Last week I quoted Wal-Mart CEO Lee Scott in an interview excerpt from the Financial Times. Yesterday, the paper published an edited, but more extensive, version of that interview. I’ve interviewed Fortune 500 CEO’s and I give Scott a lot of credit.

He’s good at this. He doesn’t make mistakes.

FINANCIAL TIMES: Wal-Mart has been seeking to improve the performance of its US supercenters and discount stores. How is that going?

LEE SCOTT: I think the US business is doing better because fundamentally the leadership team is doing a very good job across a number of areas. If you look at our marketing, it is extraordinarily effective for this particular time. “Save people money, so they can live better” with the general attitude and concerns that consumers have today, what better message to have?

I think our merchants have done a much better job, whether you talk about assorting the store for the community, the [price] roll-backs we’re doing. Working with suppliers to take costs out so the products are more affordable during a time of food inflation. They’ve done an excellent job of being more relevant.

I probably wouldn’t have paid much attention to Scott’s use of the word assorting here if it weren’t for Jonathan’s pickup from the Denver Post.

When suggesting that Wal-Mart is doing a better job of harmonizing its stores with the community, he might have been referring to efforts to better serve minority communities like Middle Eastern customer in Michigan or Hispanic customers in Tennessee.

But he also may have been referring to the company’s ability to adjust prices to reflect the customer base and therefore maximize its margins.

FT: Wal-Mart was always a company that focused on getting the lowest possible price from suppliers and now you are talking about incorporating social and environmental costs into the notion of price. And that’s a big shift for your average buyer.

MR SCOTT: It would be misleading to think that everybody is at the same place in embracing sustainability…this is a large company. And so we clearly have momentum. And I think what our people have accomplished is indisputable.

But so far much of what we have done has been really pretty straight-forward. And that is eliminating or reconfiguring packaging, or the elimination of high-gloss printed labels, or recycling at store level, which this first quarter is a $10-11m switch, from a $1.4m in costs to $10m in income. It’s working with Eureka to sell a vacuum cleaner that uses 30 per cent less power. It’s selling compact fluorescent bulbs.

So we’re doing those kind of things. Will there be hard decisions in the future? I think there will be.

Yes. The greening of Wal-Mart has involved plucking the low-hanging fruit, sort of like an obese person agreeing to cut back to only three, extra-large bags of potato chips a day. It’s an improvement and, as Scott notes, already saving the Wal-Mart millions of dollars.

The hard decisions will come when no direct savings to Wal-Mart will result from a change. But I don’t think it it will be all that hard. If it doesn’t improve shareholder value, it just won’t happen.

FT: What are you’re feeling about the level of debate on healthcare. Both Democrat candidate both seem to be in favour of some form of obligatory payroll contribution which is something you have always been opposed to.

MR SCOTT: What we’ve been opposed to is state-level mandates where you have the issue of the violation of ERISA [the federal US law covering benefit obligations]. We have not as far as I know set out a position on what a national programme might look like and the involvement of private insurance within that.

I am not particularly encouraged about the debate. I think business has been absent in this discussion on healthcare. I’m not sure why. If you look at the global environment we operate in today and you look at our leading exporters, and they tend to have very rich benefit progammes. And the more uninsured we have and the richer their programmes, the more the costs of the uninsured that they are going to be picking up. And we’re going to be competing in this global environment. And I worry about our global competitiveness there.

This is a perfect example of what I mean when I say Scott is good. Turning the health care issue into a global competitiveness question is brilliant. I specially like the bit about Wal-Mart’s exporters tending to have very rich benefit programs.

What did you find interesting in the Scott interviews?

Jeff Hess: Have Coffee Will Write.

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This entry was posted on Monday, April 7th, 2008 at 0620 by Jeff Hess and is filed under Competitors, International, Lee Scott. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.