From Merchant to CEO: A Conversation With Latriece Watkins

Good morning, everyone. Good morning. Good morning. Good morning. How are you? Thank you for being here and kicking us off. Happy to. Thank you. And I see we've got some items with us on stage. Never leave home without them. And that's why you're CEO of Sam's Club. So, thank you so much. So, as we heard, you have been at Walmart for about three decades, in major roles including Chief Merchant for Walmart U.S., but running Sam's Club is a $96 billion business on its own, ten times the size of what some Fortune 500 CEOs are running. What surprised you about stepping into a job of this magnitude? first deal a people and maybe that's not a surprise maybe it's more of the revelation in everything that all of us do and so yes ceo is the title but you lead people and i think the thing that's occurred to me most often is the power of people and the clarity that's required in leadership when you are the leader. And so maybe I didn't answer your question because I didn't say a surprise, but I think what is most important is people look to you for clarity, which means you need to be clear. So how do you find clarity? You don't think out loud. I'm not kidding. You've done it. But when you're the leader, people want to know what you think. And if you haven't cleared it up for yourself and you're thinking out loud, You'll confuse them with your thoughts. You know they're just your thoughts. They don't know they're just your thoughts. So take the time, make the time to create clarity for yourself. And it's one of the hardest things to find is time for yourself. But it's required because you can't get to clarity without it. People's leadership strategies with that one. So thank you. Okay, to turn to the Sam's Club business for a moment. You inherited a very ambitious growth plan from your predecessor to double sales, profit, and membership. where are you along that strategy right now and is there anything you've decided to do differently than what set out before you started where i am is that getting to clarity you don't double a business if you don't know how and people need to know what's expected of them now next and in the future to get to that that was a 10-year goal so we can talk about ambition and talk about that goal and have to talk about what it takes to get there what you're going to do and what you're going to stop doing. So I think one of the things that in getting to any bold ambition is required is being really clear on who you are as a company. And so the one thing I'd say that I've spent a lot of time focusing on in the last nine months is who are we at Sam's Club? And do we all agree? And if someone asked us, would we all say the same thing? And core to Sam's Club is items. so I don't leave home without them. We're item merchants. People join a club because they want to buy a thing. They want to buy everything. They want to buy the thing. And our job as item merchants is to create clarity in the assortment, curate the assortment, pick the things that people want. In a club, you also serve members. People join. We ask them to join. They say yes. So we owe them a service. At Sam's Club, we win as a team. There are a lot of us, and we have 603 clubs across the U.S., and to get things done, it takes all of us, and everyone has to play their role. And then, because Sam's Club started as an experiment 20 years after Walmart, we're a little bit like Maverick. We're not afraid to try something different. We're expected to, and we should do that in a way where we try it, fix it, do it, do the next thing. And so I'd say at Sam's Club, the thing that we've gotten clearer on in the time that I've been there is who we are. We're Sam's Club. We focus on items. We owe the member curation. We owe them service. It takes all of us, and we should have a little spirit about it. An example of that experimentation is a technology you have called Scan & Go that allows Sam's Club customers to skip long lines at checkout. what have you learned from deploying it that might be helpful to other retailers figuring out how to integrate tech into their own customers experiences listen to what people tell you they want and listen for what meant not what said people said say they want to shop however they want they say they like ease of shopping they say they like speed what they want is their own terms Scan and Go, which has the highest NPS in our business, the 93 NPS, that means people like it a lot. And when they say they want speed, they want their terms. They want to, if they want to use Scan and Go, be able to scan along the way, use our exit arches and just walk out. They've covered their whole trip. Sometimes they scan after they've put everything in their basket because they realized they could. And sometimes they go to register. Sometimes, most recently, they can tap to pay, which is really exciting for us because we haven't had it for, you know, most retail has had it for a while. We just added it. And interestingly, the feedback I got from members was, well, I like Scan and Go. And the fact is, that's great. And if you like tap to pay, that is now an option. So listening is about understanding what people are telling you, not listening exactly to the words that are said, because when people tell you they want to save time, they may mean lots of different things. Speaking of technology, AI can also make it possible for retailers to introduce dynamic pricing, charging a customer more or less for an item based on what it knows about them. Walmart's CEO has recently said the company would not do that in a letter to customers. Do you think that will always be the case, and even for bulk or business customers like those I think core to who we are is having everyday low prices, and when we manage, we're managing a price and not a person. We won't ever do that. Okay. Commitment on stage at MPW. Absolutely. Tell us about what you're observing from the consumer. Like, what are they spending on? What are they buying? What are they spending? The consumer is discerning, and we listen to them, like I said before, and they tell us what they want. They tell us that they want healthier options. They like protein. They like they you know this They like few ingredients. They like organic. They like made without and fiber. They're buying that I don't know if they like it, but they're buying it One of the items part of why I brought this basket is because I wanted to tell you About well, I wanted to tell you about one item, but I'll tell you about many This is our Member's Mark is the only private brand we have at Sam's Club and one of the things that we did was listen to members and they told us that they don't want certain ingredients in their food and they don't want dyes and so This year we removed all of those ingredients from all of our food and all of our beverages across our private brand And these are examples of some of those items when I say they like limited ingredients Ellie I don't know if she's still here. I was telling her about our members mark popcorn, organic popcorn. So it has three ingredients. It's this big bag. I tried to show her how big it was. You can see it's very big. It's $4.98, and it is a crowd favorite at Sam's Club. So they like in food to make sure that they have healthy options, that they are not only for themselves but feeding their families in that way. We saw that with what people purchased in Back to School. and when they tell us that they don't like something, we find ways to either improve it so that they do like it or make a change. That's what Curation is. When it comes to their economic habits, you've seen their transactions increase, but average ticket size is declining. What does that tell you about the consumer in college? It tells me they're shopping more often and I think frequency is up and while the basket is down, their tickets are up, their overall spend is more, which means people are figuring out what they want from where and the opportunity to give them that at Sam's Club, whether they want to come in the club and pick it up, inside the club, whether they want to pick it up at the curb. And increasingly, one of the things that is fastest growing for us is delivery. And so members are able to get products however they want. So maybe as a family, they come into Sam's Club on Sunday and they shop and they eat in the cafe. and later in the week they decide they want dinner and they choose one of our home meal solutions and they have it delivered. So you can see how those baskets might change over time, but the frequency and interaction with us is increasing. We're going to go to the room for questions in a moment, so if you have any for Latrice, you can start thinking. So Doug McMillan, the former CEO of Walmart, was the one who suggested that you move from Walmart's real estate division to merchandising, and you told him no the first time. So why did you say no and what convinced you to say yes? I said, no, because I didn't know what it was. He said, you should be a merchant. I was like, I don't know what that is. I'd worked in real estate as an intern in the first 10 years of my career. And I knew lots of things about real estate. I'd spent a ton of time there. And I knew the people I worked with. I trusted them. They'd given me lots of opportunities to do different things. So it was good. And then he said it a second time. And I said, this guy's going places. I probably should listen to him. So I went to Sam's Club to be what's called a DMM, Divisional Merchandising Manager in Training, where you manage a portfolio, like a category of goods. I didn't ever do that there. I ended up leading their supplier collaboration program and then went on to Walmart to be in my first core merchant job, running the alcohol business, which was so much fun. Okay, maybe we should talk about that after. Do we have any questions for Latrice? We've got one right up here if we could get a mic. We all ask one and then we can come back when we get there. You made your debut on the Fortune Most Powerful Women list this year, and you are our only newcomer to the list who is on the stage. So we are very excited to have you here. Thank you. Thank you. Yes, well-deserved round of applause. Thank you. I know it's not the most comfortable for you to kind of acknowledge and accept that honor in front of us, but what's your personal definition of power? Oh, I, when I feel most powerful is when I see people I've invested in, see them get promoted. Like I can, like I see all of their faces like running across my brain from very early in my career or very early in their careers to where they've moved now. I think the contributions we make are more than we could individually do they are the things we do with and for other people so power for me is the names of all the people that i could say who have benefited from my contributions and i've benefited from being able to either contribute or get feedback from them. That's what makes me. That's a beautiful definition. I'm so impressed with what you're saying. And my husband, he's retired. He lives in Montana right now. And he's a Sam's Club member. Excellent. We love him. Okay. What I'm so excited about is how you have discerned and listened to your consumer member on exactly how I like to eat. Now, I don't perceive Sam's club that way. Now, I don't shop there often because I'm not there. I go on occasion with him. He's a regular, so I'll let him know that you appreciate him. That I love him. Okay, I will let him know. How are you doing your marketing strategy to reach others to understand that Sam's Club is to create a better health for you? Sure. I think for all of us, you know the thing that is really important, and you do the thing and you tell people but you don't really tell people because we you want the you know the items to stand on their own I think we've got a lot more opportunity to tell the story not just the work that we do on the item and how incredible we think the work is and how much more we're going to do I think we we one you got to do it and you got to be committed and you got to make sure it and then I think we have a lot more room to tell that story I think what we found is we have a lot of people also telling that story we have what's called a Member's Mark community at Sam's Club on our brand and you can join the members your husband could join the Member's Mark community and the Member's Mark community just they give us feedback they co-create products and probably have an item in here that was co-created this little sports drink is a top-selling I don't know if I was supposed to take that out sorry camera guy was created with a member the member said you know this is I don't have my glasses on so I can't see oh it's cherry I can't see look at me this is cool cherry but it's not red because it doesn't have dyes in so the members of our community helps us create items helps us make items better and they give us a lot of feedback and And the gift they get is they see the items come to life. And what happens is those items, the members of our community was 50,000 when I started in February. We have over 200,000 members of our community today. And they love to give feedback and co-create. And the gift they get is they, I think I said this already, they get to see the items come to life, but they become top-selling items. And you've got to have more people buying them than the members mark community for them to become top selling items So that's how we get feedback That's part of how our story gets told but I think there's so much more story to tell so it's a sundial in the shade Great question. I'll go tell my marketer that Thanks, it's nice to meet you lamb chop lollipops we buy them all the time. What do you buy lamb chop lollipops? Did you know Sam's Club had lamb chop lollipops? They're amazing and they're reasonably priced. You can't find them anywhere else. Thank you. We have picky eaters at my house. Question for you on the competition. So I'm a member of Sam's Club. Here's your gas. I go there periodically. I'm a member of Costco. Some people, in our business, we have clients who use multiple providers. What do you think about kind of winning over those clients? Are you okay with them working with multiple providers? providers the interesting thing about people is they want choices and I one of the things that we're thinking a lot about is how to make sure we're always in the consideration set so when you've got to be consistent on the things that you're supposed to be what do well so a great quality lollipop lamb chops at a great price and maybe you'll always get those for me so the core item needs to be important the experience needs to be easy in and out with scan and go or pickup or delivery that matters and then third I think one of the things for me that I understand is people are going to make choices how do I differentiate I think our associates in our club make a big difference the interaction that our members have with our associates and club is it's it's if anything has been something that I didn't expect maybe back to your first question almost surprising is how much our members know our associates and the relationships that they build and the way that they help our members. I think people are going to choose to have lots of places they interact. I want to be great at the things you expect from me. I want to surprise and delight you with something you didn't expect with an easy experience. I want our people to make a difference. Latrice, I'm going to list a few jobs that your predecessors as Sam's Club CEO have gone on to have okay they include CEO of Target CEO of Walgreens and CEO of Walmart the entire thing what goes through your mind when you hear that list they're awesome I know all of them and I worked my job at when I started at Sam's Club um Brian was our CEO um Rods was working at Walmart and moved to Sam's Club when I was in when I moved to out of Sam's Club and into my first core merchandising job John was my boss well he is my boss and he had the job he had the Walmart US job and now has the enterprise job so I work closely with him and then obviously I've known Doug for a long time I think they're incredible people and I think they work really hard creating the clarity I talked about on the on the front side and how you move people and I have learned a ton from them and what does it tell us about what you might do I don't know listen I I am so committed to doing the job that I have and one of the things I tell younger people is it is so important to be fantastic at the thing that you're doing and to be fantastic at that you don't you're not worried about the next thing and so I I think it's great I think I mean I don't know if you know In 42 years, uh, Sam's Club has had a lot of CEOs, you named, I don't know, four or five of them I'm the 14th, so we've had a lot of CEOs and they've gone on to do lots of things and some of them we know and some of them we don't, this one is nine months in and I want a great experience and I want you buying your lamb chop lollipop I want you to buy all these things in the basket like I am focused on being great, fantastic in this job and in doing everything I can to make Sam's Club successful. I think you're one we're going to know, so thank you so much Latrice for being here. Thank you. Thank you. Thank you all.