After two deadly shootings at Walmart stores over the summer, Walmart Ceo Doug McMillon made a surprising move.
The retailer on Sept. 3 said it would halt sales of ammunition for assault-style rifles and handguns and that it would begin asking shoppers to no longer openly carry firearms in stores in states where “open carry” is allowed.
“We’ve also been listening to a lot of people inside and outside our company as we think about the role we can play in helping to make the country safer,” McMillon said earlier this year. “It’s clear to us that the status quo is unacceptable.”
It used to be that Walmart, for better or for worse, often tried to fly under the radar from its rural Bentonville, Arkansas, headquarters. But the CEO of the biggest retailer in the world has been bolder this year than he traditionally has been in the past. McMillon, who started in 1984 as an hourly summer worker in a Walmart distribution center, is now leading the company as it takes major policy stances on issues such as e-cigarettes, wage hikes and gun sales.
Next year, McMillon will have an even bigger platform. On Jan. 1, 2020, he will become the chairman of the Business Roundtable, months after the CEO trade group said that shareholder value should no longer be the primary goal of a corporation and that it should instead take into account all stakeholders including employees. The statement marked a major philosophical shift in how the group views corporate governance and drew criticism from some major investors.
McMillon’s new gig could help boost Walmart’s reputation, especially with younger employees and shoppers looking to buy products from companies whose values are aligned with their own.
“Walmart has struggled historically to be seen as a good citizen,” Witold Henisz, professor of management at Wharton, said, citing how Walmart has been attacked for its wages and working conditions, being the nation’s largest private employer.
Now, instead of focusing on the past, McMillon is “looking ahead, as he should,” Henisz said. “I think Doug is trying to understand how all of its different cohorts impact Walmart in the long term.” Those cohorts would include Walmart workers, investors and the community members situated around Walmart stores.
A ‘risky play’
Walmart’s foray into the debate over controversial subjects has so far been met mainly with positive response from industry watchers. In September, the company also said it would stop selling e-cigarettes in its Walmart and Sam’s Club locations in the U.S., or more than 5,000 stores, citing “growing federal, state and local regulatory complexity and uncertainty” around the issue.
“For McMillon to do what he is doing, he had to be given great largess by the board and by the company,” Robin Lewis, the founder and CEO of consulting group The Robin Report, said. “They gave him as much rope as he needs. … And we kind of think he is doing terrific.”
McMillon isn’t the only CEO making waves with bolder stances. Dick’s Sporting Goods CEO Ed Stack has also been thrust into the spotlight. He took a bold stance on assault-style firearms in February of 2018, following a deadly school shooting in Parkland, Florida. He has since written and released a book that walks readers through his decision to pull high-capacity magazines from stores and halt the sale of firearms to anyone under 21 years old.
BlackRock CEO Laurence Fink used his annual letter to CEOs in 2019 to focus on the responsibility of corporations to fill the voids that have been created because of “political dysfunction.”
It could help that shareholders seem satisfied with how McMillon is performing from a business standpoint. The retailer has booked 21 consecutive quarters of same-store sales growth in the U.S., as its online business, while unprofitable, is increasingly pitted against Amazon to win shoppers. Walmart is calling for adjusted earnings per share this year to “increase slightly” compared with last. Walmart shares are up nearly 30% this year.
But in taking a stance on social issues, Walmart could risk alienating shoppers across the country. In the case of guns, the National Rifle Association of America, a gun rights advocacy group, responded to Walmart’s changes on ammunition sales by saying “lines at Walmart will soon be replaced by lines at other retailers who are more supportive of America’s fundamental freedoms.”
And some viewed the restrictions as too little too late. The retailer had faced backlash, some from its own employees, for not pulling weapons from stores quickly enough after a deadly shooting in July at a Walmart store in Mississippi and another in August at a Walmart in El Paso, Texas, where 22 were killed.
“It is a risky play,” Henisz said of Walmart wading into policy debates.
Meanwhile, the company still struggles to ditch its reputation as a company paying “starvation wages,” as presidential hopeful Bernie Sanders put it when he showed up at Walmart’s annual shareholders meeting this year calling for the retailer to pay a $15 minimum wage. While McMillon has called for an increase to the federal minimum wage, Walmart currently pays a starting rate of $11 per hour, which is lower than Target‘s and Amazon‘s.
“Over the last five to 10 years, the [retail CEO] job has gotten a lot more difficult,” Joel Bines, a global leader of the retail practice at consulting firm AlixPartners, said. “You’re thinking about how to lead a business through a time of enormous industry change. … Now, the skill-set you need is how do you navigate a complex, ever-changing world.”