WAL-MART'S Future: Can Double Sales Be Doubled In 10 Years?

Global Entrepreneur December cover map.

Can the world's largest companies continue to write the story of the double growth of sales over the past 10 years? The answer depends on how it can capture the faint signals of emerging consumer demand.

You know, the office of the president and chief executive officer of the largest company in the world, Walmart, WAL-MART, is less than 24 square meters, which is only as small as an American child's bedroom.

Mike Duke and his wife Susan walked into this wooden decoration office for the first time.

"It was a Sunday afternoon."

This fall, Michael Duke recalled to "Global Entrepreneur" in his exclusive interview with China.

On that day, they finished their worship (this is their forty year family life habit) and went to McDonald's for lunch.

Then spent the whole afternoon decorating the room and hanging up the photos.

Then he sat back in his chair and said to his wife, "I am the fourth person to sit in this office. What an honor it is."

Yes, the first few owners have a reputation in the global business community: Sam.

Michael Duke noticed that the paneling on the wall was broken, furniture was spotted, and there were many scratches on the desk.

He was advised to abandon the old renovation, but he said, "no, I want to keep this table. You can find a very great history from this wooden furniture."

In the eyes of Michael Duke, these furniture contained

But the challenge is that in early 2009, after the financial crisis era, the global consumer market reinventing the value system in a strong shock.

This forced him to not only understand history, but also explore the future.

{page_break}

For WAL-MART, a company of this size, maintaining growth is a fundamental and difficult task, but it is not bad.

In the first quarter of fiscal year 2010, WAL-MART's sales volume was $99 billion 100 million, an increase of 6% over the previous year, higher than that of analysts. In the second quarter, while sales in the US fell by 1.8%, the overseas market gained 7.3%, so that the company achieved a 3.6% profit margin as a whole.

The latest third quarter earnings report shows that WAL-MART has also raised its annual profit forecast for its third quarter profit growth due to strong growth in international business and 9% in the third quarter.

But as Michael duke said at the shareholders' meeting, "although we are proud of our recent performance, we can not guarantee future success."

In this historic office, Michael Duke is trying to lead the world's largest company to try the latest retail pformation.

Internally, this is called the "The Next Generation Walmart" strategy in.

"WAL-MART in the future will become a multi channel company that allows customers to shop in different ways."

He said to Global Entrepreneur.

In November 11th, WAL-MART's US website offered free distribution of sixty thousand kinds of goods with no minimum consumption limit, which would disrupt the order in e-commerce. Some practices were hardly like a traditional company with decades of history. For example, promoting green is not unusual, but one of WAL-MART's partners is H&M, a fast fashion clothing manufacturer in Sweden.

But the essence of the future WAL-MART is more than that. Instead, it makes WAL-MART a real global company, including emphasizing customer service localization, business mode sharing, and utilizing WAL-MART's global supply chain resources, as well as strengthening honesty, or even a bit of a straightforward corporate culture.

You can also see this as a test of globalization.

When WAL-MART enters China

In order not to let the vast market disrupt the pace of WAL-MART, pragmatically made the innovation on the traditional foundation.

In fact, the purpose of "WAL-MART in the future" is from the expansion of Lee sage's famous motto of Sam and Walton, "Save Money& Live Better", which is a traditional innovation of "low daily price" accompanied by the process of globalization expansion.

When the outside world is changing rapidly and new technologies are accelerating to change people's way of life, WAL-MART needs to stick to a simple principle: innovation is based on customer needs.

"My pressure may be to continue to be the biggest retailer, but the most important thing is to become the best retailer that customers think."

Said Michael.

In China, you can feel the change at close range.

In September this year, the WAL-MART shopping plaza, located in the big Pavilion of Beijing, was renovated in three months. The name "Hypermarket new Proto" is used to greet China's upcoming consumer upgrade era. The new logo at the entrance has revealed the company's new resolution: "WAL-MART", with its three blue characters, has a lively spark.

The most visible change is that the store is divided into four different colors. The main location is the pink area, which mainly sells cosmetics, baby products and women's clothing. The main consumers of retail stores are women. The second blue areas mainly focus on the male market, which includes clothing, electronics and electronic products; the green food and dry areas are placed in the green area, where vegetables, meat and fruits are placed; the last orange area belongs to the family fun area, and those non daily necessities, drinks and liquor are distributed here.

Don't belittle this pformation.

WAL-MART has always attached importance to displaying products according to customer needs.

Michael Duke visits shop in China, will carefully observe the shop color, logo settings, electrical display, hoping to explore consumption habits or explore new consumer demand.

During his recent visit to China, he found that Chinese consumers are interested not only in traditional food but also in food from all over the world.

No matter how grand and innovative the future strategy of WAL-MART is, it needs to be implemented in detail and eventually return to consumer demand.

For China's retail industry that has just completed its original accumulation, WAL-MART's approach is worth studying.

In fact, as an industry leader, every aspect of WAL-MART has case significance.

Including the multiple demands of this change on the ability of the head of the company, at least, it needs two Michael Duke, a farsighted, and the other without letting go of any details.

As long as the meeting time arrives, Mai will rise unpolitely.

When the Global Entrepreneur tried to prove him to Michael, he laughed and lifted up the folder on his hand, which was covered with red and green N stickers. He wrote the journey: "look, every minute is counted."

The chief executive of the world's number one company is 60 years old and has to race against time.

Doers

It is not hard to imagine that it is easy to be thankless to handle such a company's pformation.

Michael doffer seems to be the right person: the old man with five grandchildren has a strong affinity and a natural simplicity.

A man who met with Michael Duke told the "Global Entrepreneur" that he attributed to Michael Duke's background as an engineer in Georgia Institute of Technology and also a farming experience in his youth.

{page_break}

In large companies, this style helps individuals to avoid political turmoil in a calm position.

In 1995, Li Sige, not CEO, appointed WAL-MART's Michael Duke as the senior vice president of the logistics department, who became a trusted confidant of Lee's cabinet.

After Lee's cabinet took office, he felt that WAL-MART's management level could not be compared with other Fortune500 strong enterprises. It wanted to recruit more college graduates and provide better training for management.

But these decisions have been opposed by many conservative old ministers, many of whom are old friends of founder Sam Walton.

In the process of Lee's removal of dissidents, he was sometimes forced to expel some employees as Li's confidants.

He had suffered so much, but in the end he thought, "in this case, there may be no right or wrong."

Of course, compared with Lee's cabinet, Michael Duke still lacks motivation.

"He also needs to grow.

You know, these leaders' learning abilities are amazing.

A WAL-MART Chinese executive told Global Entrepreneur.

But under the appearance of "good old man", Michael Duke has a strong side of leadership.

In this regard, as now the most close cooperation with Michael Duke, WAL-MART international business president and CEO Dong Minglun (Doug Million) feel deeply.

"He has a sense of urgency and competitiveness and is always expected to be very high.

When he sets a goal, it's hard to change. "

Dong Minglun said to Global Entrepreneur.

Obviously, age is the bottleneck of Michael Duke, and Lee castle is only one year older than him.

This urged him to find problems, study problems and act quickly as quickly as possible.

Fortunately, this is the strength of Michael Duke.

"He is a doer."

Lee is a judge of his successor.

His pragmatic style and WAL-MART tradition complement each other.

He bought a second-hand Porsche 911 Carrera sports car, will not go to work on weekdays, can only be addicted to the weekend.

To some extent, this style of action has also made him reach the peak of his career.

According to WAL-MART's partners, Ai Sihua's mild and understated tone is more agreeable than the Eduardo Castro-Wright, the most powerful CEO competitor at that time, trying to control everything.

Of course, the performance of CEO as an international department is also an important boost. During his three years in charge of international business, WAL-MART's overseas sales increased from $60 billion to about 100000000000.

Over the past three years, he has shown the determination of a solid leader.

WAL-MART has invested heavily in the German market but is unable to do anything at all. The global CEO Lee Pavilion thought it should be a long shot, but he decided to withdraw from the German market.

"You know it was very difficult to make that decision at that time," said Michael Duke, when he mentioned to the global entrepreneur. "I have to judge what is really long-term development. If not, we should put resources in a better market."

Quickly judge the company's situation and make the right decision, which covers the essentials of CEO's work.

But for WAL-MART, a large and old company, it is a challenge to relay the decision on change.

In essence, WAL-MART will not have zero start innovation.

Free online shopping seems to be a pioneering undertaking, but it still depends on the long-term accumulation of WAL-MART in the logistics field. Small players can not sign low price agreements with logistics companies, nor can they set up logistics distribution centers on a large scale, thus unable to absorb the cost pressure caused by free delivery.

Better life

In fact, the strategy of "WAL-MART in the future" is based on the constant adjustment and pformation of WAL-MART after the financial crisis.

E-commerce is a trend that can not be ignored.

WAL-MART launched a Pick Up Today project in the United States: allowing customers to order online and choose to send them by express or to pick up goods at the designated 800 stores.

For WAL-MART, the target customers of the project include those that are rarely distributed or have no roots in WAL-MART.

But the whole business, including physical stores, is more complicated.

The world's retail industry is about to enter the era of commodity price pparency.

This means that we must adhere to the low price mode.

For the low end consumer group, this is really hard to resist, but Michael Duke also realized: "I think sometimes customers need the best price, sometimes they need different, unique products, and we should provide all two kinds."

In short, WAL-MART must seek a dynamic balance between multiple markets and multiple needs.

In the US home market, the somewhat messy display method advocated by Walton, founder of WAL-MART, has made WAL-MART lose many customers, especially high-end customers, and the rising stars such as Target are aiming at the increasingly demanding consumers of the shopping environment, bringing the WAL-MART lost passenger flow into the arms.

Michael Duke told the magazine that in the survey of local customers, WAL-MART stores were generally overcrowded and even shoppers did not start shopping. "We listened to their suggestions."

WAL-MART's US team decided to provide consumers with a cleaner and more physical and psychological shopping environment. They began to clean up the passages filled with discounts and reduce the number of goods on shelves.

In anticipation, sales will be further concentrated on goods that already have good sales volume.

The result is surprisingly bad. Even if the effect of the economic crisis is ruled out, sales in the local market have gone a little too far, and it has lasted for five quarters.

"We have changed too much."

In view of this, he said frankly.

He quickly ordered the customers to rehear their suggestions, put back the commodities they needed, restore some of the discounted goods on the channel, and put more powers into the stores.

Little known is that he has replaced two top executives who are mainly working on and implementing this task.

"They cannot be too biased and too biased to find a balance."

In summing up the lessons of this fall in sales, he said.

All decisions only focus on what consumers need, and the premise is to act quickly.

{page_break}

Driven by this power, the strategy of "future WAL-MART" is reshaping this traditional retail companies in every small segment.

For example, in the shopping center format, WAL-MART's growth space has been very poor. It intends to reset the site selection strategy, no longer away from the center of big cities, and is ready to shrink its body, launch 30 thousand to 60 thousand square meters of community shopping centers instead of hundreds of thousands of shopping centers, and enter all major cities.

WAL-MART's plan is to test 30 to 40 stores in the next few years before spreading the net.

Even WAL-MART is ambitious to set foot in the most concentrated city in the American rich class, New York.

Facing the future

In this experiment, there is nothing more attractive than the vagaries of the Chinese market.

"WAL-MART's willingness to provide better spending power, the rise of the middle class and the hope of a better family life."

Said Michael.

Over the past three years, China's total economic growth has never been greater than that of the British Industrial Revolution and Japan and Brazil after World War II.

So, you have to believe that every detail in WAL-MART new model store in Beijing is carefully designed.

Hidden in the corner are many "secret weapons", such as freezer with sensors. Only when people come near, will the lights turn on.

In addition, in the baking area, the smell of the bread will float out of the special pipe and cause appetite. In the green fresh area, there is a machine that can spit out the menu, which will help young consumers who lack cooking experience.

In the future store, WAL-MART reintroduced the category of computers that were once withdrawn from the store. Even in the TV area, even the most advanced 3D TVs were added. According to Zhang Lei, the move is intended to attract young people who are becoming the main consumers of consumption. They are no longer as simple as they used to be for middle-aged and old consumers.

But similar to the test in the US market, this store also needs to balance the superimposed consumption demand skillfully.

For Chinese consumers, low prices are always tempting.

For this reason, WAL-MART placed a rack with special color pages at the entrance, replacing it two weeks or so, and selling information at a glance; in the store, the super low price goods were shown in yellow price tag, others in red.

But in view of the difference in logistics cost, the future store can not achieve the lowest price per commodity, but highlight the overall low price of a basket.

In fact, all adjustments are based on localization.

It is worth noting that in the newly arrived location, there is a theme promotion wall, with air conditioning and other seasonal promotional items.

"We find that people in China like seasonal promotions, such as hot pot promotion."

Zhang Lei said that this is precisely the usual marketing method of Taiwan retailers such as big fat hair.

"I think their strategy is beginning to work. The product line has been positioned, and the stores have also formed a scale, and gradually have the bargaining power."

A Procter and gamble summed up the rapid development of WAL-MART in China over the past two years.

In fact, the process of WAL-MART China practicing the concept of "future WAL-MART" is also exploring the process of upgrading China's consumption.

As the consumption concept of China's second tier cities has matured, the differentiation of retail market has gradually started, and different formats and location zones have become increasingly evident.

"Everyone is trying, there are very close to the local, have strong survival ability, also has the development speed very fast, now gradually tend to be stable, positioning is very clear."

A person who has worked in China's retail industry for more than 10 years has told Global Entrepreneur.

WAL-MART, who entered the mainland market in 1996, is not a latecomer.

But in the past decade or so, it has always explored the most flexible balance between localization and its powerful WAL-MART culture, centralization of management and decentralization.

A WAL-MART China's departure senior manager remembers that before 2008, WAL-MART insisted on the principle of "low price per day" and delayed profits: abandoning the channel fees charged by suppliers, requiring suppliers to reduce the purchase price, but was rejected.

"In fact, WAL-MART should have made money and broke some rules to make money."

Once, the decentralization of store power is another dilemma of WAL-MART entanglement.

A Procter and gamble salesperson for WAL-MART told global entrepreneur that the biggest feeling of dealing with WAL-MART employees is that they have many rules and regulations, and everything is "headquarters have the final say". WAL-MART is also relatively weak in holiday marketing and regional procurement for regional characteristics.

In the past two years, weaknesses have been gradually strengthened.

Looking back at this growth process, to today's future store, WAL-MART's model is a little earlier than the growth of Chinese consumers, but it still fits the emerging consumption power.

Reshaping WAL-MART

In China, WAL-MART's efforts to promote the use of LED lights energy-saving stores, agricultural supermarket docking, as well as WAL-MART China president and CEO Chen Yaochang in the acceptance of "Global Entrepreneur" interview, stressed the women's leadership plan, was initiated by Michael Duke since he took office.

Of course, you can take these as a lesson from the development of WAL-MART in the United States. No matter in terms of format or business mode, WAL-MART China has a positive image of the future, which is more and more high-end customers, honest, enthusiastic and environmentally friendly in the eyes of the government, partners and customers.

Although WAL-MART has different circumstances in different markets, it reflects WAL-MART's self game between traditional mode and new demand, globalization and localization.

This is the only way for WAL-MART to be the world's largest retailer in decades of development.

Therefore, you can imagine that the strategy facing the future is also a correction to the past experience and gains and losses.

In 2000s, when the global CEO Lee Castle did not pay much attention to the negative impact of lawsuits, he firmly believed that all these were the critical opinions of the elite.

Fortunately, the smart businessman soon realized the seriousness of the problem.

WAL-MART's own survey shows that less than 1% of people say they will stop shopping for WAL-MART because of these reputations.

Although the numbers are not so bad, the diffusion of influence is inevitable for a long time.

In the late 2005, WAL-MART began to respond to those rumours.

They invited ed man to create a public relations image for them, greet more green organizations and NGO, and improve their medical benefits for their employees.

The internal results seem to be good, and the number of WAL-MART employees who fail to be guaranteed has dropped by 40% from 2007 to 2008.

It is hard to say that there is a direct causal relationship between the renovation of brand image and the importance of corporate responsibility, but for WAL-MART, this makes it aware of the reputation of the industry leader and the consequent risk.

Recalling the hard times, Dong Minglun said: "I think our problem is that we do not realize that we are a big company. We still think we are still very small.

As a big company, it needs more social responsibilities, not just for customers. "

In 2008, Lee's Pavilion put forward the idea of "WAL-MART's sustainable development".

In the summer, he came to China to convene suppliers to hold a sustainable development conference for suppliers.

Not long after, WAL-MART announced that products that will be provided at its stores in the future will be labeled with green labels.

According to Dong Minglun's introduction to Global Entrepreneur, they will list 15 questions for suppliers of products without adding costs. For example, do you know what greenhouse gases are? Do you support carbon dioxide projects? Do you know the composition of your factory equipment? In order to enhance the overall awareness of the supply chain.

This direction is embedded in the strategy of "future WAL-MART", which is a general ledger: "there are more than 1 billion people in the world who live on agriculture, and hundreds of millions of them live on less than 2 dollars a day.

With the global population explosion, food production must increase by nearly 70% in order to meet the needs of 9 billion people in 2050.

But compared to the concept of Lee's age, "future WAL-MART" emphasizes regional differences.

Taking WAL-MART's agricultural super docking as an example, the goal of India is 50% of fresh food procurement comes from the agricultural super docking project; in China, 15% of the farm products will be upgraded from green food certification to organic food certification; Japan will reduce food waste by 35% and increase the number of farmers directly purchasing.

In fact, the future WAL-MART strategy is WAL-MART's integration of various new initiatives in recent years.

In business sense, this is seen as a manifestation of leadership.

In an exclusive interview, when asked by Michael Duke, the most important decision in leadership since he took office, he said: decisions on talent are always the most important. For example, I launched a project called "female leadership".

But on the other hand, Michael Duke always thinks that leadership is hard to control WAL-MART.

"In my opinion, in today's world, CEO needs both, not only a good leader, but also a good manager."

"Companies like WAL-MART need to have both," he said.

How to say, as a practical leader, Michael Duke always combines his strategy with details in his own way.

"My job is not only to draw a big blueprint, but to participate in the details of the business in the store."

He said to Global Entrepreneur.

{page_break}

Little known is that Michael will come to China every time he comes to China to visit the local consumers' home.

During his 4 days of intense travel, he visited a family of three generations in Beijing, which is rare in the United States.

While talking to middle-aged couples, Michael Duke watched the children playing happily.

"I love retail, I will try to be a consumer, think like a consumer."

Said Michael.

Sometimes, innovation originates from the most direct emotional interaction between people, especially in the retail industry which is closely related to people's daily life.