Yahoo Finance Walmart CEO Doug McMillon keeps fending off Amazon for the top spot on the Fortune 500. Can he and the mega-retailer continue their streak?
On an April morning at Walmart’s headquarters, Doug McMillon was getting the Ryan Gosling treatment.
The occasion was a meeting to celebrate about 150 of Walmart’s long-tenured employees; the giant retailer holds a few such gatherings every year at its campus in Bentonville, Ark. The employees, whose badges identified them by years of service—20, 30, even 50—were the honorees. But McMillon was the one being mobbed like a movie star, as coworkers rushed up to ask for autographs or get a selfie with their photogenic CEO.
McMillon, at 6-foot-2, was easy to spot, and it took a while for him to work the room. When he finally hit the stage, he invited the guest-of-honor cashiers, forklift drivers, and merchants to share stories about their decades at the company. He also invited them to register complaints if so inclined. “If you want to ask for anything, now is a good time,” McMillon joked. And some did just that. One asked for the company to provide health insurance for retirees. Another called for more predictable scheduling, citing the pain that variable hours can cause for parents and caregivers. “We’ll see if we can make it better,” McMillon said softly; later, he instructed Walmart’s head of U.S. stores to look into the matter.
McMillon, 57, has an approachability that would make any politician jealous, a gift for holding eye contact and making an interlocutor feel like they’re the only person in the universe. And in his 10 years as leader of America’s largest company, he’s needed every iota of it. McMillon took the reins in 2014 with a mandate to reinvent a tradition-bound giant whose sales had grown stagnant, a retailer facing obsolescence in the face of the e-commerce revolution. It has taken diplomacy, empathy, and persistence to rally managers and rank-and-file workers worldwide around a new approach to their jobs.
He admits he may have underestimated the scale of the task. “I didn’t anticipate how much change needed to happen in the way we think and work, in learning to make decisions differently,” McMillon tells Fortune during a conversation in his office, just after the employee pep rally.
By many measures, McMillon has risen to the challenge. Walmart has ranked No. 1 on the Fortune 500 list of America’s biggest companies for McMillon’s entire tenure as CEO (and for 12 years in a row). Last year the company had annual revenue of $648 billion—a stunning $162 billion more than it generated the year McMillon took over. In the fiscal year ended Jan. 31, Walmart also passed the $100 billion mark in global e-commerce revenue, demonstrating its strength on retail’s most important battlefield. What’s more, a chain that’s synonymous with “cheap” is winning more middle- and upper-income customers, thanks in part to spruced-up stores with wider selections of everything from sneakers to baby spinach.
Making these changes required McMillon—a Walmart lifer, with 33 years under his belt—to reimagine what it means to lead 2.1 million “associates” (as Walmart calls its employees). He’s given subordinates more freedom to innovate. And he has fought to change Walmart’s image as an employer, from that of a tightfisted miser to one that pays frontline workers more competitively and offers a welcoming environment for techies and executives.
The work is far from done, and more obstacles loom. Walmart now faces the challenge of slowing sales growth as consumer demand weakens, and it announced in mid-May that it would lay off some corporate staffers. But overall, McMillon sounds pleased with the progress. “The pieces are finally coming together,” he says of his strategy. “We’ve been working on these pieces for a long time.”
It’s virtually impossible to spend time in Bentonville without encountering reverential references to Sam Walton, who founded Walmart in 1962. Walton’s company became America’s dominant retailer by focusing on frugality bordering on austerity, under the banner of an “Every Day Low Price” philosophy. (The Sam’s Club warehouse-store chain, founded in 1983 to battle Costco, and Walmart International, which took off in the 1990s, built further on Walton’s legacy.)
Even today, 32 years after his death, “Mr. Sam” is constantly invoked in Walmart meetings and gatherings. Indeed, three associates who were feted at the meeting that McMillon hosted either mentioned or quoted Walton; a 50-year veteran named Theresa called him “the ultimate disrupter.” Visitors from outside the company can watch and listen to a slightly unnerving Walton hologram at the Walmart Museum Heritage Lab downtown—or even visit his grave, a half-mile from headquarters.
McMillon’s own history with Walmart dates to 1984, after his father, a dentist, moved the family to Bentonville from Jonesboro, Ark. The teenage Doug’s first Walmart job was unloading trucks at a warehouse. His other choice for a summer job was McDonald’s, but Walmart paid far better, at $6.50 per hour. Later, while at business school at the University of Tulsa, he entered Walmart’s training program for “buyers,” managers who choose what items their stores will stock. (The first product McMillon oversaw as a buyer: fishing tackle.)
The buyers program is one of Walmart’s entry points for grooming high-potential management candidates. McMillon lived up to that potential, eventually serving stints as CEO of Sam’s Club and of Walmart International. At 47, he became the fifth chief executive in Walmart’s history, and the youngest other than Walton himself. He occupies an office that once belonged to—of course—Mr. Sam; its Nixon-era wood paneling and parking-lot views speak to the founder’s disdain for frills.
“We don’t celebrate Sam and talk about him for nostalgic reasons,” McMillon says. “Sam had a set of beliefs that generated success, and those principles are relevant today.”
Still, by the time McMillon became CEO, there were signs that the company had strayed from some of those beliefs, while taking others too far.
Walton had always railed against creeping bureaucracy. When he visited stores, he famously would speak much more with frontline workers than with managers; he often praised any “rogue merchant” who did right by the customer even if they deviated from their boss’s protocols. Yet by 2014, Walmart had grown so large that bureaucracy had set in, and different teams worked in silos. A fixation on keeping costs low left the company struggling to invest in innovation, making it ill-equipped to serve consumers drawn to the affordability and convenience of Amazon. Same-store sales at Walmart U.S., which generates some 69% of overall company revenue, were oscillating between anemic growth and small declines—a clear signal that Walmart was falling short of Mr. Sam’s ideals about keeping the customer’s wishes paramount.
McMillon recalls his predecessor, Mike Duke, boiling down his mission to a pithy phrase: “You’re going to have to do this differently.” The challenge: modernizing Walmart’s practice without abandoning its low-price ethos.
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Walmart's rank on the Fortune 500 list for the past 12 years in a row.
The most urgent area for modernization, of course, was e-commerce. Early on, McMillon sent a clear message: He would let his subordinates experiment, and even face-plant, in the search for innovative solutions. The idea was to adopt the “fail fast” approach that had propelled Walmart’s e-commerce rivals. His efforts quickly multiplied: Walmart bought retailer Jet.com in 2016 in a $3 billion megadeal and lined up its founder, Marc Lore, as its e-commerce head—a vital acqui-hire. Walmart also acquired digital-native consumer brands like men’s clothier Bonobos and outdoor gear-and-attire retailer Moosejaw.
Progress was slow, and many of the acquisitions were later wound down or sold off. Jet.com closed in 2020, and Lore left Walmart in 2021. But McMillon says working with digital-first brands and executives helped give Walmart staff a sense of daring, while speeding up their tech metabolism. Lessons learned from its acquisitions helped Walmart build a faster payments platform, for example, along with a more user-friendly way for customers to manage prescriptions at its pharmacies.
Above all, McMillon helped Walmart find its e-commerce sweet spot in its strongest existing asset: its fleet of 4,600 stores. An estimated 90% of the U.S. population lives within 10 miles of a Walmart store, which gave the company a head start on building a network of e-commerce fulfillment hubs. As Walmart.com scaled up, it was quickly able to narrow the gap with Amazon on speed as well as price.
In 2023, Walmart posted $65.4 billion in U.S. e-commerce sales, more than quadruple its 2019 total. Today, McMillon can allow himself a victory lap. “It’s fun when the world tries to condemn a failure, and inside, you just smile and say, ‘We were learning,’ ” he says. “It strengthened the company, and the hits are outweighing the losses.”
Most of Walmart’s revenue still comes through stores, and here, too, McMillon prompted major rethinking—and gave deputies lots of leeway. Greg Foran, McMillon’s top U.S. lieutenant from 2014 until 2019, helped turn Walmart’s largely drab stores into far more appealing emporiums. Walmart grocery sections still sell bulk bargains, but they increasingly showcase the kinds of fresh produce and deli counters that middle-class shoppers flock to.
The same treatment extends into the apparel and general-merchandise aisles: On a store visit to a Walmart in Springdale, Ark., in April, one could find Levi’s and Reebok featured in “vignette” displays and on mannequins—the kind of “visual merchandising” associated with department stores and specialty retailers—rather than simply stacked up high on shelves. The wine section even boasted a Cabernet Sauvignon from the upscale California winery Caymus Vineyards, for $85 a bottle.
McMillon’s team hasn’t quite been able to turn the company into an “everything store” where people go for an array of services outside of shopping. In April, for example, the company announced it was shutting down its Walmart Health clinics, as well as its telehealth arm. But “comp” sales at U.S. stores have exceeded 2% growth every year since 2016—an unusually good run for a mass retailer.
McMillon says he visits Walmart and Sam’s Club stores in the U.S. and abroad one week a month. He’s not there to micromanage his managers, he says, but to make sure stores are up to Walmart’s new, higher standards.
Investor stability has been key to Walmart’s progress. McMillon has had an ally and guide in Greg Penner, a venture and private equity investor who became Walmart’s chairman the year after McMillon became CEO. A former Walmart employee from its early e-commerce days, Penner married into the Walton family, which owns close to half of Walmart’s shares. Several times during the 2010s, McMillon announced plans for big e-commerce investments and increases in wages that were aimed at improving Walmart’s service and digital firepower—but would dent profits in the short run. Predictably, commentators fumed, and the retailer’s shares stumbled. But McMillon’s close coordination with the Waltons meant the wrath of Wall Street didn’t knock Walmart off course.
When his changes draw criticism, McMillon thinks back on one of his predecessors. David Glass, the first CEO to succeed Sam Walton, was under intense scrutiny, and critics accused him of trying to change Walmart too much by entering the grocery business. Today, groceries account for 60% of Walmart’s sales. On his office bookshelf, McMillon keeps a copy of a 1996 issue of Fortune that includes a piece questioning Glass’s strategy. At the end of our interview, he cheerfully shows off the magazine, not unlike a winning athlete pointing to the scoreboard. “What would our revenue be now,” he says of Glass, “if he hadn’t done those things?”
Physically, at least, there’s no bigger symbol of McMillon’s modernization efforts than the sprawling 350-acre construction site known as the New Home Office. Scheduled to begin a phased opening in 2025, the campus will feature the kind of eco-friendly open-plan buildings most people associate with Silicon Valley, along with bike paths, a fitness center with two large swimming pools, and outposts of hip local coffee shops.
The new digs have a lot more in common with, say, Apple’s new headquarters than with Walmart’s badly dated current home office, which opened in 1971. Like McMillon’s own office, its extreme simplicity sends the message to suppliers, employees, and other stakeholders that Walmart does not waste money on frivolity. But McMillon bristles at the suggestion that the new space is over-the-top for a retailer for whom frugality is a North Star. “I don’t think it’s splashy, and I don’t think it’s fancy,” he says. “It’s consistent with a contemporary Walmart.” And he’s candid about its purpose: “We have world-class talent, and we want to keep it.”
The company wants to keep more talent close to home, too: Over the past year, it has closed some regional hubs and relocated employees to Bentonville. Indeed, Walmart wouldn’t be sitting atop the Fortune 500 if it hadn’t succeeded in attracting top people: engineers to keep its e-commerce humming; merchandisers, marketers, and designers to make its stores inviting. Bentonville for years was dismissed as a backwater by many retail executives, but its population has doubled in the past 20 years, and the energy of its restaurant and nightlife scene is now more Austin than Ozark. That change reflects the people Walmart has lured to town.
Luring them has required major cultural shifts. When McMillon took the reins in 2014, Walmart was still, for many anticorporate types, public enemy No. 1—best known for driving small competitors out of business and paying lamentable wages. For most of its history, Walmart had written off critics, particularly in the media, as unfair. But after Walmart earned kudos for its role in providing relief in Louisiana after Hurricane Katrina in 2005, the company aimed to refresh the narrative. Building on the efforts of his predecessors Duke and Lee Scott, McMillon aimed to make Walmart a better citizen, in deed and in appearance.
“It’s fun when the world tries to condemn a failure, and inside, you just smile and say, ‘We were learning.’”
Doug McMillon, CEO, Walmart
Under McMillon, Walmart has lifted its entry-level wage a number of times, from $9 in 2015 to $14 today, and ramped up training to create more career paths like the one that helped boost McMillon to better-paying roles. Walmart was a pioneer in paying college tuition for employees. Such efforts have been key to motivating workers and taming the high turnover that hampered customer service 10 years ago. On the sustainability front, McMillon has pushed efforts to reduce Walmart’s carbon footprint. In 2017, Walmart said it would work with suppliers to eliminate one gigaton of greenhouse gas emissions by 2030; it achieved that goal this year, six years ahead of schedule.
“We’re not a perfect company, but we’ve done a lot of good things for the environment, for our associates, for others,” says McMillon. “I would just love for the reputation to match the reality.”
Building a contemporary Walmart has also sometimes meant reluctantly wading into the culture wars. That’s a particularly perilous task for a company where some 150 million Americans shop every week, representing pretty much every demographic and political orientation in the U.S. Here, McMillon’s gift for congeniality has proved helpful; he has routinely avoided grandstanding, or shaming those who disagree with him.
In 2015, Arkansas considered passing a so-called freedom of religion act, seen by many as opening the door to more discrimination against LGBTQ+ people. As CEO of the state’s most important employer, McMillon took a low-key approach to advocating for a veto, making a statement on Twitter that the law “undermined the spirit of inclusion” in Arkansas. The governor ultimately signed a much-watered-down version of the bill. And in 2019, after 23 people were killed by a gunman at a Walmart in El Paso, the company said it would stop selling handgun ammunition, and urged Congress and then-President Trump to strengthen background checks.
Other retailers, including Target and Starbucks, have taken much more emphatic stances on such issues; both became objects of boycotts, and both have since dialed back how outspoken they are. In a “go woke, go broke” era, McMillon appears to have found a balance that sends a message of inclusivity and public-mindedness without coming across as partisan.
“I don’t wake up in the morning thinking about making political statements,” says McMillon. “I don’t have an agenda other than serving people, and we want to serve everybody.” But sometimes, he suggests, serving everybody requires speaking out.
For the moment, McMillon certainly seems to be pleasing almost everybody. Walmart’s growth got a huge boost from the pandemic and has continued healthily, as its lower prices help attract inflation-weary customers. In 2020 the company launched a loyalty program à la Amazon Prime called Walmart+; by last fall it reportedly had almost 60 million members. Walmart has also built a $3.4 billion advertising business around the data about shoppers’ habits generated by its e-commerce. (The company recently bought TV maker Vizio for $2.3 billion, to support further data gathering.)
Insiders and analysts expect McMillon to stay in place for at least two more years while Walmart preps and evaluates prospective successors. If he stays longer than that, he’ll have the longest tenure of any Walmart CEO other than Mr. Sam, who led the company for 36 years.
The irony is that McMillon may stick around long enough to fall out of first place on the Fortune 500. The transformation he led has revived Walmart’s retail dominance. But Amazon’s revenue growth continues to outpace Walmart’s, in part because of its fast-growing cloud-services business; by Fortune’s calculations, it’s likely to eclipse its rival in total revenue within three years.
McMillon professes to be unfazed by that prospect. “Being first on the list also brings some disadvantages,” he says with a slight grin, alluding to the idea that everybody wants to topple the king. “We’re trying to get better at serving customers and members every day,” he says, “and that’ll be true whether we’re first or second.”
This article appears in the June/July 2024 issue of Fortune with the headline, "Walmart’s Mr. Fix-It."
This story was originally featured on Fortune.com
