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  • Writer's pictureNuno Moreira da Cruz

Walmart: From “best price” to “live better”

Walmart is the #1 Retailer in the USA, with a market cap of $315bn, revenue in 2018 of $500bn and a net profit of $10bn. It is the nation’s largest private employer, and its varied selection of goods, from home furnishings and electronics to groceries, appeals to millions.

With this sort of dimension, it is understandable their purpose statement: “At Walmart, we’re committed to using our size and scale for good. Not just for our customers, or even our associates, suppliers, and their families, but also for the people in our communities and around the world that we will never meet”

They have come a long way, to "blend" this new "purpose" with the long-lasting culture of cost reduction. From the previous “best price/best deal” claim to the current “Save money. Live better”. Their commitment to customers is paramount, they were one of the first organisations to anticipate this “Responsible business” trend for their customer base and act accordingly.

One of the most significant moves happened in April 2015, when they announced they would increase the minimum wage of all its U.S. workers to $9 per hour starting. This would increase the wages of approximately one-third of its workers and Walmart estimated that in the first year alone, this initiative would cost approximately $1 billion. The following year, Walmart planned to increase the wage again to at least $10 per hour.

After all was said and done, Walmart committed to a $2.7 billion investment (key word here) in its employees over a two-year period.

Walmart also committed to more transparency in scheduling for part-time workers, more flexibility in the use of paid time off, and more training and development opportunities for its employees. In addition to offering a variety of other training programs, Walmart invested in training facilities across the country called “Academies.”

Walmart’s stock fell 10% in response to this announcement. Doug McMillon, the CEO, argued at the time that while these investments put pressure on short-term earnings, “If we don’t win with customers, we don’t have a business…We got so focused in the last few years on productivity that we didn’t invest in our employees/stores.” An amazing clear connection employee to customers. He also said at the time, “investments would add $45–60 billion in revenue…in just 3 years…that’s the combined size of Netflix, Whole Foods, Ebay and Starbucks.”. Now, three years down the road…they did.

Was Walmart’s decision to raise wages and invest in employees all about the money (Profit)? Was it all about doing the right thing (Purpose)? Or was it somewhere in between?

I am a strong believer that in the future companies cannot survive without both - Purpose and Profit. The game has changed and this is not anymore about "shareholders only" but about the whole stakeholder’s scenario. Which leads more and more to Purpose. And Purpose shows the way to Profit.

A shared purpose can have enormously powerful effects. But why, then, does talk of purpose make many managers nervous? For me it is the same discussion about Values - one should step back from immediate satisfaction if it affects your Values. You may feel good in the short term, but you will feel quite unhappy in the long run. Same with Purpose - Companies need to understand that the discussion is not about what they "loose" now but about what they will "win" tomorrow.

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