Inside This Issue - News
Walmart U.S. gets new CEO
August 11th, 2014
BENTONVILLE, Ark. – Walmart has promoted Greg Foran to the position of president and chief executive officer of Walmart U.S., replacing Bill Simon.
Simon, who had held that post at Walmart's flagship division since June 2010, is slated to transition out of the company. He will remain available on a consulting basis for six months.
Foran most recently served as president and CEO of Walmart Asia, succeeding Scott Price. A 35-year veteran of Australia’s Woolworths Ltd., Foran joined Walmart in 2011. In March 2012 he was named president and CEO of Walmart China, and he was subsequently credited with “significant progress” in assortment, pricing, store operations and compliance.
Foran was hired by Walmart’s new president and CEO, Doug McMillon, who paid tribute to his abilities. “Greg is one of the most talented retailers I’ve ever met,” he said in a statement. “His depth of knowledge and global experience will bring a fresh perspective to our business. 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.”
Foran left Woolworths after being passed over as CEO when Michael Luscombe retired. He most recently had been managing director of supermarkets, liquor and petrol, with responsibility for more than $40 billion in sales.
At Woolworths, Foran was credited with increasing sales and market share in an intensely competitive market. Previously he had served as general manager of Big W, Woolworths’ discount store chain, and also as managing director of the company’s Dick Smith consumer electronics chain.
When he took the reins at Walmart U.S. from vice chairman Eduardo Castro-Wright, Simon was known mainly as the author of the company’s epochal $4 generic prescription drug policy, which brought upheaval to the retail pharmacy sector and soon made Walmart one of the leading pharmacy operators in the country.
Castro-Wright had launched a number of initiatives intended to improve the customer experience through changes in operations and merchandising. However, the merchandising alterations, which centered on heavily editing assortments to give more play to ostensibly more productive items and private label goods, met with sharp resistance from customers.
Consequently, one of Simon’s first moves was to bring back hundreds of items that had been jettisoned from the shelves. In addition, he scaled back sharply the volume of price rollbacks, or discounts, that had been used to drive traffic and sales, claiming that Walmart had strayed from its fundamental everyday-low price philosophy.
Those moves did generate improvement as they gained traction. By the end of fiscal 2012 (which ended in January 2012), comparable-store sales had increased modestly after a downturn the previous year.
Sales and operating profit grew faster in fiscal 2013, but comparable-store sales growth had begun to decelerate as customer traffic weakened. Diminished traffic would become a chronic problem for the remainder of Simon’s tenure, and a succession of initiatives was launched to try to reverse the trend.
With the end of fiscal 2014 in January, though, comparable-store sales had declined 0.4%, as customer traffic fell 1.7%, offsetting a 1.3% increase in the average transaction.
While those basic metrics showed that growth at Walmart U.S. in effect has largely stalled, or slowed to a crawl, Simon has overseen a major strategic shift, one that should, ultimately, benefit the company, even if he does not receive credit for it.
The Walmart U.S. division’s great growth boom in the 1990s was driven by the rollout of the Supercenter format, which combines a full supermarket and discount store with a full-service pharmacy. But by at least 2010 it was clear that the market for Supercenters was approaching saturation.
In response, Simon and his team developed a strategy that places the main emphasis of store development on Walmart’s smaller formats — the Neighborhood Market, which usually measures around 45,000 square feet and includes a full supermarket and pharmacy with a limited general merchandise assortment, and Walmart Express, a smaller box of approximately 10,000 to 15,000 square feet that nonetheless offers fresh food and, in many locations, a pharmacy.
That change in format strategy will enable Walmart to penetrate markets that cannot support a Supercenter; however, healthy long-term growth will depend on Walmart’s ability to execute the other leg of its new strategy, which calls for all of the stores to be effectively tied together with walmart.com, its e-commerce engine.