Walmart CEO Paints Mixed Picture for Retail

Walmart’s Doug McMillon: Merchants must be flexible and creative.

By Alan Wolf, YSN

It’s the best of times and the worst of times for retailers, according to the head of the largest big-box chain in the world.

Speaking last week during Goldman Sachs’ virtual Global Retailing Conference, Walmart president/CEO Doug McMillon spoke to the industry’s persistent and perplexing supply chain problems but also shared his expectations for a strong holiday season.

McMillon described ongoing supply chain disruptions and inventory shortages as “more dramatic” than anything he can remember in his three decades in retail, and cited insufficient capacity and government policies that kept consumers flush with cash as key inflection points. “There have been various challenges” over time, he noted, “but not anything like this.”

Chief among those challenges is the cost of shipping containers and logjams at U.S. ports. “We’re having to divert to different ports,” he said, but “in some cases, there are driver shortages … common carriers are having some issues, so there are a lot of things to overcome.”

See: Container Shortage Adds to Inventory Woes

To address the problem, McMillion said merchants need to be creative and flexible, which in the current environment is almost as important as marketplace dominance. “I do think scale and relationships can help, but creativity shouldn’t be underestimated,” he said. “We’ve had some supplier relationships where they’ve reduced the number of SKUs they’re making to focus lines on fewer items [and] that’s been helpful. There’s just a lot of need to be in the moment, to manage a fluid situation, and not get stuck in your ways if that means you’re not going to have the inventory you need.”

That said, McMillon believes the supply chain challenges will ultimately be worked through. “I do think supply chains move,” he observed.

His positive forecast extends to the upcoming holiday selling season, as consumers are still spending money and will likely continue doing so through the fourth quarter. That includes lower-income families, which are enjoying rising wages and are itching to celebrate Christmas again.

“Consumers are feeling pretty good,” McMillon concluded, “and we don’t see an abrupt stop to that.” Thanks in part to various forms of government assistance, “There are going to be a lot of people with plenty of spending capacity … and a consumer that’s strong for some time.”