Speaker 1: Bloomberg Audio Studios, podcasts, radio.
Speaker 2: News, Carol Master, Tim Stenevik live here at the Bloomberg
Speaker 2: Global Business Forum at the Plaza in New York City. Well,
Speaker 2: if you want to know about global consumers are up to,
Speaker 2: or what massive global companies are really thinking about when
Speaker 2: it comes to the macro environment, what are their priorities,
Speaker 2: then keeping an eye on Walmart is definitely a must do.
Speaker 2: It is the world's largest retailer. It was among the
Speaker 2: retailers that recently raised their forecast that happened over the summer,
Speaker 2: and a member of the company c suite is joining us,
Speaker 2: Tim right here at the forum.
Speaker 3: Yeah, here at the Bloomberg Global Business Forum. Please to
Speaker 3: have Chris Nicholas with US President and CEO of Sam's Club.
Speaker 3: It is Walmart's membership only retail warehouse club, mostly with
Speaker 3: clubs here in the US, but also overseas clubs in Mexico, China,
Speaker 3: and Brazil. Former COO of Walmart US, previously CFO across
Speaker 3: Walmart US and Walmart International.
Speaker 2: Which means you've seen everything I've tried.
Speaker 3: How are you?
Speaker 1: I'm doing great, really excited to be here.
Speaker 3: How are we doing? By we, I mean the American consumer.
Speaker 3: You've got such a great view on what happens across
Speaker 3: the country.
Speaker 1: How are we doing? Yeah, I mean we what we're
Speaker 1: seeing at Sam's Club is consumers that are consistent and rational.
Speaker 1: You know, I've been in retail for more than thirty
Speaker 1: years now, and I've never known a time when people
Speaker 1: don't love great items at great prices. And as long
Speaker 1: as you're giving people that, we're finding consumers really you know,
Speaker 1: rational and consistent.
Speaker 3: What is their behavior though right now? Because that's something
Speaker 3: Carol and I were talking a lot about today, and
Speaker 3: you know, the whole idea of are they buying what
Speaker 3: they typically buy? Are they buying what they buy at
Speaker 3: a certain point in economic cycle? Are they trading up,
Speaker 3: are they trading down? What are they doing in your stores?
Speaker 1: Yeah, it's interesting with I mean, consistent would be the
Speaker 1: word i'd use. People are still buying general merchandise from US.
Speaker 1: I mean, we talked in our last quarter at the
Speaker 1: results about general merchandise sales having another quarter of positive
Speaker 1: comp But what's really interesting within that is that the
Speaker 1: units are moving faster than the items, which means that
Speaker 1: you know, we're still giving them great value, and I
Speaker 1: think people are really moving to appreciate when they're getting
Speaker 1: good value. You know, the club warehouse model is made
Speaker 1: for times like these. I would say it's a good
Speaker 1: time to be in the club model. We've got in
Speaker 1: our clubs. We've only got four thousand items. And the
Speaker 1: way that the club model works, just to level set
Speaker 1: us is our job is to make almost nothing on
Speaker 1: what we sell. We're just about break even, and we
Speaker 1: make all our money from membership. So the lower you
Speaker 1: can operate in terms of costs, the lower you can
Speaker 1: keep prices. And when that happens, people are more loyal,
Speaker 1: they renew more often, and you get more members. So
Speaker 1: we're in this like really special moment right now where
Speaker 1: people are love the great value that we've got and
Speaker 1: they love the great items that we've got to you.
Speaker 2: Know, I want to cross that with what we just
Speaker 2: heard from Fadsherman J. Powell Chris last week in terms
Speaker 2: of the decision and kind of basically saying the f
Speaker 2: that's not in a great place, like either way, there
Speaker 2: are some risks to the employment picture. Their concerns still
Speaker 2: about inflation. So this is there's kind of risks to
Speaker 2: both sides of the equation and concerned about monetary policy
Speaker 2: that it's hard to do right now in this environment.
Speaker 2: So that to me sounds uncertain, unsure, but it doesn't
Speaker 2: sound like you're saying any of that.
Speaker 1: Look, the club here's the thing. We have this position
Speaker 1: where there's only i mean between us and our main
Speaker 1: competitors in the club model. In particular, we're only like
Speaker 1: six and a half percent of the of the of
Speaker 1: the total retail market, and we would definitely from a
Speaker 1: club point of view, our consumers definitely skew sort of
Speaker 1: more wealthy, you know, bigger basket sizes, but we do
Speaker 1: serve everybody, and we don't see a great delta between
Speaker 1: different income cohorts. You don't know, all right, that's more generations.
Speaker 2: Well what about I mean, when you think about kind
Speaker 2: of the environment, whichally when it comes into tariffs in
Speaker 2: terms of pricing, how do you kind of figure out
Speaker 2: where you can maybe raise price is where you can.
Speaker 1: Well, it's such a great it's such a great question.
Speaker 1: We and again not to sort of pivot, but one
Speaker 1: of the powers of the club model is because you've
Speaker 1: only got four thousand items in the club, those items
Speaker 1: are curated. Yeah, and our merchants they are true professionals that,
Speaker 1: like many of them, have been in their jobs decades
Speaker 1: and they understand the value chain from end to end
Speaker 1: better than anybody, and so they get the ability to
Speaker 1: choose what's in the club, but they also get the
Speaker 1: ability to work through where the inefficiencies are in the
Speaker 1: supply chain. They've got deep relationship with the suppliers, so
Speaker 1: you work through where the opportunities are between the suppliers too.
Speaker 1: So I'll give you an example. Our roses that we
Speaker 1: buy from Ecuador. The costs went up because you know,
Speaker 1: the tariff environment changed, and so our merchants worked through
Speaker 1: with the supplier, like what could we do? So we
Speaker 1: move them in different ways so we have less packaging.
Speaker 1: We we wrap them in the US now instead of
Speaker 1: where we used to wrap them, And so you do
Speaker 1: things like that that help you to manage the input costs.
Speaker 1: That means you don't have to pass it on to
Speaker 1: the consumer. And our job is to work through how
Speaker 1: little you pass through, and you work through how late
Speaker 1: you do it. So we'd always like to be last
Speaker 1: last up. But we have the ultimate opportunity in the
Speaker 1: club channel, and that is that we have choice because
Speaker 1: we don't have to sell everything, so we the curation
Speaker 1: actually is a superpower for us.
Speaker 2: Does that mean you haven't raised prices on anything?
Speaker 1: No, No, we see. I mean, look, here's the thing
Speaker 1: there there are certain things that where prices move all
Speaker 1: of the time. No, anyway, So produce would be a
Speaker 1: good example of that, and there are some strictly teriff
Speaker 1: for later. Yeah. What I would say to you is
Speaker 1: that if I think about general merchandise would be there,
Speaker 1: which is like all of the electronics and apparel and
Speaker 1: all of those things.
Speaker 2: The stuff that I have way too much in my home.
Speaker 1: There's never enough, Please buy more.
Speaker 2: But in terms of tariffs particularly pretty pressure on pricing.
Speaker 1: Yeah, So what we see is in terms of what
Speaker 1: people are buying. I think I mentioned this, but the
Speaker 1: growth in the units that we've had is outpacing our
Speaker 1: comps in general merchandise. So if you think about like
Speaker 1: over the last few years, you had like packaged goods
Speaker 1: through COVID became more expensive and they never really came down,
Speaker 1: whereas general merchandise, we had the supply chain disruption, you
Speaker 1: remember that, and the general merchandise inflated and then it
Speaker 1: deflated rapidly, as was after all of the supply chain
Speaker 1: disruptions disappeared, and at the end of last quarter, we
Speaker 1: were still in a period of slight deflation in general merchandise,
Speaker 1: so prices move all of the time. Our job and
Speaker 1: our merchant's job, is to make sure that we give
Speaker 1: people access to the price points they want and the
Speaker 1: value that they want. Maybe it's worth mentioning, but in
Speaker 1: Sam's Club, like, we're twenty five percent cheaper than retail
Speaker 1: in general, so as we resist putting prices up because
Speaker 1: that's in our DNA, were always going to be more
Speaker 1: price competitive than everybody else.
Speaker 2: So then you haven't raised any prices related to terrorst
Speaker 2: We will.
Speaker 1: We will be the last people to put prices up,
Speaker 1: And some prices have gone up, but in the mix
Speaker 1: I'm telling it so for sure. I mean we have
Speaker 1: input price changes in some items and some come through
Speaker 1: already and some is still to come through. But I
Speaker 1: would tell you that, like, our job is not to
Speaker 1: lead with putting prices up, and all of our sales
Speaker 1: growth in Sam's Club is through unit growth, not inflation.
Speaker 3: Okay, cool, I'm wondering what you're hearing from from your
Speaker 3: team who's out there talking to the producers the American
Speaker 3: producers of things we grow produce beef as well. We
Speaker 3: had a Bloomberg News story last week about farmers and
Speaker 3: as all that the Trump administration policies are taking on
Speaker 3: farmers right now. Immigration just one of them. Tariffs on
Speaker 3: soybeans are another one, as a result of fewer less
Speaker 3: interest from China and Chinese buyers. What are you hearing
Speaker 3: though on the immigration front, Because in some cases forty
Speaker 3: percent of migrant workers are from outside forty percent of
Speaker 3: farm workers rather are migrant workers, so they're coming from
Speaker 3: outside the US, and that's a challenge for farmers to
Speaker 3: actually find those employees right now. What are you hearing
Speaker 3: from them?
Speaker 1: Yeah, I'm not hearing. I don't have anything to add
Speaker 1: or to offer on that topic. I would tell you
Speaker 1: that we have brilliant farmer partners. We understand the value
Speaker 1: change really well, and we have no in stock issues
Speaker 1: or cost price issues.
Speaker 3: So have they raised prices at all on American produce?
Speaker 1: I you'd have to ask somebody else about the through
Speaker 1: line on like employment and pricing prises. I think you
Speaker 1: probably speak to lots of people are better informant.
Speaker 3: What about from produce that comes outside of the United States.
Speaker 3: I mean, we can't do everything here. We can't grow bananas,
Speaker 3: we can't.
Speaker 1: Grow a card. Avocados.
Speaker 3: Yeah, tomatoes when they're out of season come from outside
Speaker 3: of the US. What does that look like?
Speaker 1: Yeah, I mean what it is, well, like the increasing.
Speaker 3: Costs associated with terriffs because those will be or those
Speaker 3: are tariff already. I mean beef that comes from Brazil present.
Speaker 1: Erraors for example. Yeah, I mean, we we are we
Speaker 1: definitely over index on US beef. The vast majority of
Speaker 1: what we buy is US, the vast majority, and and
Speaker 1: so you know, but we have choices about where we
Speaker 1: buy from. This is the benefit of being this curated,
Speaker 1: limited assortment retailer is that we get the choices to
Speaker 1: buy from the places that where you give the consumers
Speaker 1: great value and and great quality, which we're never going
Speaker 1: to relent on. But you know, yeah, we buy items,
Speaker 1: you know, we buy avocados as you said, from abroad,
Speaker 1: and many other items, tomatoes when it's out of season,
Speaker 1: and you know, the quality and the value. That will
Speaker 1: never relent on the quality. But if the input costs increase,
Speaker 1: then the input's costs will increase. But there's meant, there's
Speaker 1: produce there are so many variables produce and beef. I
Speaker 1: mean that there are so many variables that pushes the
Speaker 1: costs down as well as up. So I think it's
Speaker 1: a super complex situation. And I think that our farmers
Speaker 1: are some of the best in the world, and I
Speaker 1: think that our merchants know how to work with the farmers.
Speaker 1: The thing, the best thing you can do for those
Speaker 1: farmers is to give them great forecasts, allow them to
Speaker 1: grow to those forecasts, and give them good prices that
Speaker 1: allow them to run sustainable business models. And we do
Speaker 1: a really good job of that.
Speaker 2: Chris. You guys in retail, I'm sure we're even late
Speaker 2: to talk about the holiday season and the upcoming holiday season.
Speaker 2: When you think about assortment and what you want to
Speaker 2: have inventory for consumers, how's it looking for this year?
Speaker 2: Is it going to be a lot different from last year?
Speaker 2: Are the supply channel there to get what you need
Speaker 2: and what you want for your consumers?
Speaker 1: Yeah, that's not an issue. We don't see any issues
Speaker 1: with supply chain management in that way. A Sam's Club
Speaker 1: in particular, we get really early. So you guys are
Speaker 1: a Sam's Club now, which hopefully you know, please do
Speaker 1: You'll see it's full of Christmas.
Speaker 2: I know it tries it a little crazy.
Speaker 1: Yeah, I mean, if I understand, is it so?
Speaker 2: I mean Halloween hasn't even happened.
Speaker 1: Yeah, Well, in the club channel, people like to be prepared,
Speaker 1: so we get into a season early and then we
Speaker 1: exit early. And that's kind of scarcity is part of
Speaker 1: the value that we create and so so we're not
Speaker 1: worried about it from a Sam's Club point of view.
Speaker 1: But the thing I would say is that people just
Speaker 1: love to celebrate, They love to buy, they love the seasons,
Speaker 1: and so I think you'll find that certainly at Sam's Club.
Speaker 1: People whether it's the general merchandise they buy pre Thanksgiving
Speaker 1: and Christmas or the food that they buy for the season,
Speaker 1: as long as you're giving them great value, they're going
Speaker 1: to come to you and people will find a way
Speaker 1: to celebrate.
Speaker 2: One of the things we love about the Global Business
Speaker 2: Form is we tackle everything climate change, you know, workforce, employment, economics, politics.
Speaker 2: As a leader who's been at a company for a
Speaker 2: long time, and I'm sure looking at everything that's going on,
Speaker 2: what's top of mind for you, and an environment where
Speaker 2: this pushback against certain initiatives, there's a lot of political
Speaker 2: things going on, geopolitics. I'm just curious, you know, in
Speaker 2: running what you guys do. And I know you're kind
Speaker 2: of a well oiled machine in many ways, but I'm
Speaker 2: just curious.
Speaker 1: Yeah, I think, you know, in the in an environment
Speaker 1: of change, and by the way, I like, changes are
Speaker 1: constant and you've got to you've got to love it. Then.
Speaker 1: I've always found that the best thing to do is
Speaker 1: to focus on what you can control. And what you
Speaker 1: can control is the culture you create as a business,
Speaker 1: how you work with and treat your customers and your members,
Speaker 1: the experiences that you create. You know, A great example
Speaker 1: is is the e commerce business. We've just launched express
Speaker 1: delivery from our clubs and people love it and they're
Speaker 1: opting in.
Speaker 3: Does the price change with delivery?
Speaker 1: No, we have price parity. We have price so others don't.
Speaker 1: We do. So we have price parity between clubs and
Speaker 1: an online that's really important from a trust point of view.
Speaker 1: And people are thanking us for our delivery from club
Speaker 1: food and non food is growing at triple digits right now.
Speaker 1: So I think, like, focus on what you can control.
Speaker 1: Start with being great people, Start with being a great business.
Speaker 1: Look after your associates so they can look after our
Speaker 1: members and then you know that that generally will lead
Speaker 1: to the right outcomes. So on that.
Speaker 3: We'll hear from one of your big competitors tomorrow. Costco
Speaker 3: reports earnings tomorrow. How do you make sure that people
Speaker 3: join Sam's Club and not Costco?
Speaker 1: Yeah? Look, Costco is a great competitor. We think that
Speaker 1: we're great too, and we're doing a lot of good things.
Speaker 1: What I would tell you is this.
Speaker 2: Because you have an aggressive plan in terms of expansion.
Speaker 1: Yeah, I remember about it.
Speaker 2: I know.
Speaker 1: Yeah, we're really excited about that plan. Actually, the club
Speaker 1: channel in general is a relatively small channel. There's a
Speaker 1: huge there's huge upside for the whole of the club channel.
Speaker 1: And I would tell you this, good competition makes you better.
Speaker 1: And I've never been afraid of good competition.
Speaker 2: What about AI and how you guys are working?
Speaker 3: Are you afraid of AI?
Speaker 1: AI? We're trying to AI is a big topic everywhere now,
Speaker 1: isn't it. You know, here's the thing we are. We're
Speaker 1: excited about AI as a company, and I am personally too.
Speaker 1: I think this idea of.
Speaker 2: Are you guys using it a lot? A lot?
Speaker 1: We've been using it for a long time, honestly. But
Speaker 1: the generative AI and then the agentic AI that's coming
Speaker 1: through too is really exciting. It's exciting for our members
Speaker 1: and for our associates. What we do we pivot to growth.
Speaker 1: How does this help us move faster, do more for
Speaker 1: our associates and our members. How do we find different
Speaker 1: routes to market? So that's exciting. Of course, we also
Speaker 1: look at how do you find opportunities to take time
Speaker 1: out of product launches and all of those kind of
Speaker 1: things so that you're a better business. The one thing
Speaker 1: that you may have seen is we also believe that
Speaker 1: the opportunity to give people to empower people with the
Speaker 1: use of AI but with an enterprise but with enterprise
Speaker 1: data is really exciting. So whether it's in the office
Speaker 1: or recently, we made an announcement a couple of weeks
Speaker 1: ago at our holiday meeting where we gave our frontline
Speaker 1: management access to open AI, to chat GBT and which
Speaker 1: they can use to just go faster and do more.
Speaker 1: And that's really exciting.
Speaker 2: Yeah, it's kind of amazing. We're all kind of finding
Speaker 2: our way through it. Chris, thank you so much.
Speaker 1: Thank you for having me. I appreciate it, and yeah,
Speaker 1: good luck, good luck.
Speaker 2: Thank you as well. Chris Nicholas. He's the presidentcy of
Speaker 2: Sam's Club.