A top executive of Wal-Mart Stores Inc. told local business leaders Monday that returns from the company’s small-format stores have recently become as profitable as those of its well-known supercenters.
The changing business model means that Chicago is the best venue for Walmart’s growth, said Thomas A. Mars, executive vice president and chief administrative officer of Walmart U.S., during the Metropolitan Planning Council’s annual luncheon at the Hyatt Regency Chicago.
The climate also gives Walmart the incentive to launch in Chicago its nationwide minority supplier program, Mars said. The program aims to increase the diversity of the retailer’s suppliers, primarily in food, general merchandise and professional services. No launch date was immediately available.
Mars didn’t say it aloud, but observers said after his presentation that Walmart undoubtedly perceives Chicago as a more hospitable political climate, too, despite continued protests by labor unions and some residents and politicians about its worker policies.
Jesse Ruiz, vice chair of the council, led the discussion, titled, “What, Where and How? Rethinking the Retail Landscape.”
Walmart operates 59 stores in the Chicago metropolitan area, including one in the Austin neighborhood inside the Chicago city limits. The Bentonville, Ark.-based Walmart has announced eight other Chicago sites where it plans to open full-size and smaller-format express stores, and intends to eventually operate dozens in the city.
“This second city thing? We didn’t get the memo,” Mars said. “We don’t buy that and never have.”
Statewide, Walmart operates 180 supercenters, 28 Sam’s Clubs and five distribution centers, and employs 50,166, making it one of Illinois’ largest private employers.
In Chicago, Walmart will use its experience operating stores in other urban and under-served areas and intends to reduce the cost of living for nearby residents, Mars said.
“We want to go where the customers need us the most,” he said.
Diversity—whether in the communities that Walmart serves or its internal operations—plays a part in the retailer’s expansion plans, Mars said.
“The most important epiphany I’ve had in my adult life is the way we look at diversity,” he said. “We look at it as a way to improve talent—you start to see the world in a different way.”
Mars, a former general counsel for Walmart, helped lead an effort to transfer $60 million of business to minority and female partners in law firms with which Walmart does business.
Mars pointed out that Walmart CEO Bill Simon attended Mayor Rahm Emanuel’s meeting earlier this month in which supermarket executives pledged to build new stores in so-called “food deserts” as part of the mayor’s action plan. Food deserts are areas where residents must make an effort to find fresh produce and affordable groceries, including having to drive out of their neighborhood or take a cab or public transportation to get fresh, affordable and healthy foods.
Walmart’s expansion here will enable local residents to see greater evidence of its six-year-old efforts to save energy and improve sustainability, Mars said.
The retailer has changed its packaging and the way it packs its trucks, developed a hybrid tractor-trailer and has installed solar roofs on some of its stores, he noted.
People hired by Walmart will benefit from another new program in which Walmart gives its employees, called “associates,” credit toward achieving an associate’s, bachelor’s or master’s degree, Mars said. He said the educational program is part of its efforts to address urban issues.
Source : Chicago Sun-Times