Walmart finds strategy to not offend is working
Walmart is getting out of the vaping business but still sells cigarettes. It is working to reduce plastic packaging for the products on its shelves but continues to use plastic grocery bags in its checkout lines. And after a gunman killed 22 people at a Walmart in El Paso this summer, the retailer said it would no longer offer certain types of ammunition but stopped short of banning customers from carrying their guns into stores.
When navigating the nation’s culture wars, Walmart follows a strategy it has honed for years: Alienate as few customers as possible and do no harm to its core business. In many cases, it appears to be working. Walmart’s stance on guns, for example, drew a lot of attention but had “no discernible impact” on overall sales, according to a top executive who spoke on the condition of anonymity to discuss internal matters.
Once viewed in many parts of the country as a union-busting killer of Main Street businesses, Walmart and its CEO, Doug McMillon, have received plaudits of late for taking stands not just on guns, but also issues such as carbon emissions and Confederate flags. “When did Walmart grow a conscience?” read a headline in the Boston Globe.
Interviews with more than a dozen Walmart executives, former executives, company advisers and regulators show that the retailer’s approach to public policy issues is more nuanced than a desire to simply do the right thing.
When Walmart said it would remove electronic cigarettes from its shelves in September, vaping critics praised the move as validation of their health concerns. But Walmart’s decision was partly driven by concerns that the retailer would be stuck with excess inventory if more regulators began to outlaw vaping, executives say.
Overall, Walmart remains committed to tobacco. When CVS announced that it was ending cigarette sales five years ago, Walmart considered making a similar move. But Walmart ultimately decided to keep selling tobacco after executives concluded that cigarette sales were in keeping with the retailer’s brand as serving the mass market, according to two people briefed on the decisionmaking who spoke on the condition of anonymity to discuss internal deliberations. Some executives also thought that Walmart might gain market share after CVS’ exit from the market, one of the people said.
On the environment, Walmart has been viewed as an industry leader by reducing carbon emissions in its trucking fleet and supplier network and by cutting back on plastic packaging for thousands of food and household items it sells in its stores.
But internal company discussions about plastic grocery bags show the tension between Walmart’s environmental concerns and its sales goals.
Walmart continues to use plastic bags in its checkout lines, while big competitors such as Kroger are phasing them out. The company offers reusable bags at some registers, but some executives have expressed concerns that switching entirely out of plastic could delay moving customers through the checkout as quickly as possible and turn off shoppers who prefer the convenience of plastic, according to two people briefed on the discussions.
“My impression is that this is a company that does seem to care beyond the bottom line,” said Arun Sundararajan, a professor at New York University’s Stern School of Business. “But you also have to keep in mind, it is still a highly efficient competitor.”
In the company’s last earnings report, its revenue in the fiscal second quarter climbed 3 percent, lifted by a 37 percent jump in e-commerce sales.
It is perhaps no coincidence that Walmart’s public relations victories come as rival Amazon is being battered by antitrust concerns and criticism about onerous working conditions, issues that the original big-box retailer has spent years trying to defuse, with some success.
Many credit CEO McMillon with positioning Walmart as a socially responsible company while also finding ways to increase sales in the U.S. for 20 consecutive quarters. Through a spokesman, McMillon declined to be interviewed.
Publicly, McMillon has said he wants to stay above the political fray. But when Walmart takes a stand, McMillon has tried to convey the company’s position without “spiking the football” and inflaming the other side, one executive said.
“Politics moves around,” McMillon said in 2017.
“We are on our 11th administration, since Walmart was born,” McMillon added. “There will be a 12th. There will be a 13th.”