New Wal-Mart chief Mike Duke: ‘This is our time’

Mike Duke is a Wal-Mart veteran of 14 years, but last Friday was a red letter day for him.

It was the first time he had addressed the Wal-Mart shareholders meeting, held at Fayetteville in Arkansas, as chief executive, having taken over the role from Lee Scott in February.

Duke may be an old Wal-Mart hand, but because he inherited the leadership mantle after so many years’ familiarity with and experience of the company, it is business as usual. The trouble for Wal-Mart’s rivals is that business as usual means perpetual dissatisfaction with the status quo and a restless quest to get bigger and better.

So, although Duke may be a familiar presence on the world retail stage, he will behave like a young tyro. He displays all the qualities of the archetypal US chief executive – the not-a-hair-out-of-place smoothness allied with the folksiness of Wal-Mart’s traditional rural American values of hard work and thrift, topped off with the dispassion of the 21st century corporate leader determined to wipe out the competition.

In his debut speech, Duke spoke of his and every Wal-Mart staffer’s privilege of being a “steward” of Wal-Mart’s culture and customer-focused mission. But his role brings with it, as it has done with his predecessors, one goal. “I love to compete, but only when we win,” Duke told his colleagues and shareholders.

So what will that determination to be top dog mean? First of all, it means that economic misery presents Wal-Mart with big opportunities – opportunities to bring prices down for hard-pressed consumers (and never doubt how concrete an objective doing good by the shopper is for Wal-Mart) and opportunities to recruit a host of new customers.

Duke said: “I believe the economic crisis has brought a fundamental shift in consumer attitudes and behaviour. There is a new normal in which people want to save money and are getting smarter about saving money.

“So let me be clear, and people ask me about this all the time, our customers will stay with us when this economy turns around and they have more discretionary money to spend. We are building long-term loyalty to Wal-Mart.”

But Wal-Mart cannot afford to rest on its laurels, Duke warned. “We need to be obsessed with understanding customers in every market we operate in. And we need to serve customers however they want to shop – whether it’s on a mobile phone, a laptop or in a local store.

“We also need to see ourselves and conduct ourselves not as Goliath, but as David – not as a giant but as a nimble and innovative competitor in every market.”

Therefore, Duke told his teams: “This is not a time to slow down. This is not a time to take comfort in our success. This is Wal-Mart’s time to look to the future and seize the opportunity to truly lead around the world.”

He is determined to drive greater efficiencies out of the business and create a coherent whole. “We need to see ourselves not just as Wal-Mart US or Sam’s Club but as one global company.”

Duke’s predecessor, Lee Scott, won plaudits for changing Wal-Mart’s priorities. He never lost sight of the need to make money, but he acknowledged that Wal-Mart had an image problem and initiated in response what was probably the most ambitious sustainability programme in the world.

Scott’s prioritisation of corporate social responsibility helped shift Wal-Mart’s image from pure buccaneer to upstanding business citizen.

Duke clearly recognises what a smart move that was and has pledged his own commitment to that programme.

He said: “The issues we face in the world today are going to require business to be part of the solution. And they’re going to require business and government and NGOs to work together. It’s the only way the world is going to emerge stronger from this difficult time.”

Duke acknowledged and responded to some of the criticisms Wal-Mart still frequently faces. He insisted: “I value our suppliers and work hard to listen to them and understand their businesses.”

Duke also maintained that Wal-Mart was a force for good in the world. “Issues like having a well-trained workforce to meet the challenges of the 21st century; offering working people a path to a better life – whether they live in rural America or cities in emerging countries; and helping women, who for too long have been left out of too many economies, climb the career ladder,” he said.

In the end, whether the initiatives are social, environmental or commercial, Duke will be judged on Wal-Mart’s success. He is convinced that the retailer is in pole position.

Recalling Wal-Mart’s origins, Duke said: “I’m absolutely convinced that these are the times Sam Walton built your company for.” He concluded: “Never has there been a time when the strengths of our company were more aligned with what the world needs than right now.”

If Duke is as in tune with consumer trends as Walton was he will have earned himself a place in retail’s hall of fame.

World retail’s biggest party

Wal-Mart rolled out the stars for its AGM but the upbeat atmosphere was focused on improvement.

Part hootenanny, part formal business function, part motivational extravaganza, Wal-Mart’s annual shareholder meeting is unique.

Celebrities, Wall Street suits and Wal-Mart associates – the retailer’s term for its frontline staff – all rubbed shoulders in the 16,000-strong throng last Friday.

Sports legend Michael Jordan, Hannah Montana teen sensation Miley Cyrus and Latina starlet Paulina Rubio were among those who took the stage for a celebration of the
world’s biggest retailer, MC’d by Ben Stiller and rounded off by soul giant Smokey Robinson.

The diversity of the stars reflected the retail united nations that is Wal-Mart. Spanish, Chinese, Japanese and Russian were among the languages that could be heard, representative of Wal-Mart’s presence from Shanghai to Santiago.

The sense of excitement was palpable. Chileans, for instance, the newest members of the Wal-Mart family following the acquisition of D&S, were out in force and the noise made by their flag-waving, dancing delegation was drowned out only by the ear- splitting roar in response to chief executive Mike Duke’s question whether there was anybody from the US in the room.

The tone of the event – as is almost always the case given Wal-Mart’s near-infallible retail performance – was celebratory. The meeting began at 7am and people queued to get in while it was still dark. As Stiller kicked off the proceedings, he joked: “I hear they’re still sleeping at Target.”

Wal-Mart’s good works – whether its sustainability initiatives, support for US small businesses through Sam’s Club or soup kitchens in Argentina – figured large in the proceedings, in which associates from around the world participated by telling their own stories.

But behind the light tone – typified by chief financial officer Tom Schoewe’s re-enactment of a scene as a male model from Stiller’s film Zoolander – was the sort of focus that would do the Hubble telescope proud. How to bring down costs. How to design and run stores better. How to work with suppliers more effectively. 

While Schoewe highlighted how impressive Wal-Mart’s financial performance was in absolute, relative and trend terms, the emphasis throughout Wal-Mart directors’ presentations was that there was plenty left to do.

Chairman Rob Walton, son of legendary founder Sam, said: “We have accomplished more than we ever imagined. We have the opportunity to do more.”

The global downturn brings all sorts of openings, Wal-Mart chiefs believe, and the retailer must be at the top of its game.

The shareholders’ meeting was the culmination of a week’s activities, mostly centred on associates. For the first time, Wal-Mart this year allowed journalists to attend the associates’ gathering, which was held a couple of days before the climactic bash.

The atmosphere at the associates’ meeting was similar to that at the shareholders’ but, unsurprisingly, designed to an even greater extent to educate, enthuse and motivate the troops.

While the representatives of each country performed entertainment routines for one another and were made to feel part of a global family, business priorities such as the reduction of inventory were clearly pinpointed.

From the outside, Wal-Mart can appear a cultish organisation that expects behaviour above and beyond the call of duty. But there was genuine excitement among the associates, genuine belief in the retailer’s mission to save people money and often a sense of fun that would surprise sceptics and could not exist if the organisation was simply the robotic and impersonal machine that its critics claim.