Mega-Merchant With Grass Roots

Discount Store News, Dec 8, 1997 by Mike Troy

The Power Merchants: Lee Scott, Wal-Mart

Mike Troy

Talk about job security. Wal-Mart executive vice president of merchandising Lee Scott has it, and it's not the kind that comes from being head merchant of a retailer whose annual sales this year will top $115 billion.

'I've tried to keep my forklift driving skills in hand in case sales slow down,' said Scott, who at one time ran Wal-Mart's distribution and logistics department.

It's unlikely he will need to fall back on those skills considering the retailer's recent sales and profit growth, but the fact that he references the possibility reveals much about his personality, how he views his role and a healthy awareness of any retail company's mortality, even Wal-Mart's.

In many respects, Scott embodies that set of beliefs and business practices known collectively as the Wal-Mart culture. He occupies one of the most influential positions within the world's largest retail organization but remains fairly level-headed.

When accolades are directed his way, he credits those he works with for achieving the results. He recognizes the future is more important than the past, and despite WalMart's successes to date, he focuses on where improvements can be made. He believes achieving future goals will require a risk-taking, entrepreneurial attitude and, above all, places an emphasis on the customer and the need to support store-level associates.

'We are focused on the customer and focused on helping the stores,' Scott said. 'We don't have any perception that we in the merchandising department are somehow the ones driving this whole thing. We understand it is driven at store level. It's the store associates who come into contact with the customers. They are the ones who make the difference whether this company is successful. Sam Walton knew it, and we know that today.'

Armed with his beliefs and an understanding of what it takes for Wal-Mart to be successful, Scott assumed his present merchandising role in October 1995. In the intervening two years, the company has accelerated its sales growth, improved profitability by making massive cuts in inventory, increased training for the buying staff and through store design and packaging initiatives tried to simplify life for store-level associates. Scott has also sought to provide consistent and clear direction to the buying staff, while encouraging them to be what he calls 'intelligently aggressive.'

Scott wants buyers to take chances and be willing to fail. Such an attitude is a basic tenet of the Wal-Mart culture and necessity for its future growth. It's also something to which Wal-Mart has paid more than lip service. Buyers were actually given a pallet on which to risk failure in late January when Wal-Mart opened a concept discount store in Boise, Idaho. It featured a lot of new fixtures, category adjacencies and cross-merchandising. It wasn't revolutionary stuff, but the store offered evidence of Wal-Mart's willingness to experiment with merchandising. More experimentation came later in fall when four more concept stores were opened in October, including units in Portland, Ore.; Covina, Calif.; Belen, N.M.; and Fayetteville, Ark.

According to Scott, WalMart will look at what it has learned from its concept stores and how those lessons should be applied to new openings in 1998. Sometime during the year, Scott said, he plans to encourage buyers to think outside the box and develop a store where hard choices and radical changes are necessary for space allocations of certain departments.

Making sure the buying staff is willing to stick out its neck and risk failure is a challenge Scott addresses by making sure failure is about learning, not about taking blame.

'What stifles the willingness to fail is the amount of criticism you give to failure. If people think about something, think through it, lay out their plan and execute to a plan and then [if] it fails you have to sit down with that person and talk through why it failed and where we went wrong,' Scott said. 'It is usually a great learning experience, and they won't feel like they have been chastised or the penalty was so high they will never take another risk. You can't sit there and berate people for failure or you will cause them to never step out on that limb again.'

Risking failure is a subject Scott knows well. He stuck his neck way out when an October 1995 management restructure shifted him from logistics to merchandising. Scott was in Europe looking at distribution centers and logistics technologies when he was notified of the change. It was a Thursday evening, and he had returned to his Paris hotel room after making a presentation to find a fax from chief operating officer Don Soderquist. After visiting the Louvre museum the following morning, Scott called Bentonville where it was 7 a.m. and was asked if he would take responsibility for merchandising.

'My reaction was one of excitement because it was a great opportunity, but also one of understanding the limitations that I would bring to the job because of the lack of merchandising experience that I had,' Scott said.