Shaping up: Wal-Mart begins the New Year with a restructured executive team pursuing new strategies in merchandising, marketing and operations

DSN Retailing Today, Dec 19, 2005 by Mike Troy

The New Year is almost here, and when it arrives millions of Americans will resolve to get in shape by eating right and exercising. Wal-Mart plans to get in shape, too. But its regimen seeks to balance a heightened sense of corporate responsibility and a desire to live up to the elevated expectations of society with the need to drive growth from an evolving business model.

It is a delicate balancing act and one that will influence virtually every aspect of the company in the year ahead. The ongoing transformation--especially in areas such as operations, merchandising and marketing--promise to have far-reaching implications for suppliers. "This company, although it is successful, is changing as radically today as it has ever changed in its history," Wal-Mart president and ceo Lee Scott said during a presentation in late October to financial analysts.

This is especially evident in the composition of the company's leadership team where familiar faces occupy new roles, lesser known executives have significantly increased responsibilities and where there are high expectations for new people hired from outside the company. These moves ensure suppliers can look forward to adjusting to change and digesting a steady diet of new initiatives and new expectations during the coming year. A dramatically restructured U.S. Stores division is now led by vice chairman John Menzer who previously served as president and ceo of Wal-Mart International. Eduardo Castro-Wright, who served less than a year as coo after being reassigned to the U.S. division in early 2005 after serving as president and ceo of Wal-Mart Mexico, is now president and ceo of the Stores division. Pat Curran now serves as coo following her recent promotion from senior vp of operations. She was one of six executives who held that title previously, but that structure has also changed. There are now five senior vps of operations responsible for realigned territories. The number of regional vps and district managers--now called market managers--that complete the field operations hierarchy was reduced by a third and they now have support teams.

The goal of the changes is to achieve more consistent execution at the store level and that is being supported by a management philosophy Menzer brought to the International division in 1999. He recognized Wal-Mart couldn't run international operations from Bentonville and he gave country presidents greater decision-making authority. That philosophy has now been extended to domestic operations where senior operations vps are essentially ceos of their regions.

The area of change that has generated the most buzz is in marketing. Bob Connolly announced his retirement early this year followed by John Fleming's appointment as chief marketing officer and the subsequent hiring of Steve Quinn as senior vp of marketing. The two executives are from different backgrounds, Fleming was with Target prior to joining Wal-Mart.com where he served as president and ceo, and Quinn ran marketing for Pepsi's Frito-Lay division, and they have already brought change to Wal-Mart's marketing. New ads in chic publications and an early holiday campaign featuring celebrities were firsts for Wal-Mart. Generally speaking, Wal-Mart will be more of a marketing-driven company in 2006 that seeks greater consistency of quality and consumer communication across all merchandising categories.

"Your buyer is going to lose some of their power," Scott told an audience dominated by suppliers at a recent Center for Retailing Excellence conference.

Personnel changes hit the International division as well. Mike Duke will be traveling the globe in 2006 as vice chairman with responsibility for International. He previously served as president and ceo of the U.S. Stores division. Duke and new cfo Wan Ling Martello will oversee a business that now consists of operations in 15 countries. WalMart entered five Central American countries late in the year with an investment in a unique retail holding company and it recently upped its ownership stake in Japan's Seiyu to a majority position.

In addition to those moves, Andy Bond is still relatively new at the helm of Asda following the departure of former ceo Tony DeNunzio earlier this year. WalMart Germany is under the leadership of president David Wild following the resignation of Kay Haffner and it also has a new head merchant in Uwe Klenk-Zilli. In Japan, Ed Kolodzieski, the former Neighborhood Market executive turned international coo, is set to become president and ceo of Wal-Mart Japan later this month when Wal-Mart acquires a majority ownership position in Seiyu. Then there is India, a market Wal-Mart has indicated on numerous occasions it will eventually enter.

There were personnel changes at Sam's Club, too. When former president and ceo Kevin Turner jumped ship for Microsoft, evp of merchandising Doug McMillon was immediately named his replacement. Former coo Gregg Spragg assumed the head merchant job and veteran operator Greg Johnston stepped up from his regional vp position to fill the coo slot. Sam's also brought in Mark Goodman as evp of marketing and membership.