning Meeting, where all the managers come together in one place and we talk about the year before, and we talk about…[connection lost]

Willy Walker: I think John is frozen. John, can you hear me? I think we have a bad connection down in Bentonville. Yeah, he's fallen away for a moment. To those on the line, if you hang with us for a second, I'm assuming that John will come back in. I was hearing his connection be a little weak. Here he comes back in. So let's hope that as he comes back in, we get a better…

John Furner: Okay, so I got dropped. We're going to try to hook on to a second location here, so if that happens again I'm going to switch screens real quick.

Willy Walker: We lost you right when you were talking about the team meeting and reflecting on the previous year.

John Furner: Yeah and these meetings, you know, they’re thousands of people in one location. Really exciting. And I remember David Glass saying, that someone had asked him at that time, how do you manage and lead a $100 billion company? And David's answer was, well, “I have absolutely no idea how to do that. What I do is I try to run one store at a time.” And it was, you know, helpful because it's all about one person at a time, one location at a time, which is a lot different than trying to, in your head, just think about how do you manage a workforce of millions of people. The answer is, we don't. We break it into parts and we have people who are managing a store at a time, a market at a time, or a region at a time. So, we really break this down into a very competent team. The parts of the very competent team are able to help us do this and do it together. But, ultimately, as you're thinking about how you use scale or any business scales, it's making it aligned on the core principles and the things that are not going to change. I think of those as like gravity. Those basic beliefs, they're gravity. They always pull back when we try to get away from them. The forces that are important, they're strong and we've got to respect it.

Willy Walker: So I believe you use a technique called a “huddle”, where you have a daily huddle with your team, and then your teams go and huddle with other people. Talk for a moment about the huddle and how you use it every day to guide your absolutely massive business.

John Furner: Yeah, we do. The teams in fulfillment centers and distribution centers and stores, they do take a couple minutes every day, and they start the day with a bit of a review of what we've done and where we are, and then what's ahead of us. I was just in a distribution center in Texas a couple months ago, and I was watching as this team comes together, it was the beginning of the shift. And, you know, these environments, they’re physical environments, there are people in there who are working in freezers all day and refrigeration units all day, and they’re physical. So, their huddle was, here's how we did the day before, here's our product of the week, here are the stores. And then, it was on to physical training, you know, like you and I met through cycling and this hobby that we both have. But in a role like that, they're doing jumping jacks and stretching, getting ready for the shift, and they're all at it as a team. So, I have my own version of the huddle I do every couple weeks, and we just put that out in the public for people to see. But it's important for any leader to make sure the team knows who you are, and not just what you expect or what kind of goals you have for the business, but they want to know you. They want to know who you are and what makes you tick and what you get up out of bed to do every day. And if you don't help them learn a bit about who you are and what's important, then someone else can do that for you. So, for me, it's just important that they know who we are and that we're a part of the team and what it is we want to do together.

Willy Walker: So, your business, Walmart US, did $341 billion in sales in 2020, that's out of $524 billion total for Walmart, and generated $17 billion of operating income. First of all, those numbers are just hard to get your head around. But what's the biggest challenge, I mean I looked at comparables. You're doing 3x the sales of JP Morgan. Right, so I was trying to figure out about the size of your job versus Jamie Diamond’s job, and you got a much bigger job than Jamie Diamond does. What's the biggest challenge in managing a billion dollars in revenues each and every day?

John Furner: Well, it's funny you say that. When I first moved into the role in November of 2019, I remember looking at a couple sales reports, and I kept having to go back to the fact that I had been a part of the Sam's Club team, and we were, at the time, doing about a billion a week. And I remember checking it two or three times because I kept thinking, “Oh wait that's a billion for yesterday. That can't be right,” because I just came out of this role where a billion week seemed pretty big. It's a large-scale operation. It's really hard to get your head around trying to quantify what it is. And so what I try to focus on is not the size of it, but the quality of the decisions. What I really try to do, Willy, is spend a lot of time thinking about, and listening to, whether it's through informal channels or some sort of formalized feedback channel, is what's going on with the customer? And if we can improve the customer experience individually or at scale, then the 340 could be much bigger. If we don't innovate and we don't focus on the customer, then the 340, we're not entitled to it. It could be something much smaller. So, I'm constantly worried about what we’re doing for customers and for associates and to scale. Honestly, I really don't spend a lot of lot of time thinking about it. We quantify at the end of the quarter, and we quantify it at the end of the year. But if you tried to break down a billion a day I think you'd spend all day trying to get from the billion to something else, and you wouldn't have much time for the other things that are that are so important.

Willy Walker: So, I don't want to spend too much time on size and scale and how big this all is, but, in the US, what's the largest Walmart in the sense of, which store does the most revenues on a daily basis? And is that due to the footprint, it has more products, it has the best food, or is there something else that makes that Walmart the biggest from a sales standpoint? And I see you stepping up so that tells me that you're going to go to another computer. 

So, to anybody who's watching the screen, I'm going to do a plug for Walmart because it says, “save money and live better.” He will be right back, I'm getting a note. So, to those of you listening in please hang on for a moment and we'll pick the conversation up as soon as he's back on. One of the nice parts about this virtual world that we all live in is that doesn't cost a whole lot to get a Zoom link, and when one goes down, you can get another one back up and going pretty quickly. So, let's hope we can do that. 

While I'm waiting for John to come back on, just a couple broad thoughts that I actually hadn't planned on going into today on the commercial real estate world, but I will do so. Many people have seen that 10 year has rallied back down to close to 1%. I think a lot of people had thought that we'd cleared 1 and were headed towards 1.10-1.15 and potentially higher. Clearly people investing back into fixed income as there's somewhat of a sell off going on in the equity markets. I don't think that's as much of a statement about the fixed income markets and people saying, “I have to go buy 10 year treasuries,” as it is about the sell-off in the equity markets right now. A lot of commentators on Squawk Box are talking about the fact that markets, typically after the inauguration of a new President, have a pretty choppy first month or so, so we'll see how all that plays out. 

Since the last time we all spoke, we obviously have a new president sworn in, and the Biden team is wasting no time trying to both get the pandemic under control. I was on a real estate roundtable quarterly meeting last night, listening to Senator Wyden, who's now the Head of the Financial Services Committee in the Senate, as well as Sherrod Brown, who's now running the Banking Committee, as well as Senator Manchin, who has become a very important swing vote in the US Senate, talking about what's going to happen in the Senate, what's going to happen with COVID relief and taxes. I would say one thing that Jeff Deboer of the real estate roundtable said, that had we all been in a room, Senator Manchin would have gotten a standing ovation when he basically said it'll take The Biden Administration, as well as the US Senate, quite some time to start focusing on any changes to the tax code, given everything they're focusing on right now, as it relates to COVID relief. So, I think that many people on the call from the real estate roundtable were concerned that we would see significant changes to either the 1031 exchange rule or carried interest. And whether that comes or not is still a question mark, but Senator Manchin was trying to put people at somewhat of ease that it's not something that's going to be imminent. With that, John is back. There you are.

John Furner: Hey, sorry. One thing I will say is, we will be tenacious.

Willy Walker: No worries. Much better connection, so what I was asking you was, the largest store in the country, and is that due to just having a huge footprint, more products, best food, or some other special sauce?

John Furner: We don't disclose location volume per se, but our best stores typically have a combination of things, and it always starts with the right product that people are looking for at the local level. But store managers make a massive difference in the way stores run. Like any business that has multiple operating units, that individual has such an impact over the way that processes handle, the way they connect with the community. But our best stores, what I typically find is the leadership teams are so well aligned. We can walk into facilities, you and I could go in a couple together, and we could quickly huddle, as we said earlier, we could huddle with the leadership team, and within a couple minutes, you'll have a really good indication on how well the store is going to be presented, and the types of revenues and profits they generate, and it's alignment around some very narrow things. It's inventory availability, the right pricing, having people who are friendly. And in large part, our commerce, which I know we're going to get to Willy, but it's changed in the last few years. And last year really accelerated some of the trends we were seeing in terms of shopping and picking up, shopping in store, e-commerce, and the entire US market went through some pretty big shifts early in the year. But it all comes down to the quality of the individuals, the roles they've had that prepared them for the leadership role that they're in, and then having the right career ladder where people can start as a store manager, or a buyer, or a merchant here in the home office or a logistician, or start in the store working in the garden center the way I did, and have a career ladder they can follow to be anything they want to be in the company.

Willy Walker: So, let's jump right to that, John, as it relates to 2020 and the accelerated changes to your business that you saw happen. The pandemic hits, everybody in commerce, in business sits there and says, “We don't know what the future holds.” But many of us, like Walker & Dunlop, we were able to basically send everyone home, do remote work, and continue to process our business. You had the very real challenge of making sure that your associates were able to go supply services, deliver services, and keep going. Talk us through, for a moment, what the real challenges were there, and then whether any of those challenges that you overcame are going to be lasting changes to the way that you are managing Walmart.

John Furner: Well, that's a great question I heard you talking about travel earlier, and you know I think the answer is we, we can assume some things but we really don't know. Exactly the way or the timing that things could become, I hear people say all the time, you know get back to normal. But what may be normal in the future, might be different than what we would have thought of as normal before 2020. And early in the year last year, you know I didn't, I didn't anticipate being a part of an organization that had a million essential workers; and hadn't really spent much time thinking about the role of what an essential worker was and their terms that popped up early in the year, like essential worker and social distancing other things that. When the last time you and I physically saw each other, which was probably 18 months ago. If you would of said, any those things to me, I would have said, Willy, I don't know what you're talking about. We don’t we don't think of ourselves that way. And as things began to progress, you can see that something was coming, and you could see that this this may change the way we have to operate, and it was really about early March in 2020 when things really started to accelerate, and you know the day that I remember. The biggest change, I think it was the night that the NBA canceled the rest of its season and that began what we what we refer to as the stock up phase back on our first quarter last year. And we saw, as you as you did, and everyone in the country runs on product categories, unlike anything that I think any of us had ever seen before. And our team was put in the position of trying to maintain supply in a in a supply chain that had run really well and it's a big stable supply chain and suddenly there is these extreme demands put on, all the way back to product manufacturing and logistics and getting products through warehouses and back in stores or ecommerce fulfillment centers we're seeing you know spikes in demand that they hadn't seen before. So trying to frame up and what we need to do as a business and at that point, it was it was all about we've got to do everything we can to serve because people need us. And we began purchasing surgical masks to give our associates to wear we put in something like 80 to 100,000 plexiglass shields between our cashiers and the public, and we covered our pharmacies and we began social distance measures in stores. And we started, you know, providing wipes and sanitizer to begin at the front of stores. We limited our hours. We were 24 hours and a lot of many locations, we went from 7:00 am to 8:30 pm so there were just so many decisions happening. At the same time, but the biggest single priority was being able to serve and protecting our associates, the best way we could. So, we had to change our leave policy immediately so, that people that thought they had been exposed would have time off. And you know, I’m sure someday I’ll have a chance to sit down and rethink through all the things that happened. But you know in those situations it's really about you just got to put yourself aside and think about what's best for the person who is on the front line. Now part of our workforce is remote. If you were here in the Home Office with me today, you'd see me and a few other people. And it's pretty thin. We learned some things about remote working in administration, but there are a number of us who are probably 50/50 between being in the field still and being in some sort of remote situation and then we've got a big piece of the workforce that, they you know they are the front line, and you know my hats off to them. They kept a big part of the of the country fed and running at a time when there was so much change and for those that are listening, in manufacturing know, it's not as easy as just taking a food service product and putting a barcode on it and changing it to a new size and suddenly you're ready for sales to be happening in the grocery store channel. Those are some pretty massive shifts that take a while. And so how quick it changes back, and you know I don't know. I'm sure that we'll find a new normal, I'm sure people will travel again I’m sure when we get to a high level of vaccinations or herd immunity, people will get back out. I know there's pent up demand to get out and now the question is you know what does it all mean when this gets back to a, or gets to a state of what we'll call normal in the future.

Willy Walker: Just when you were talking about supply shortages, managing you know everyone remembers toilet paper was the product in demand. You all have made a science of supply chain and logistics, yet you didn't build it, as you said, if we talked about the pandemic and the stresses it put on you a year and a half ago. You know, we would have never been able to think about all the pressures it put on you. Was there anything during that crisis that stressed that supply chain that made you think about potentially changing something going forward? Whether it was your suppliers, I know you all are famous for having your suppliers be co-located in Bentonville with you all. Anything where you said you know what that supplier didn't show up, we got to vertically integrate back into that product, or we can white label that product. Or shipping, I mean, I think you own all of your own logistics management as it relates to shipping products from here to there. But was there anything there, obviously you're not going to say to me, we're going to you know, we decided to take on P&G and they're no longer our partner, that's not what I’m looking for. But was there anything during that process John that stressed the system to the point where you think you're going to change the way that you logistically manage Walmart?

John Furner: Well, one thing that happened early that I think this will sound obvious, but it wasn't an obvious, as obvious as it is likely now; is visually people react to what they see or they don't see even more than probably what I believed going into 2020. And what I mean by that is, the category that sold out the first and what was stocked up the quickest was bath tissue and I remember a friend called, acquaintance from China and said I’ve got a question and with this pandemic why, why are Americans buying all the toilet paper, why aren't they worried about food and water and other things they need to stay home. Which is actually a great question. It certainly it is something that we have, and we consume but it's not essential for staying alive. But I think the answer is when someone sees something empty, it creates a sense of panic and because that's a big product it's bulky and a big package takes up a lot of space. It's one of the places in the stores and in Sam’s Club, where you dedicate a lot of space to it because it just a counter doesn't hold that many units and so nationally when these things start disappearing I think people feel like well it's about to run out, I better go get it. And I don't know if it's true now but at some point, last summer someone told me there was something like 40 weeks of toilet paper in Americans’ homes sitting in stockpile. Hopefully that's all reconciled now. But what we've learned from it is really to let the math help us dictate the way we manage things. What we call safety stocks or backup stocks or supplies that are coming through. The company has been historically great at managing inventory turns and, as you know, think about selling inventory, as you receive it and most adjusting time system. So, over the last year, many of our supplier partners and us together have ensured that things that we would call modular or shelf space represent more space. The very best-selling items. There's definitely been some rationalization around the entire industry. Maybe the best way to describe it, is that the 10th or 12th flavor of something we decided to not stock can we put more space and resources into the top items. And you know where it all ends, to be determined, but the big thing to that everybody knows about, of course, is the channel shift. Store business through the end of the year, or the end of our third quarter, as we reported, remains strong. The ecommerce businesses are growing faster and then our pickup and delivery business shifted really early in the year. It was under extreme stress in March and April last year and then a number of, millions of consumers were then shifting to home delivery and pick up as the year went on. And if I were to guess it's probably accelerated the whole country, this is a national statement. I think the pickup and delivery business probably accelerated two to three years ahead of what it would have because the changes that were that were in place last spring.

Willy Walker: So, talk for a moment about the competitive landscape, I want, I want to go to online the multi-channel piece of it, in two seconds. But just talk about the competitive landscape, as the pandemic set in because the big box retailers clearly were net beneficiaries and the smaller retailers suffered greatly and clearly there's been a lot of talk about small businesses in America. That's really where the stimulus money needs to be targeted and there are plenty of small retailers who have really suffered through this crisis. Clearly not looking for you to say hey that's been great for Walmart because I know you wouldn't say that, but it has been just from an economic flow standpoint. The big box retailers have become the net beneficiaries of the scale that you all had being on the front line and being able to stay open during the pandemic. But you go head to head with target, you go to head to head with Costco, you go head to head with Amazon, just talk about how that landscape has shifted this year and whether you feel that Walmart, given the number of stores, you have and how strong a retail base, you have, how do you continue to compete with such fierce competitive set in the Targets and the Costcos and the Amazons of this world?

John Furner: It starts with the customer and I’m going to repeat something I said earlier, knowing what is important for our core customer and other customers who are potential customers we really, as I said, are really focused on what is the customer wanting from retail in general right now in the past and going forward. And, and the winner in any of these markets are going to be the people who always serve the customers better than their competitors. 

You know back to your point on small business we are looking forward to our small businesses being more healthy than they are today. Small businesses is a very large part of the economy. It's where entrepreneurs start and Walmart is a small business that scaled over the years, you mentioned Sam Walton earlier he started with a single location here in Arkansas and that's a very small business. So you know we want the stimulus that we assume is going to happen to make its way into the hands of small business and it's great for employment. But just to wrap that up with competitors, though, competitors are big, they're small, and they're everything in the middle, and it's all about it's all about share and when you're gaining share you feel good about the results and when someone's taking this share from you, then, then clearly, we've got our work to do. Our homework to go to do, but we spend a lot of time thinking about customers. And look what we know about customers is they want to be able to shop conveniently when they decide to. When they want something for pickup, we've got to be there to be able to do it, and when they want something delivered we also need to add that, and I think the future looks more like customers want to be in stock at home, the same way, we want to be in stock at a store. So customer journeys include inspiration and discovery and they also just include, I have a favorite soft drink and I want that to be in my refrigerator anytime I go there, and we want to be able to help fill that role for them.

Willy Walker: So, I believe in 2019 about 8 percent of your sales were online. You haven't released your 2020 numbers yet so I’m not going to ask you for that, but it's my assumption it went up quite a bit. Where's e-commerce as a percentage of Walmart sales in 2025 or 2030?

John Furner: We haven't any issued any guidance for this year coming up and we started it's pretty interesting situation back in the first quarter. Last year we decided not to provide guidance for the rest of the year and going forward at that time, because there was just so much changing. And as you said, e-commerce is certainly growing faster than brick and mortar. Which would include the pickup business and the direct to home, business and into the third quarter last year you'd seen our results, where e-commerce is quite strong. So, over the long run, look I don't want to try to be an economist, I’m not an economist, I’m a marketer who leads a retail company. You do we think it will be shifts and you know certainly, at the at the rate that they'll happen, you know I'm not sure what it is. But what I try to think about for our team is be prepared for any change in the environment, and you know, like I said last year, there were changes that I certainly never would have anticipated I don't think any of us would. And I’m extremely grateful for the team here at Walmart who were able to adapt so quickly, and you know, we had our stresses put on us early in the year last year with the out of stocks, and imbalances in supply chain, due to the changes we saw so quickly. But this team has reacted and it just as I said this morning, I was in a store across the street, the in-stock is in great shape, the produce quality looks great this morning, teams engaged, so you know it's just a matter of deciding that whatever comes at us we've got to be ready for it. So, from now and until we've got to be ready for the changes that customers want to make.

Willy Walker: I’ve asked you previously about logistics and supply chain and what might have changed during the pandemic. I believe, that during the pandemic, you also brought your two merchandising teams both online, as well as traditional retail together and then you also, you collapsed the online app for growth with the retail app into one app. Talk about that, because I, you know the size and scale of Walmart is something that few of us have any real appreciation for, but one thing I think everyone understands is changing a company as large as Walmart is not easy. And I read that and I sort of said well there's probably a benefit to someone like John who might have wanted to bring those two together previously and the pandemic sort of forced it, and now you have those two retail teams working together, you have that app being unified app. Can you talk about that, and whether that was net beneficial and something that you kind of from a strategic planning standpoint, a couple years ago said God I’d love to do that someday but it's just not going to be something I can actually get through?

John Furner: Yeah, no I am happy to talk about that. Those changes were made probably between March, April last year. When the two apps moved to one app. We have one app now, but it's still has two what we call two hallways inside it, so we've still got some work to do to make the app experience even more seamless. And then the two merchandise and operations teams were built separately, so the store business had built its way up from the early 60s until last year, in Bentonville and then our e-commerce teams were geographically dispersed between New Jersey where was located and then California, where was located and then a number of acquisitions, we’ve made. And, and both are big businesses and both growing and in what I was trying to do is make it so that when a customer shops with us they could shop with us as the brand Walmart be able to search what it is they were looking for, transact seamlessly and not expose to the customer our org chart. And if I were to diagram the org chart and then you went those from stopping journey, it said okay, I get it I’m now at the store org chart or I’m with the E-COM org chart. Or, in this situation I’m now I’ve moved over to the financial services org chart and again it's putting the customer in the center and then, making the experiences around the customer, a seamless experience that is able to fulfill all their needs. And what we were doing in some situations, as you could tell which business you'd moved over to almost like swiping an app on your phone and going off to shop somewhere else. So those experiences are what we were trying to clean up and I’m sure you and other business leaders have had the same thing. Where if you're in one part of the business, and if you know if it's in banking if you're with retail banking or mortgages or investments it's like the relationship starts all over and hello, Mr. Walker nice to meet you. Well you should already know me because I do business with you in two other places. But we're trying to try to make it so that the customer doesn't recognize that our org chart is fragmented and look we've got a lot of work to do and a long way to go but I think the team so position to be able to do it.

Willy Walker: While you were doing all that you delayed the rollout of Walmart Plus. When can we expect to see Walmart Plus, and is it going to be Amazon Prime on steroids? Is it going to be Amazon Prime? Or is it going to be something completely different?

John Furner: Well, now that you say that, I feel like we should have sent you something and been a little louder in your market cause we did get it launched back in the Fall.

Willy Walker: I'll sign up today, John, my bad. I will be a Walmart Plus customer by the end of the day. I’ll send you my password.

John Furner: Okay, well, I believe you will. But we are excited about the program, it’s early stages. We launched with free unlimited shipping on orders from your local store for food, and merchandise, and other items. We have a product called Scan and Go where, when you're in the store shopping, you can check on your mobile phone as you're going to the store. We've got fuel discounts, it's available at Walmart and Murphy locations, including Sam's Clubs around the country. Then in December we added a free shipping benefit from So, Willy, if you if you would sign up today and go in and just load your basket, we will get it to you, and I think you'll be pleased. We're excited about the program.

Willy Walker: So, one of the stats, John, that I think a lot of people are surprised at was that in Q2 of last year, right in the depths of the pandemic 84% of retail sales in America were done through bricks and mortar and only 16% online. That then collapsed back down to 14.5% online and 85.5% through bricks and mortar in Q3. So, while everyone sits there thinking that Amazon is out to take over the world, the reality of the situation is that the vast majority of retail sales still go through bricks and mortar, and you're the largest bricks and mortar retailer in the world. So, one quippy question would be, why are they trading at 97 times earnings and your trading at 21? But, more importantly, isn't that install base that you have in your 4,300 stores a real competitive advantage to you as it relates to last mile?

John Furner: I think being local is an advantage, and we're proud of the fact that we're local and close to 5,000 communities. And I would include in that our distribution centers, fulfillment centers, apparel sortation centers. We're local all over the country. And, you know, just last week, a member my team said, “Hey I just want to share the experience I had,” she said,” I decided I needed to buy K cups, and I ordered on and I thought, you know, they'll be here in a couple days, that sounds great. And about three hours later, they showed up on my front door, and I was so pleased to find how quick it was and delighted to see the speed.” And to your point, having capabilities like that, where we can do express deliveries in under two hours from literally thousands of places is an advantage. And, you know, what we see now, and I think we’ll see even more in the future, is a consumer that has the capability to be fulfilled on demand in just about any way they want. And having these stores and associates and fulfillment centers located all around the country, it's exciting to think about the possibilities that can be accomplished by such a footprint. And having the ability to have a digital relationship with customers and help you anticipate things that you may be out of stock of in the future at your home, or share with you latest releases on things that may be interesting and help you discover. I'm excited about the possibilities. One of the things you would see, you mentioned, there are probably pictures of Sam Walton around their office, and there are. And in one of those talks about the only constant Walmart is change. I don't know when he said it, but it was probably in the 80s. That was when, I remember, when the company hits its first billion-dollar year, and then when I joined the company, I think we were maybe $55-56 billion. I remember we hit 100 and we say to our associates, and they repeat back, “The only constant Walmart is,” and they'll say “Change.” So, we are going to change, and we'll keep changing. But you can change, and you can grow business and change without losing what got you here. And what got you here, it's typically the values, and the personality, and the things that the founder instills and leaves with us. It's certainly true here.

Willy Walker: When I looked at your CapEx spending in last year's annual report, I was surprised at, if you will, the disparity in spending between e-commerce, technology, and supply chain, where you spent $5.6 billion. And that's over 2x what you spent on remodeling existing stores, and then dramatically larger than your new store acquisition, which, for 2020, and it was obviously an anomaly of a year, was only $77 million, but the year before that it was $313 million. But there are a lot of people listening today who are very interested, because there are a lot of people in the commercial real estate industry listening. I read those numbers and I say Walmart's putting all their money into e-commerce and all into supply chain and technology, and not a whole lot into growing the bricks and mortar footprint. Is that fair? And are you basically sitting there and saying let's hold on to this physical footprint, but then the challenge is to grow the e-commerce business?

John Furner: Well, I think it's probably a combination of a few things you said. You know, first we were in 4,700 locations, and we're pleased with the footprint that we have and it's a large number of locations. We had grown fast in terms of square footage growth in super centers for probably 15 years there was a really strong run. I think, you know, in the 90s and late 2000s, we probably peaked at about 300 locations, maybe a touch more per year, in terms of growth. The technology investments are really important for us going forward. We’ve got a number of systems and applications that we're updating, we want to be a digital company, we've built in things like product management as a discipline to ensure that the tech products we deliver and build are commercial grade, for not only consumers, but our own associates. So, there's a large-scale transformation in technology that's been going on and has been has been ongoing for some time. And, you know, for me, personally I learned a lot from the years that. [Unintelligible] … we're seeing those kinds of things here. When I was at Sam's Club finding ways to create innovation in spaces that you failed out. Now for us, thinking like a digital enterprise and building in the capabilities to delight customers preemptively, like I described with this person who got their K cups within a few hours. It seems like a transactional experience, but there's a lot that goes on in the background for those kinds of things to come together. You know, when I when I was growing up in Central Arkansas back in the 80s, if you'd have told me that you could hand me a device that ran on a battery, and I can push a button on it and food would show my house in an hour, I would’ve thought wow that's pretty exciting. You know, I don't mean to oversimplify, but there is a lot that has to go in the background for the intelligence to run to be able to serve customers in almost a one to one fashion. Whether you're a one location operation with one business, or thousands of locations. So, you know, we’ll continue to evolve and again, probably said this five times and I’ll say it five times more, it's where the customer is going and how the customers want to be served, will determine the way we make our changes at Walmart.

Willy Walker: So, let's talk about where customers are going. There's a lot of talk right now about red state, blue state, and lower tax states getting a lot of people moving across the country. I was really interested to see that your largest state, by a wide margin is Texas, where you have 603 stores, and then you've got 386 stores in Florida. So those are sort of state migration one and state migration two right now in the United States. And then I was also very surprised that you only have 320 stores in California. And, so, as I saw those numbers, I sort of thought to myself, is that due to access to develop the land, consumer preferences, or just amazing strategic planning on the part of Walmart?

John Furner: Well, great question. Money commands your research. Your attention to details is fantastic.

Willy Walker: I try.

John Furner: Just well rounded so impressive. The foot that we have. We operated, think of concentric circles, so the first locations were in Northwest Arkansas. And, as a number of locations built around there, the company would add in distribution capabilities that have weighted average distance routes. You know, imagine, how many stores can you put in a 250 mile area, and then we would saturate with these in those geographies and, as we got into other territories, then we would open more distribution capabilities. So, I think a lot of the concentration that you'd see in Texas and Florida happened a long time ago, and we continue to build. Those are big markets and they're strong. You know, Texas you. know about back and these when the first you Texas, and then and then Western states to bit longer. So, I don't know it was as much of perhaps luck, or history will tell, you know, we do see large population shift and growth in places like, [unintelligible], as you said, Florida, Tennessee. It's hard to get it exactly where everyone's coming from, but when you drive around North Dallas and just look at the amount of construction, it’s substantial, there's quite a lot going on there.

Willy Walker: So, I talked about red state, blue state. Obviously we've just gone through a very challenging election season and with the inauguration of a new President. You've got, you know, Doug McMillan has underneath him 2.2 million associates, and you have over a million underneath you. You're the largest employer in the world, and what you say on everything from the minimum wage, to health benefits, to wearing masks, not only is it news, many people look to you to sort of establish norms, and tell the world where Walmart is and that's going to lead the rest of us to know where we ought to be. How do you and Doug manage the constant pull of talking about these issues and, at the same time, if you will, doing what's in Walmart's best interest?

John Furner: Yeah, every decision is different, every scenario takes a considerable amount of thought, and, you know, I'll talk about masks for a second, as an example. Early last year, we decided to source masks and to start distributing masks for our associates to wear. And the reason we did it back then was associate safety. Second was we want to serve our customers, we want to serve communities, and then there was a long list of things after that. First, let's start with what can we do for associate safety, and that led to the decision of masks, plexiglass, sneeze guards, social distancing, closing entrances and metering customers. All was done for safety and, you know, certainly, we were aware that when we change [cut out].

Willy Walker: I think I lost you again, John. Yeah, I lost you. Let's hold on for a second, I’m sure that John will come back in. Here he comes on another line, I think he's got a got someone right next to him. You back?

John Furner: I'm back. So Willy, what I think I'll do is, if there's a tough question, I guess, I can just blame it on the internet.

Willy Walker: That’s right, exactly. You can just back out. I was going to go to the fact that you made the decision last week of pulling funding from anybody who didn't support the confirmation of the electoral college, so maybe you just let the link go down on that one and we'll come back afterwards for something that talks about store expansion.

John Furner: Yeah, look. Certainly, you know, things like mask wearing for instance, and then and then eventually for our customers, decision made based. If you. Do to pay types of responses, you know, certainly and what we never intended when it came to associate safety is for, in any way, that to be a political decision. It’s always about the health and safety and the best interest of our million plus people who are essential workers out in the field. And when we made those decisions, you know, fortunately, a number of places in the country [cut out]

Willy Walker: I think John's going to fall out on me again. John, you there? So, a couple things as I wait for John to come back in. One is that Walmart has started to provide inoculations to COVID in a number of states, including Georgia, Maryland, South Carolina, Texas, and Puerto Rico. John, you back with me? So, we've only got about three minutes left here and so I'm hoping that John will reconnect so that I can, let's see if he's coming back on here. There you go, are you back?

John Furner: And it's this morning somehow interfered with fiber optic cable laying in, . apologies this keeps happening. It is what it is. Right, this is living on Zoom. Some days are better than others. Like you started us with, at some point, it’ll be great when we can sit across from each other in a couple chairs and have a room full of people, and the worst thing happens is the microphone quits working.

Willy Walker: There you go. Well it's exactly right, and what I'm going to do is, I am going to come down to Bentonville and we're going to go for a bike ride together and then we'll tape round two live. Before I lose you, just two other quick things. One of the things that I just wanted to understand because of the size and scale of your businesses, you can move in any direction you want. You can vertically integrate, you can do white label products, you can get into the shipping business, you can get bigger into the pharmaceuticals business. When your bus-dev team comes to you with an idea, how big does that idea, need to be to have you even focus on it? Because, I sit around, we're a billion dollar revenue company, and I sit there and say if it's not going to be 10 percent of revenues, we don't even focus on it. So, don't even talk to me if it can't be a $100 million business. But you're of such a size and scale, that the concept of looking at anything is like buying half an industry.

John Furner: Well, you’d probably be surprised. I'll look at about anything. It is size and, in fact. Today innovation T store Ray who takes really projects and small ideas that may scale we envision as a as a really important part of what we do and. And I could probably think when we tried things and we were way too early, and now they’re at scale. You know, our pickup and grocery home shopping business we call online pick up delivery, I remember trying back in the 90s. And a good story, I met my wife working at Walmart and one of her jobs was a delivery system where customers could fax in their order, we would shop it, and then we would deliver. And it failed because it was tiny and it didn't work, but you know, looking back now, I think we were on to something. So, I try to assume every idea, it may be the next thing, you never know. And maybe it scales to a million dollars or a billion, but I can tell you one way to be sure to not know if it's a million or billion, is don't try it at all.

Willy Walker: Exactly. Well, that's great, and I see that we're at the bottom of the hour and the technology has been going in and out, so while I've still got you I wanted to say first of all thank you so much. Great hearing all your thoughts, congrats on all you've done at Walmart and, as I said previously, I very much look forward to grabbing my bike and coming down to Bentonville and going and biking on some of those trails you've talked to me about.

John Furner: Me too, me too. Sorry for the connection, but thanks for the time and I look forward to seeing you in person at some point.

Willy Walker: Great, John. Thanks very much. Thanks everyone, we'll see you next week.

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