Walmart COO McKenna keepin’ it simple

Seven weeks into her new role as chief operating officer of Walmart’s U.S. stores division Judith McKenna shared insights into her priorities for the retailer’s domestic business with a gathering of more than 400 suppliers Friday morning.

Among the key takeaways for those attending a WalStreet Speaker Series event hosted by the Bentonville/Bella Vista Chamber of Commerce were simplification, best practice sharing, supply chain opportunities and small format growth. Those attending the event held in the auditorium at the Sam’s Club home office were eager to hear McKenna’s views on different aspects of the business given her newness to the role, international background and the expectation that changes in senior leadership -- which there have been a lot of lately at Walmart –- typically result in new strategic initiatives which impact trading partners.

McKenna didn’t drop any bombshells that would give suppliers immediate cause for concern, but her comments about simplification and supply chain efficiency reveal a lot about the mindset of an executive poised to have a huge impact on Walmart’s operations this year. For starters, she mentioned on several occasions the importance of simplicity and the need for closer internal collaboration between merchants and operators at Walmart. The phrase “Better Together,” is how McKenna characterized the internal collaboration she expects to see the company do a better job of going forward, reeling of the names of senior merchants at Walmart with whom she is in close communication with. It is an approach McKenna said Walmart’s Asda division used effectively during her tenure as COO at the U.K. retailer.

“It is a working process where you have all the debates internally before something gets to the store,” McKenna said. Directing a simplification comment to suppliers, she added, “you all have a role to play in that.”

Simplification is not a new strategy at Walmart. In fact, is it is a fundamental concept of being an every day low cost operator on which Walmart’s business model is based. The company has long sought to minimize complexity, understanding that by doing so it improved execution, reduced cost and improved sales. The emphasis on simplicity ebbs and flows with changes in senior leadership at Walmart and how firmly rooted executives are in the fundamentals of EDLP. McKenna’s comments suggest she is something of a purist.

“The teams are fed up with me talking about making things simple and improving consistency,” McKenna said.

Simplicity is an area of importance in the supply chain as well and an area of huge opportunity and growing complexity. McKenna oversaw supply chain as Asda and believe some of the concepts employed in the U.K., where home delivery of groceries is popular and Asda is a major player, can be applied in the U.S. Walmart has experimented with home delivery and grocery pick up but with a former Walmart International executive leading U.S. operations, the potential for accelerated best practice sharing with the international group is now a reality.

E-commerce is more advanced in the U.K. than the U.S. and population density plays a role in that, but McKenna views increased integration of digital and physical as another major opportunity area. Customers want choice in how, when and where they shop and how they fulfill orders, especially the ability to pick up in stores.

“(Store pick up) is a good area of growth for the future and it’s what customers want,” McKenna said. The other thing customers want is an improved store experience, according to McKenna, identifying a topic that has been a frequent topic of discussion by her multiple predecessors during the past decade. “We have work to do on the store experience and customer experience,” McKenna said.

As a relative newcomer to the U.S., McKenna said she’s been visiting lots of stores, adjusting to subtle difference in the English language and looking to identify those areas that are holding stores back from being successful. Suppliers have a role to play in identifying those opportunities by taking an end-to-end view of the supply chain that will drive simplification.

“We want to grow and grow with you,” McKenna said, a comment that hit home with those in attendance at an event the day after Walmart opened 33 Neighborhood Markets.