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Speaker 1: Welcome to Fear and Greed Sunday feature, oh Michael Thompson.

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Speaker 1: This week we talked about Jensen Huang, the co founder

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Speaker 1: of chip maker and Video. Because of the incredible surge

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Speaker 1: in in Nvidia's share price, he now has a fortune

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Speaker 1: worth around ninety two billion US dollars. That makes him

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Speaker 1: the seventeenth richest person in the world. And when we're

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Speaker 1: talking about this through the week, Sean mentioned that mister

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Speaker 1: Huang is now richer than the Walton family members. They

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Speaker 1: are the descendants of the creators of the Walmart retail giant,

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Speaker 1: and that reminded me of this terrific interview. Really is

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Speaker 1: a good one from twenty twenty one when Sean spoke

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Speaker 1: to Dr Kathleen Adams from rot about the extraordinary history

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Speaker 1: of Walmart, where it came from, how it got to

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Speaker 1: be so big, and why you will not find a

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Speaker 1: Walmart in Australia. It is a great interview. I hope

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Speaker 1: you enjoy it.

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Speaker 2: To the Fear and Greed Daily Interview, I'm Sean Almer.

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Speaker 2: Walmart is a retail icon in the United States, with

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Speaker 2: two point two million employees worldwide. It's the largest private

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Speaker 2: employer in the world. And the Walton family that still

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Speaker 2: owns a majority share of the company is collectively the

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Speaker 2: wealthiest family on the planet, worth around two hundred and

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Speaker 2: fifty billion US dollars. But despite global expansion, the department

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Speaker 2: and grocery store behemoth has never made it to Australia.

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Speaker 2: I wanted to take a closer look at why Walmart

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Speaker 2: has been so successful, what's set it apart from the

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Speaker 2: rest of the world of retail, and then why there

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Speaker 2: isn't one in every Australian town and city. Doctor Kathleen

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Speaker 2: Adams is a lecturer in marketing at r MIT and

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Speaker 2: is my guest this morning. Kathleen, welcome to Fear and Greed.

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Speaker 3: Thank you very much, sure Na and Fearing Greed for

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Speaker 3: inviting me here today.

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Speaker 2: For those who don't know it, just how big is

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Speaker 2: Walmart the company?

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Speaker 3: Well, you're pretty write in your introduction, Sean, Walmart currently

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Speaker 3: has two point two million associates and that's what we

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Speaker 3: would call employees. It'll come to that, and eleven thousand

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Speaker 3: stores and two hundred million customers every week. It's in

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Speaker 3: another twenty five twenty seven countries, and so there's five

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Speaker 3: nine hundred retail stores in the global world with more

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Speaker 3: than seven hundred thousand associates, and they serve more than

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Speaker 3: one hundred million customers every week. So we've got American statistics,

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Speaker 3: we've got international statistics. But I'm sure this next statistic

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Speaker 3: will blow your mind, like I did mine. Last financial year,

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Speaker 3: and their financial year ended in January this year, their

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Speaker 3: revenue was five hundred and fifty nine billion US dollars.

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Speaker 2: Wow, half a trillion US dollars exactly.

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Speaker 3: So they're big.

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Speaker 2: They're big, But people who haven't been to a Walmart,

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Speaker 2: give me a taste of the stores and kind of

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Speaker 2: the products they sell. The thing I always remember about

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Speaker 2: Walmart is, you know, in Australia you have a supermarket

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Speaker 2: and then you have a department store for one of

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Speaker 2: a better term, whereas Walmart really is both together.

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Speaker 3: Absolutely they I was thinking about when I first experienced Walmart,

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Speaker 3: it was quite amazing. I went to a Sam's Club

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Speaker 3: store back in nineteen ninety one and they hadn't been

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Speaker 3: around for very much. You know, we had nothing like

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Speaker 3: it in Australia at that time. Walmart stores or other

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Speaker 3: brands sort of like ride themselves on being one stop

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Speaker 3: shopping and they have, of course, our everyday low prices. Now,

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Speaker 3: this Sam's Club I walked in. It was like a

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Speaker 3: huge warehouse with just about everything you could possibly buy

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Speaker 3: in it. Now. I remember buying some ray Bans sunglasses,

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Speaker 3: which were pretty cool at the time. And then I

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Speaker 3: turned the corner and there was this amazing range of

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Speaker 3: food and clothes and electric stuff, and you know it

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Speaker 3: was I sort of didn't understand at the front door

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Speaker 3: that I was picking up this enormous shopping trolley, but

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Speaker 3: I certainly understood very quickly. By the end of that time,

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Speaker 3: I would fill it up.

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Speaker 2: Sam's Club is a part of Walmart, and there's something

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Speaker 2: akin to Costco. Is that all right? Is that crazy?

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Speaker 1: Yeah?

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Speaker 3: Yeah, I think it is. You know Costco were and

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Speaker 3: it started in Australia. I think they came to Australia

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Speaker 3: in about two thousand and nine and their first store

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Speaker 3: was down in Melbourne Stocklands. Now when they came it

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Speaker 3: was straight after the global financial crisis, so that was interesting.

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Speaker 3: There are other Walmart stores. I also visit a normal

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Speaker 3: Walmart store, if I can call it that, and they

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Speaker 3: both had everything. They had a pharmacy, clothing and accessories,

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Speaker 3: big grocery stores. Yeah, lots of guns that went well

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Speaker 3: with bakery and deli and products, didn't it, you know, electronics, toys,

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Speaker 3: home furnishings. The one that I visited at the time,

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Speaker 3: it was in a shopping mall, so they had all

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Speaker 3: the extra normal shops. But some Walmarts have got banks,

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Speaker 3: hair and nail cellons, health and beauty, hardware, restaurants, vision centers.

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Speaker 3: The list really goes on. But I'll have to remember

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Speaker 3: that guns.

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Speaker 2: They're guns. The thing about Wilmot also is that you

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Speaker 2: just mentioned that it was in a mall. But I

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Speaker 2: think I'm right in saying that many of the Walmarts

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Speaker 2: are actually stand alone stores. Absolutely they are, Yeah, which

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Speaker 2: is a bit different to Australia. Yes, so it's a

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Speaker 2: destination in a sense. It's not like you're going to

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Speaker 2: a more than going to a bunch of stores. The

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Speaker 2: destination is Walmart.

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Speaker 3: Yes, it is, and it's very much you know, our

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Speaker 3: closest equivalent would be as we just discussed Costco, and

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Speaker 3: I remember going there and just you know, wow, this

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Speaker 3: is this is Sam's. Again, it's not obviously owned by

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Speaker 3: the Walton family in Costco, but me definitely is you know,

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Speaker 3: like a Walmart supercenter.

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Speaker 2: So Sam's KaiB which is part of Walmart, and that's

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Speaker 2: named after Sam Walton, who actually started Walmart back in

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Speaker 2: the early sixties in Arkansas. I think, can you give

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Speaker 2: me a sort of a potted history with the company

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Speaker 2: since then.

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Speaker 3: I'll try. I mean, that might take the rest of

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Speaker 3: our time today, but I'll do my best.

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Speaker 2: The thumbnail sketch.

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Speaker 3: Okay, well, as you said, the first store opened in

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Speaker 3: nineteen sixty two. I'm going to sort of try and

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Speaker 3: blow your mind with the figures. By nineteen sixty seven

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Speaker 3: they had twenty four stores. But they have twelve point

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Speaker 3: seven million dollars in sales, and that's a lot of

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Speaker 3: money in nineteen sixty seven. In nineteen seventy it became

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Speaker 3: a public traded company. Now, their first stock was sold

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Speaker 3: at sixteen dollars fifty per share. Now I looked up

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Speaker 3: yesterday what they were trading for, and they're trading for

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Speaker 3: one hundred and forty one dollars per share. Good thing

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Speaker 3: if you can't keep it that long. Now, in nineteen

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Speaker 3: eighty they'd reached the magic mark of one billion dollars

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Speaker 3: in annual sales. We had two hundred and seventy six

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Speaker 3: doors and twenty one thousand associates. It's relevant to sort

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Speaker 3: of say those figures because you know, many years later

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Speaker 3: those figures were very different. Nineteen eighty three. Sam's Club

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Speaker 3: opened nineteen ninety they were declared the number one retailer

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Speaker 3: in the world. They were convenience and one stop shopping,

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Speaker 3: every day low prices. Now when I hear these convenience

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Speaker 3: and one stop shopping and every day low prices, my

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Speaker 3: brain gets full of coals and well worth using these

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Speaker 3: slogans or released pretty much the same. Nineteen ninety two

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Speaker 3: was an interesting year because he brought out the saying

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Speaker 3: that save people money so that they can live better

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Speaker 3: is what he wanted Walmart to do, and in that

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Speaker 3: same year he passed away in age seventy four. By

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Speaker 3: nineteen ninety seven, they had their first one hundred billion

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Speaker 3: sales in the year. Now, I'll try and be really

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Speaker 3: quick on what happened since two thousand. So in two thousand,

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Speaker 3: Walmart dot Com is founded for US customers only to

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Speaker 3: shop online. At that point they had one point one

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Speaker 3: million associates and four thousand stores. In two thousand and two,

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Speaker 3: they topped the Fortune five hundred rankings of US as

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Speaker 3: the largest companies. I'll skip a few years because it

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Speaker 3: just becomes more and more and more. But in two

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Speaker 3: thy fifteen they had two point two million associates that

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Speaker 3: you started off with, and also those two hundred million

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Speaker 3: customers per week, eleven thousand stores and twenty seven countries.

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Speaker 3: So there you go a bit of a potted history

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Speaker 3: of how Walmart grew.

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Speaker 2: Stay with me, Kathleen. We'll be back in a minute.

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Speaker 2: My guest this morning is doctor Kathleen Adams, a lecturer

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Speaker 2: in marketing at r MIT. A lot of the things

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Speaker 2: that Walmart did, even though they haven't come to Australia,

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Speaker 2: were exported to Australia. So I know Roger Corbett, who

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Speaker 2: used to run Woolworths, was a massive Walmart fan. In fact,

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Speaker 2: he may even have been possibly even on the board,

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Speaker 2: but certainly on an advisory board of the Walmart retailers.

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Speaker 2: And so a lot of the ideas that Woolley's bought

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Speaker 2: really came from Walmart.

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Speaker 3: Absolutely. I think as you said, as I just said,

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Speaker 3: Cole's and Walmart started with the slogans, but they definitely

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Speaker 3: every time they refreshed their stores, they sort of see

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Speaker 3: them as becoming more and more like Walmart.

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Speaker 2: Yeah, yeah, yeah. So the company spread across the world

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Speaker 2: and went to North America first and then China, UK, India,

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Speaker 2: et cetera. How successful is it outside the US, because

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Speaker 2: to my mind, it's a very American experience going to Walmart.

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Speaker 3: Absolutely, and not everything went to their plan. You know,

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Speaker 3: they have some pretty good disasters. I'll come back to Germany,

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Speaker 3: but that was the major one career and even Japan

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Speaker 3: now the company, he was really stuck there. They have

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Speaker 3: a completely different culture, different competition, different supply chain, and

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Speaker 3: of course we have to sneak Amazon into the discussion.

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Speaker 3: So they went to the UK and that wasn't successful.

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Speaker 3: So they're selling their supermarket chain to Sainsbury's and it

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Speaker 3: was nineteen years after they bought it, so they've had

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Speaker 3: to sell off stores like they made a one billion

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Speaker 3: dollar loss, and in Germany had basically Europe and they

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Speaker 3: had to withdraw. And Germany doesn't allow price cuts, so

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Speaker 3: every retailer there had matching prices and Walmart couldn't really

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Speaker 3: offer anything that others weren't offering. Germany was a big problem,

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Speaker 3: and they certainly learned that there was cultural friction between

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Speaker 3: the US and the German team. So of course, while

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Speaker 3: Walmart was running their stores, it's not as if retailers

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Speaker 3: like stood still like Amazon, they were going to they

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Speaker 3: were introducing things and selling their products at much lower price,

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Speaker 3: says than Walmart. I can't believe that would actually happen,

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Speaker 3: But you know, they continue working in Japan and they

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Speaker 3: spend a lot of time getting some online grosery help.

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Speaker 3: They seem to buy stores that can help them with

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Speaker 3: online service. What about China, Ah, China, they're still there.

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Speaker 3: A few years ago, I was working in China for

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Speaker 3: a little while and I went into one in Suzo,

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Speaker 3: which is a couple of hours sort of south of Shanghai.

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Speaker 3: And I walked in and it didn't impress me very much.

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Speaker 3: It looked sort of a bit, a bit tired. But Chinese,

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Speaker 3: you know, there's so many of them, so many stores

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Speaker 3: they go in. The novelty of going into a Walmart

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Speaker 3: in China is still pretty amazing. But the Chinese, like others,

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Speaker 3: certainly look for the best deal. And so I think

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Speaker 3: that's sort of what's going on in China. They're there,

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Speaker 3: they're making money. They're not going to be removing themselves

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Speaker 3: from that place or that country soon at all.

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Speaker 2: So why do you think Walmart never made it to Australia.

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Speaker 3: That's a really good question, and I'm sure they looked

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Speaker 3: at us. But we're a country with only about twenty

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Speaker 3: five five million people and that's always been a problem

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Speaker 3: for mass retailers that wanted to come to Australia. We've

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Speaker 3: got a really strict minimum wage of nineteen dollars eighty four.

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Speaker 3: We also have, of course, we know four weeks paid

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Speaker 3: annual leave, sickly even even superannuation, so if we put

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Speaker 3: those all together, it all adds up. In addition, we've

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Speaker 3: had a lot of large retailers who had trouble. The

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Speaker 3: stores that close that I can think of off the

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Speaker 3: top of my head was Dimer Roo. I work for

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Speaker 3: them a couple of years, the Levice specialty store, Toys

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Speaker 3: r Us. I'm sure I've forgotten them all. And as

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Speaker 3: we know at the moment, many Target stores are currently

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Speaker 3: shutting down or being rebirthed as a Kmart store. So

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Speaker 3: it doesn't look really good for Walmart looking in in Australia.

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Speaker 2: And I suppose in the grocery part of it, Coles

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Speaker 2: and Wools are such dominant players. But you also have

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Speaker 2: Aldi and met Cash, slash IgA and even Costco to

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Speaker 2: some extent here, and they.

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Speaker 3: Were talking about Liddel the other one sort of like

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Speaker 3: Aldi spelt differently Germany coming, and I understand that that's

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Speaker 3: almost on hold because of the things we're going through

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Speaker 3: at the moment.

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Speaker 2: There have been retailers in the US that haven't transferred

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Speaker 2: as well to Australia. I mean, I'm thinking Starbucks is

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Speaker 2: another one that is everywhere in the US but kind

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Speaker 2: of didn't work in Australia, and Starbucks certainly didn't work

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Speaker 2: in parts of Europe as well, Italy, those sorts of places.

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Speaker 2: What is it, I suppose that makes Walmart so successful

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Speaker 2: in the US, but not necessarily mean, you've given us

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Speaker 2: a few examples where it hasn't done so well. What

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Speaker 2: is it that makes it so successful in the US.

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Speaker 2: Is it basically low prices, But then presumably Amazon means

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Speaker 2: that's not enough anymore.

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Speaker 3: Well, I think there's another side to Walmart, and I

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Speaker 3: don't think lower prices is enough, and I don't think

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Speaker 3: lower prices is their reason for being. They've got incredible culture,

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Speaker 3: and they've got really progressive ideas on minimum wage and

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Speaker 3: also employee benefit. So everything that they do, probably other

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Speaker 3: stores in America go no, no, not you again. So

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Speaker 3: in Tuesday fifteen, they raised the minimum wage to nine

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Speaker 3: dollars an hour. Now this's kept going. Twenty sixteen, they

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Speaker 3: raised their average wage or the ali rage two about

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Speaker 3: thirteen and a half dollars, and everybody complained about that.

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Speaker 3: But they have other secrets for their associates. They every year,

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Speaker 3: they have about one hundred and sixty associates, and they're

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Speaker 3: promoted to jobs with higher pay, and they've also been

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Speaker 3: provided with extra benefits like you know, maternity and parental year.

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Speaker 3: And of course all these measures make their staff happy

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Speaker 3: to come to work. And if they're happy to come

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Speaker 3: to work, they're going to smile, they're going to be loyal.

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Speaker 3: And I think that's really something that nobody else can

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Speaker 3: really copy. I think that's their competitive advantage, and I

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Speaker 3: think they're part of, you know, why they're so successful.

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Speaker 2: They've also been quite progressive and climate change and some

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Speaker 2: of those things too.

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Speaker 3: I think, oh, absolutely, they've made some big commitments. As

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Speaker 3: you know, some examples are and don't try and keep

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Speaker 3: this short. They've contributed eighteen million dollars and two and

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Speaker 3: a half thousand trucks of suppliers to the victims of

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Speaker 3: hurricanes Katrina and Rita in two thousand and five. They

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Speaker 3: then went on to commit two billion dollars between twenty

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Speaker 3: ten and twenty and fifteen to help in hunger in

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Speaker 3: the US. You know, this is not retail to speak,

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Speaker 3: this is completely different. So they also launched a global

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Speaker 3: commitment to sustainable agriculture. Okay, they've asked their suppliers to

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Speaker 3: help reduce greenhouse gas emissions from their supply chain. Okay,

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Speaker 3: And they are all examples of them being you know,

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Speaker 3: agile and moving quickly as time change. But one of

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Speaker 3: the things that I remember the publicity in twenty thirteen

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Speaker 3: when they announced that they would hire any honorably discharged

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Speaker 3: veteran within their first year after active duty. So there's

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Speaker 3: a lot of things that they are doing that no

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Speaker 3: other big retailer is doing, and as I said before,

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Speaker 3: I think that gives them a competitive advantage.

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Speaker 2: We'll be back in a minute talking to doctor Kathleen Adams,

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Speaker 2: marketing lecturer at r MIT. Now the flip side, and

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Speaker 2: when I lived in the US, there was a lot

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Speaker 2: of debate over the pressure they put on suppliers though,

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Speaker 2: so they have been criticized over time because there's such

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Speaker 2: a big company. If you want to be successful, you've

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Speaker 2: got to be in Walmart. But if you're in Walmart,

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Speaker 2: they then start to screw you after a couple of years.

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Speaker 2: That was the argument. Anyway, What do you think about

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Speaker 2: that idea?

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Speaker 3: Absolutely? I think having worked in the retail industry for

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Speaker 3: so long myself and for big ones, big companies like

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Speaker 3: Meyer and din Maru and smaller companies like Jackie Yee,

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Speaker 3: I do remember about just what you're saying about starting

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Speaker 3: off with certain prices and then every year the suppliers

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Speaker 3: have to sell them for usually cheaper, and we all

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Speaker 3: know that the cost of living doesn't stand still, so

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Speaker 3: it really meant a big reduction for those suppliers. But

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Speaker 3: you know, they have to do it because if they

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Speaker 3: don't do it, they'll be chucked out of the store

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Speaker 3: like Walmart. And so if they've put all their eggs

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Speaker 3: in one basket, then that you know, destroys them as

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Speaker 3: a supply pretty much. And so yeah, they have to

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Speaker 3: just keep on agreeing to these low prices a bit

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Speaker 3: of negotiation, but probably not much.

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Speaker 2: Yeah, fair enough, So what next to Walmart. Can it

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Speaker 2: keep growing or sort of does it? Is it saturated

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Speaker 2: the market? What do you think?

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Speaker 3: I think they're going to keep growing, but maybe more

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Speaker 3: so in its American stores. Okay. They stay on top

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Speaker 3: of the latest tech systems. That's the amazing part about them.

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Speaker 3: They're continually looking for the latest tech. They are continually

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Speaker 3: looking for more online help, and when they move to

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Speaker 3: another country, they basically buy a tech store. They stay

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Speaker 3: on top of that. But the big one is that

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Speaker 3: they continually look after and promote their excellent associates each year.

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Speaker 3: And because they've increased that minimum wage, as I said before,

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Speaker 3: they've got loyal employees and they'll give excellent service, Like

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Speaker 3: they have a greater at the front, which we do

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Speaker 3: have in Kmart or Target, but they get the trolley

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Speaker 3: out for you, They basically get you organized, and they

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Speaker 3: look after the more elderly customers very well. So they've

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Speaker 3: got this loyal employees and they provide this excellent service.

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Speaker 3: So I think I can't almost say that Walmart in

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Speaker 3: the US is probably one of the happiest places to work.

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Speaker 2: Fantastic, Kathleen, Thanks for talking to Fear and Greed.

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Speaker 3: You're very welcome. I hope you've enjoyed finding out some

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Speaker 3: more about Walmart. I certainly enjoyed talking.

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Speaker 2: To you, sure have. That was doctor Kathleen Adams, a

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Speaker 2: lecturer in marketing at ro MIT. This is a Fear

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Speaker 2: and Greed daily interview. You join me every morning for

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Speaker 2: the full Fear and Greed podcast with all the business

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Speaker 2: news you need to know. I'm Joan Almer. Enjoy your day,