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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: In January, a group of Bloomberg journalists, including senior BusinessWeek

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Speaker 2: writer Devin Leonard, flew to the small city of Bentonville

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Speaker 2: in northwest Arkansas.

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Speaker 3: The first time I went down was two thousand and five.

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Speaker 3: It's in Benton County, which was a dry county at

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Speaker 3: the time, so base you could go to Ruby Tuesdays

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Speaker 3: and sign in. I think it was like some kind

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Speaker 3: of a private club thing. That's the one place you

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Speaker 3: can get a drink.

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Speaker 2: Bentonville has changed a lot since then, and a good

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Speaker 2: amount of that change can be traced to the retail

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Speaker 2: giant that's been headquartered there for the past six decades, Walmart.

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Speaker 2: Sam Walton founded the first Walmart just a few miles

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Speaker 2: from Bentonville in nineteen sixty two, and since then it's

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Speaker 2: grown from a small town store to the largest retailer

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Speaker 2: in the country, and in the last decade, under the

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Speaker 2: leadership of its current CEO, Doug McMillan, Walmart has been

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Speaker 2: on a mission to revamp its image. It's Bentonville headquarters

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Speaker 2: is a clear sign of that.

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Speaker 4: The company is opening a new campus. It's you know,

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Speaker 4: three fifty acres twelve new buildings.

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Speaker 2: That's Jaywon Kong. She was also in that group of

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Speaker 2: Bloomberg journalists who made the trip to Arkansas in January.

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Speaker 2: Jay one covers Walmart day in and day out, so

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Speaker 2: she's followed along as Bentonville has transformed.

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Speaker 4: The Walton family. They've you know, invested quite heavily in

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Speaker 4: you know, hospitality, outdoor activities like mountain biking, and so

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Speaker 4: that's created this new vibe of pipster and cool.

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Speaker 3: To me, it was literally like kind of like wandering

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Speaker 3: into like Shangri La or in the Ozarks. It was

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Speaker 3: a little hard for me to believe there's all these

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Speaker 3: upscale restaurants, all of them with these fancy cocktail menus.

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Speaker 3: We were staying in a boutique hotel that it literally

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Speaker 3: you know, just opened and it had very nice sushi

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Speaker 3: place in the lobby and the next.

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Speaker 2: Sushi in the Ozarks Rush. On their trip, Jaywan, Devin

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Speaker 2: and BusinessWeek editor Brad Stone sat down with Walmart CEO

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Speaker 2: in his office and they learned that the changes in

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Speaker 2: Bentonville signal even bigger changes McMillan wants to bring to

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Speaker 2: the company, and we're.

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Speaker 1: Trying to set the stage for the future. We want

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Speaker 1: to be able to recruit and retain the best talent

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Speaker 1: in the world. And having Bittonville progress in the way

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Speaker 1: that it has, and having this new home office campus

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Speaker 1: will be also whether it's food or the grounds, the

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Speaker 1: bike trails, the lake, all those kinds of things I

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Speaker 1: think will just help us do that.

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Speaker 2: I'm David Gura, and this is the big take from

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Speaker 2: Bloomberg News Today. On the show Just what does the

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Speaker 2: Future of Walmart look like, we take you inside the

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Speaker 2: office of Walmart CEO to learn about the company's push

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Speaker 2: to level up in Bentonville and to cross the US

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Speaker 2: while it navigates concerns over retail competition, corporate talent wars,

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Speaker 2: and a new political climate. Dud mcmillon's office is on

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Speaker 2: the ground floor of a one story building. Bloomberg's Devin

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Speaker 2: Leonard says, it's the longtime Walmart headquarters.

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Speaker 3: You know, the window looks out in the parking lot.

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Speaker 3: It looks like an office, you know, more suitable for,

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Speaker 3: you know, the head of a regional trucking company than

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Speaker 3: you know, a multi billion dollar global company, the America's

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Speaker 3: biggest retailer.

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Speaker 2: But it makes sense given Walmart's history. Walmart founder Sam

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Speaker 2: Walton put in place a low price guarantee and his

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Speaker 2: mantra for decades has been save money, Live better. And

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Speaker 2: McMillan's office used to be Sam Walton's office.

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Speaker 3: There's a picture in McMillan's office of Sam Walton sitting

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Speaker 3: at the same desk. So you're literally, you know, living

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Speaker 3: in a shadow. The company's whole origin story is the

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Speaker 3: Sam Walton story. The success we've had is because of

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Speaker 3: our people.

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Speaker 2: That's Walton reflecting on the business in a video on

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Speaker 2: the company's YouTube page.

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Speaker 3: They in turn, I've worked harder than our editors. We've

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Speaker 3: kept our prices lower than our competitors' prices. He had

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Speaker 3: this whole every day low prices discounter philosophy, and he

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Speaker 3: just blew past serious. He blew pasted Kmart and so

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Speaker 3: by the time of his death, which is nineteen ninety two,

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Speaker 3: he was one of America's richest men. I think at

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Speaker 3: times he was America's richest man. But he was this

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Speaker 3: folk hero, you know, this guy who drove around in

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Speaker 3: a beat up old Ford that he used for hunting,

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Speaker 3: and he kept a gun behind which which we Milan

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Speaker 3: told us he had.

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Speaker 1: A shotgun behind the door in Tasty to go berten pack.

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Speaker 1: Not zero weapons in the room.

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Speaker 3: Not there anymore. But McMillan has been very good at

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Speaker 3: you know, sort of. He has one foot in the

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Speaker 3: past and one foot in the present.

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Speaker 2: McMillan started at Walmart in nineteen eighty four. Bloomberg retail

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Speaker 2: reporter Jay Won Kong says his first job at Walmart

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Speaker 2: was unloading trucks at a warehouse.

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Speaker 4: He's spent his whole career at Walmart. He's someone that

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Speaker 4: a lot of people who work at the company find

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Speaker 4: really relatable.

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Speaker 2: McMillan became a buyer and worked his way up the

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Speaker 2: corporate ladder. He was the CEO of Sam's Club, Walmart's

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Speaker 2: membership warehouse chain named for Sam Walton. Then he led

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Speaker 2: Walmart's international division before becoming CEO of the company in

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Speaker 2: twenty fourteen.

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Speaker 3: Round the time when he took over, Walmart wasn't just

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Speaker 3: trailing Amazon. Its e commerce sales were lower than eBay

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Speaker 3: and Apple, so they were really coming from behind, and.

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Speaker 2: Walmart wasn't just lagging its rivals when it came to

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Speaker 2: e commerce. When McMillan got the top job, the company

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Speaker 2: was coming off years of slumping sales and a plateauing

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Speaker 2: share price. Before he took the helm, there were years

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Speaker 2: of discussions within Walmart about how they could keep customers

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Speaker 2: from turning away from brick and mortar supercenters and toured

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Speaker 2: online shopping.

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Speaker 3: And there was a big debate about what do we

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Speaker 3: do about that, and some people thought, oh, you know,

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Speaker 3: it'll never be bigger than the the US catalog market.

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Speaker 1: At that time, it was only about a two percent

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Speaker 1: share of the US retail business that in those categories

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Speaker 1: done three commerce, and people would say things like, we're

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Speaker 1: not going to put a banana in a gallon of

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Speaker 1: milk in a ups box and ship it to somebody's doormat,

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Speaker 1: So how is food even going to work in e commerce?

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Speaker 3: They launched Walmart dot com in two thousand, but there

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Speaker 3: really wasn't a commitment and there were always people, you know,

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Speaker 3: thought Amazon, you know, it's not a big threat.

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Speaker 2: Back in two thousand, Amazon had been around for about

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Speaker 2: six years and hadn't turned to quarterly profit. Walmart meanwhile,

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Speaker 2: sat comfortably on top as the country's largest retailer. But

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Speaker 2: in the next decade plus, as McMillan moved from running

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Speaker 2: Sam's Club to Walmart International. He saw the way e

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Speaker 2: commerce cut into business, and when he took over his CEO,

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Speaker 2: he set his sights on expanding Walmart's online sales. In

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Speaker 2: twenty sixteen, two years after he became CEO, McMillan spent

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Speaker 2: billions of dollars buying Jet dot Com and several other

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Speaker 2: young online shopping sites in an effort to catch up.

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Speaker 2: Jet was supposed to be Walmart's e commerce brand, but

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Speaker 2: within a few years, Walmart had shut Jet down and

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Speaker 2: finally decided to put its weight behind its own online store,

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Speaker 2: which was good timing. When the pandemic hit.

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Speaker 4: A lot of stores were shut down or they didn't

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Speaker 4: have products you know, on shelves. Walmart, because they are

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Speaker 4: the biggest, and they were in a lot of you know,

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Speaker 4: parts of the country one of the few places that

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Speaker 4: remained open. So they gained new consumers during that timeframe.

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Speaker 4: And when inflation started and prices of i mean everything

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Speaker 4: went up, they were able to appel to newer consumers

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Speaker 4: as well. Well.

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Speaker 3: And also if they're delivering stuff, you know, within an hour,

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Speaker 3: because in ninety percent of Americans live within ten miles

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Speaker 3: of a Walmart.

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Speaker 2: Now Walmart is the world's second largest e commerce company,

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Speaker 2: with US sales expected to reach one hundred and fifteen

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Speaker 2: billion dollars this year, according to market research company e Marketer,

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Speaker 2: But in the company's latest earnings report, its profit forecast

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Speaker 2: was below what Wall Street analysts expected, and an expected

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Speaker 2: one hundred and fifteen billion dollars in e commerce is

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Speaker 2: still a fraction of Amazon's expected four hundred and eighty

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Speaker 2: seven billion dollars in US online sales. McMillan is hoping

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Speaker 2: to close that gap.

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Speaker 1: Actually, my first day, when I was a teenager applying

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Speaker 1: for a job, there was a poster over the recruiting

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Speaker 1: desk for the warehouse that had a Walmart tractor trailer

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Speaker 1: running a Kmart tractor trailer off the side of a mountain. So,

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Speaker 1: you know, at seventeen years old, I'm like, huh, this

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Speaker 1: is a competitive spot. I like that, and I know

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Speaker 1: who were competing against, and that representation that was on

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Speaker 1: the wall showed us behind. I like that and our

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Speaker 1: peripheral vision, we're seeing the very best competitors and studying

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Speaker 1: what they do and then take the best of what

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Speaker 1: they do and apply it.

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Speaker 2: If you can't to compete with fast fashion companies like TIMU.

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Speaker 2: E commerce behemoths like Amazon and retail competitors across the spectrum.

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Speaker 2: Walmart and McMillan have to face a few challenges. There's

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Speaker 2: keeping Walmart's workforce of over two million global employees happy,

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Speaker 2: pitching the brand to more upscale shoppers, and navigating a

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Speaker 2: complicated political environment. How McMillan is trying to do all

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Speaker 2: that after the break to keep Walmart on top, Doug

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Speaker 2: McMillan wants it to appeal to as broad an audience

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Speaker 2: as possible. That means expanding beyond the deal seekers and

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Speaker 2: trying to capture higher end shoppers. But Walmart has tried

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Speaker 2: this before and it didn't go so well the first

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Speaker 2: time around.

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Speaker 3: In two thousand and five, they rolled out this line

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Speaker 3: of apparel aimed at urban women, which certainly wasn't their

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Speaker 3: core customers, called Metra seven, and they promoted it within

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Speaker 3: an event a New York Fashion Week with a big

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Speaker 3: apage spread in Vogue that kind of bound because the

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Speaker 3: clothing really didn't appeal to upscale buyers, then it was

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Speaker 3: too expensive for their core customer. They also embarked on

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Speaker 3: something not long after that called Project Impact, which was

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Speaker 3: an attempt to make the stores look and feel a

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Speaker 3: little more like Target, which traditionally appealed to a more

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Speaker 3: affluent demographic, and that didn't work out either. I mean

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Speaker 3: then they kind of widened dials and took items off

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Speaker 3: the shelf, and they kind of had to reverse a

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Speaker 3: lot of that. So now they're kind of doing that again.

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Speaker 3: They have two new clothing line, Scoop in Free Assembly

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Speaker 3: and Jay one and I went to a New York

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Speaker 3: Fashion Week show. Their creative directors Brandon Maxwell, who's you know,

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Speaker 3: the very well known fashion designers. Yeah, and you know,

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Speaker 3: done dresses for Michelle Obama. And at the same time

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Speaker 3: they've embarked on a big sort of rebooting of a

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Speaker 3: lot of their stores. They're sort of walking type broke,

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Speaker 3: and you walk around, you see fancier you know, Pete's

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Speaker 3: and things like that. At the same time you see

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Speaker 3: two dollars displays of belvi To cheese and things like that,

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Speaker 3: and they say it's work.

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Speaker 2: Walmart reports that more than seventy five percent of their

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Speaker 2: market share gain last fall came from customers with annual

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Speaker 2: incomes of over one hundred thousand dollars, and the company

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Speaker 2: is hoping it's e commerce business will extend those gains

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Speaker 2: because shoppers who wouldn't normally set foot in a Walmart's

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Speaker 2: store can buy from the retailer online, shoppers like Bethany

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Speaker 2: Frankel of Real Housewives of New York fame, who bought

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Speaker 2: a new bag on Walmart's website. Frankel posted a review

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Speaker 2: of that bag on TikTok. It's a knockoff of the

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Speaker 2: Ermez Birken bag, which some people call a work in.

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Speaker 4: So here's the thing.

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Speaker 1: This is eighty five dollars. This is like twelve thousand.

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Speaker 2: This is like flying Private, This is like flying Spirit

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Speaker 2: in the luggage compartment. While she said the work in

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Speaker 2: was Spirit Airlines quality compared to the real thing, she

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Speaker 2: still found plenty of things to complement and inside it

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Speaker 2: actually doesn't look all that different. The bag went viral

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Speaker 2: and then the company took it down after all, it

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Speaker 2: was a fake. It's worth noting even though it's sold

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Speaker 2: on the Walmart dot com marketplace, it's not something Walmart

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Speaker 2: makes Walmart dot Com now, just like Amazon sells third

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Speaker 2: party products.

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Speaker 1: Managing the customer experience in trying to build trust and

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Speaker 1: being responsible for things in a world where you don't

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Speaker 1: actually own all the inventory and make all the decisions

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Speaker 1: is more challenging.

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Speaker 2: If managing a marketplace whose inventory it doesn't fully control

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Speaker 2: is one challenge, and even bigger one is managing a

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Speaker 2: company with Trump back in the White House. Every CEO

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Speaker 2: of Walmart for the past half century has worked with

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Speaker 2: the sitting US president. It's part of the job. But

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Speaker 2: during Trump's first term, McMillan made his criticisms of the

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Speaker 2: president known. In twenty seventeen, he condemned Trump's response to

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Speaker 2: a violent protest in Charlottesville, Virginia, saying, Trump this just

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Speaker 2: an opportunity to quote, bring the country together by unequivocally

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Speaker 2: rejecting the appalling actions of white supremacists, unquote. And even

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Speaker 2: before that, he'd weighed in occasionally on some hot button social.

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Speaker 3: Issues, doing things like lobbying state officials in Arkansas and

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Speaker 3: not to pass a bill that would have restricted GBT rights.

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Speaker 2: It's not clear he'll be taking the same tack this

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Speaker 2: time around. In early January, McMillan traveled to Florida for

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Speaker 2: a meeting at Mara a Lago, and this is what

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Speaker 2: he said.

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Speaker 1: He told Trump, We're here long term, We're a large employer,

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Speaker 1: we serve a lot of people. We want the country

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Speaker 1: to thrive. How can we be helpful?

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Speaker 2: Like many US based multinational companies, Walmart will be affected

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Speaker 2: by the president's protectionist policies. McMillan says he's not too concerned.

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Speaker 2: Walmart dealt with new tariffs during Trump's first term, but

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Speaker 2: Jaywan says the economic picture is different in twenty twenty five.

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Speaker 4: Another factor to take into account is years of historic inflation,

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Speaker 4: and there's a huge uncertainty around how that's going to

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Speaker 4: impact consumer spending. And Walmart, you know, they're used to

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Speaker 4: operating under this environment.

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Speaker 2: And Devin says there are less obvious ways Trump's policies

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Speaker 2: could hit Walmart's bottom line.

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Speaker 3: Robert F. Kennedy Junior Health and Human Services Secretary, but

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Speaker 3: he doesn't think that food stamps should be used to

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Speaker 3: buy processed food and sugary.

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Speaker 2: Drinks, and Walmart receives about twenty six percent of SNAP

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Speaker 2: benefit spending. Walle McMillan tackles these challenges. He said that

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Speaker 2: at the top of his mind is the ordinary task

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Speaker 2: of being boss, recruiting and retaining good talent. When he

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Speaker 2: took over in twenty fourteen, Walmart faced dissatisfaction from some

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Speaker 2: employees who were trying to organize, McMillan raised the company's

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Speaker 2: starting wage and offered better benefits.

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Speaker 1: Everything we do wages, cash bonuses, equity, health care decisions.

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Speaker 1: We're trying to build a ladder that people want to

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Speaker 1: get on to build a career, not just come for

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Speaker 1: a job.

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Speaker 3: For a or two.

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Speaker 2: Successful store managers can now make over six hundred thousand

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Speaker 2: dollars a year. The company also recruits employees from Google

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Speaker 2: and Amazon, and last year Walmart shares rows by seventy

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Speaker 2: two percent, and in the years ahead, McMillan's big bet

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Speaker 2: on Bentonville could test things. The company is closing some

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Speaker 2: satellite offices and asking many employees to relocate to the

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Speaker 2: new Arkansas headquarters. McMillan himself is also moving desks and

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Speaker 2: will soon say goodbye to Sam Walton's storied office in

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Speaker 2: the old HQ.

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Speaker 3: It's still a hard sell even with all of this

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Speaker 3: quote unquote cooler stuff, and people are riding around in

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Speaker 3: knee bikes and fancy coworkingess centers and great cocktails.

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Speaker 4: Doug and the other executives are super focused on keeping

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Speaker 4: their momentum going, keeping up with competition and growing and

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Speaker 4: making sure that they don't fall behind again.

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Speaker 2: This is the Big Take from Bloomberg News. I'm David Gora.

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Speaker 2: This episode is produced by Julia Press. It was edited

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Speaker 2: by Aaron Edwards and Danielle Sachs. It was mixed and

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Speaker 2: sound designed by Alex Sekura and fact checked by Adreana Tapia.

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Speaker 2: Our senior producer is Naomi Shaven. Our senior editor is

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Speaker 2: Elizabeth Ponso. Our executive producer is Nicole Meemster Boor. Sage

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Speaker 2: Bauman is Bloomberg's head of Podcasts. If you liked this episode,

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Speaker 2: make sure to subscribe and review The Big Take wherever

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Speaker 2: you listen to podcasts. It helps people find the show.

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Speaker 2: Thanks for listening. We'll be back tomorrow