Walmart CEO Doug McMillon went on CNBC yesterday to say that he believes that current inflation rates are an opportunity for his company because it will allow Walmart to double-down on its longtime low-price approach.
“That’s our purpose,” McMillon said. “We save people money and help them live a better life. Those are the words that came out of [Walmart founder] Sam Walton’s mouth. He loved to fight inflation. So do we.”
McMillon said that Walmart - which yesterday said that it has a high in-stock position - "is absorbing rather than passing on some of the higher costs that have come from fuel, shipping, labor and more - even as that weighs on short-term profitability, he said. Its cost inflation is higher than its retail inflation."
And, McMillon said, “We’re proud to try and hold prices down. Our conversations with suppliers today, tomorrow will be ‘How can you help us roll back prices and swim upstream and be different than everybody else?'"
- KC's View:
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One of the points that ste story makes is that Walmart is trying to strike a balance between "delivering for shareholders and staying to true to its discounter roots for customers."
The simple truth is that if you deliver for customers, you're going to end up delivering for shareholders. It can be a longer game, but it is the way you win.
Investors who do not understand that retailing is a matter of having a consistent and long-term value proposition that translates into brand equity that supports the extended health of the banner … well, they probably should best in another segment of the economy.
