Detail key to retail success

Wal-Mart's new China CEO is a stickler for getting things just so

New Zealander Greg Foran caused quite a stir by visiting a Walmart store in Wangjing, a large neighborhood in northern Beijing.

The new executive for the China unit of the world's largest retailer by sales is tall, fast-walking and sharp but down-to-earth. In his first meeting with Chinese media representatives since his appointment in March, Foran chose to invite reporters to visit one of his stores before being interviewed.

He checked on the merchandize attentively and offered opinions in a gentle but firm tone.

A retail veteran of 30 years, Foran prioritizes the Wal-Mart Stores Inc (branded as Walmart since 2008) motto that "retail is detail". He practices the concept in multiple visits to stores, often appearing unannounced.

Having been appointed as the new president and chief executive officer for Walmart China only seven months ago, Foran makes such visits three days a week, having been to 240 of the 380 stores in the Chinese mainland so far.

On one shelf, a dozen bags of deodorant that appeared too heavy for the hook caught his eye. Foran told his associates to get the packaging redesigned.

At sections where some of items were out of stock, he asked for them to be refilled. "When winter comes, there will be a big demand for heaters and electric blankets," he pointed out.

Passing by a pile of neck pillows, he noticed the bar code was hidden in the packaging. Such packaging will prolong customers' check-out time. He said to the manager of the store: "How is it scanned at the checkout? This is an example of things not being packaged properly".

Pointing at a surface covered with out-of-season clothes, Foran was unhappy with the display. He said: "You need to be careful how much you put on the table. It is hard to select an item even if the price is good. It would be better to leave it on the hanger on the rack with a big price on it."

Turning to another counter with discounted goods, Foran formed a different opinion, saying: "When the price is very low, people will go to the counter."

The new CEO has quickly gained respect from his Chinese associates who yearn for professional guidance and advice in their daily work.

"His observations focus on detail and operations," said Lucy Lang, district manager of Walmart Beijing. "He looked at things in a way that customers look at them. He has very high standards for quality and price. He is very professional when it comes to making a judgement. And he is nice."

The most frequent questions he raised focus on a good mixture of margins and sales. But most importantly, Foran wants his associates to understand what matters to Walmart.

"The more they understand about that, the better decisions they make about what items they are going to sell in the store," he said.

His predecessor as head of the Chinese unit, Ed Chan, quit in October last year amid a pork-labeling probe that temporarily shut all 13 of the company's stores in Chongqing municipality in Southwest China.

Walmart said the reason it wanted to have a new leader is because it wants to take the stores to a new level, one of "excellence and being able to deliver on food safety and value" in even better stores, Doug McMillon, Walmart International president and CEO, said in February.

The company's fast expansion strategy in the past few years did not work well. Last year, Walmart China ranked No 4 in the top foreign chain retailer list in terms of revenue, after RT Mart, Carrefour SA and Yum! Brands Inc. The list was published by China Chain Store & Franchise Association in May this year.

To regain a balance in development and the confidence of staff and customers, Walmart is eager to showcase its return to "American values".

Unlike his predecessor, Foran does not have a Chinese face. But he brought the same Walmart culture that values "servant leadership".

At a meeting with Chinese employees marking the start of the year, he dropped down on one knee as a demonstration of that concept. "I was probably feeling tired after a long flight," he joked.

"We prepare fantastic merchandising in a clean way with the right display and excellent fresh food. But service at the checkout is important. A customer's total experience of a store can be affected by one final experience as he or she leaves at the checkout. We must have wonderfully trained and engaged associates. Servant leadership is the way forward for them to achieve that," he said.

Foran began his career with a part-time job stocking shelves at Woolworths in Australia at the age of 15, ultimately leading to his most recent role as head of Woolworths' supermarket division.

His career includes several senior roles within Woolworths including general manager of Big W, the discount department store division and Dick Smith, which specializes in consumer electronics.

In Foran's opinion, to lead the operations in the fastest-growing market in the world is "the opportunity to make a difference".

Walmart entered the Chinese market in 1996 and had 370 outlets by March. The market contributed less than 10 percent of Walmart International's sales revenue. China was one of the contributors to the highest dollar increases in Walmart International's net sales growth in 2012, which grew 15.2 percent to $125 billion in net sales.

Early this year, Walmart announced it will remain committed to allocating 60 percent of its funding to developing higher growth markets and 40 percent to developed markets, according to McMillon.

With high hopes for the Chinese market, Foran said he is hearing really positive things about Walmart in China and it will continue to open new stores - around 30 a year - and build new distribution centers and Sam's Clubs, named after founder Sam Walton, who opened the first store in 1962. Sam's Club is a chain of warehouse clubs that sell groceries and general merchandise, often in large quantities. Sam's Club outlets are "membership" stores. It is also the biggest private employer in the world with more than 2 million employees.

The opening of new stores in China is a reduction on the approximate 40 a year previously. Foreign retail giants in China are experiencing difficulties in maintaining growth. British retail giant Tesco Plc, the world's third-largest retailer by sales revenue, has closed four stores in China.

Thanks to the weak European economy, Carrefour SA, the world's second-largest retailer by revenue and owning around 210 stores in 64 Chinese cities, has also pulled back its fast expansion plans in the nation.

Zhao Ping, deputy director of the consumption and economic research department of the Chinese Academy of International Trade and Economic Cooperation, said it is smart for multinational retailers such as Walmart to slow down their expansion in China. She cited the tough global economic climate and weak growth in the Chinese economy and consumption as reasons.

As the economy tightens, Walmart's value in helping customers to save money presents a great opportunity for Walmart, Foran said.

However, he insisted: "We must never compromise the quality nor our price. We must always try our best. We must have low prices." Foran said he thinks the company's strategy of "every day low prices" and "every day low costs" is one of the key drivers that helps Walmart beat rivals.

Being a foreigner could be an advantage as Foran listens and observes. In addition to close research of his competitors, Chinese and foreign, Foran is also trying to understand local customers.

He has spent time shopping with three Chinese families. He found they live in a quite small apartment so getting out of their homes and going shopping is a social occasion. The discovery has convinced him of the value of running physical stores as well as e-commerce stores.

The move also helped him better understand the buying patterns of Chinese customers, for example, why fresh food is more important in China than general merchandise.

"The average size of an apartment in China is smaller than in the United States," he said. "People in the United States buy a lot of stuff because they have a lot of space. Fresh food in China is much more important than general merchandise."

Enhancing localization is a key to success for multinational retailers, which have a relatively low share of the overall retail market in China, said Zhao.

"Retail business operators face consumers directly. The more a company knows about the local market, the better they know what products and services they should provide, and the higher the customers' satisfaction."

Foran is proud that his job can help Chinese families to save money.

"It would be a fantastic legacy for Walmart to help millions of people to save money so they can live a better life. I'd like to be part of that," said Foran. "So that is what makes me get out of bed early and go to bed late at night."