Scott: Don't blame us for company failures
January 20, 2004,
New York — While touting new opportunities globally — particularly in Asia — Wal-Mart President and CEO Lee Scott told attendees at the National Retail Federation's convention that the demise of Pillowtex wasn't the giant retailer's fault.
"Unfortunately, even with the purchases we made from an organization like Pillowtex, which were hundreds of millions of dollars — paying higher prices than we would have offshore — when Pillowtex didn't make it, Wal-Mart stores became the reason."
Quipping that he might sound "defensive," Scott said Wal-Mart wants to support U.S. suppliers and will continue to do so, paying more for their goods if necessary rather than sourcing overseas. "But the truth is that the world is changing and it will continue to change in such a way that, at times, is uncomfortable for all of us."
He also argued that while it's easy blame the loss of U.S. jobs on China's low wages, that argument doesn't take other factors into consideration, like the loss of lead time and the transportation costs. U.S. companies are heading overseas because of other areas such as healthcare, worker's compensation, trade agreements and legal issues, he said, and the U.S. government needs to take more responsibility.
The retailer is not positioned in a way to tell who is dumping and who isn't, Scott said. "We see that as a responsibility of our government to make those decisions, not ours."
Besides China, Scott said he's excited about the opportunities in India, Argentina and Brazil.
Germany has improved dramatically, he said, after what he called an "embarrassing" experience. "We lowered 7,000 prices in one day and didn't know the cost of the products."
Scott also addressed RFID (Radio Frequency Identification) technology, which allows for the wireless transmission of data, and which the company is requiring its top 100 suppliers to implement by next year.
The benefits of RFID will be seen in the long term, he said. However, once implemented, it will drive time out of the replenishment process and costs will go down. There will be no need of storage areas or markdowns because there will be no excess stock, and it will be able to track product throughout the chain.
Right now, Wal-Mart's general merchandise turns six times a year, or an average of 60 days — even longer if it takes out fast turners such as diapers — and RFID has the potential to change that.
"If doesn't do anything for customer, we're not going to do it," Scott said.
He added that if a supplier had a hard time meeting the 2005 deadline, it would not stop doing business with it.
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