Monday , June 1 2020

A test of Walmart’s momentum

And now for a major test of the well-oiled retailing machine that is Walmart Inc.
The big-box giant announced that Greg Foran, the CEO of its US division — which makes up the bulk of its sales and operating income — is leaving to become CEO at Air New Zealand Ltd.
He will be replaced by John Furner, who has led the company’s Sam’s Club division since 2017. Furner has been a capable steward of Sam’s, a retailer with $58 billion in annual revenue that would be among the nation’s 10 largest if it were a standalone chain.
But the departure of Foran, whose new job will take the native New Zealander back home, marks the loss of a key architect of Walmart’s turnaround. The big-box chain has delivered several years of remarkably steady comparable sales growth, sending its shares to all-time highs.
Much of the credit for this run of strong performance has gone to CEO Doug McMillon, who has made tough decisions to close hundreds of stores, plowed money into its e-commerce business and made a big bet on Walmart’s future with a large investment in India’s Flipkart. Marc Lore, the head of the US e-commerce business, also garners praise for helping Walmart draw up a more effective digital playbook that is helping it compete with Inc.
But Foran should not be left out of this Walmart success story. Despite all the attention lavished on its e-commerce efforts, physical stores are still the beating heart of Walmart’s business. Foran managed critical improvements in this area, including fixing in-stock levels, ensuring produce was fresh and improving customer service.
Plus, much of Walmart’s e-commerce innovation and growth relies heavily on its stores. Online grocery pickup, in particular — a fast-growing service that differentiates it from Amazon — relies heavily on the brick-and-mortar outposts; that is where those orders are picked, packed and retrieved by customers. If Foran didn’t have those locations running efficiently, and if he hadn’t made such noticeable improvements to its offerings of fresh food, this service wouldn’t have gained nearly as much traction.
It may turn out Walmart can keep up the momentum without Foran. Furner is basically a Walmart lifer — he started at the company as a part-time store worker in 1993 — so he’s deeply familiar with the company and his fellow C-suite executives. Also, Vox had recently reported on tensions between Foran and Lore, so perhaps Foran’s exit will have the benefit of leading to more collaboration and cooperation.
But Foran has been an important force in the revitalisation of Walmart. The retailer will have to be diligent to make sure it doesn’t squander his progress.


Sarah Halzack is a Bloomberg Opinion columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post

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