Last week I heard Craig Herkert speak as part of the Wertheim Lecture Series at the Business College at FIU. Herkert is the CEO of Wal-Mart Americas, which includes all countries in the Western Hemisphere except the U.S. and Canada and has annual revenue of $49 billion. In Latin America Wal-Mart focuses on the low income segment, which according to their estimates totals 300 million or the rough equivalent of the U.S. population. This segment excludes the poor, who can not afford to shop at Wal-Mart.
What was interesting about the speech was that whatever subject Herkert discussed--market positioning, green initiatives, working with indigenous suppliers--he always framed the issue in terms of product development and the customer. I have seen many, many retail CEOs present their companies because I used to present at quite a few retail industry investment conferences, but I have never seen a CEO who so consistently brought a presentation back to product and target customer.
Wal-Mart has been successful for so long because their CEOs are always "merchants", the executives that select, source and negotiate the purchases of products for the store floor. Herkert follows in this long tradition. Must be easy to work for him--just think about how every decision relates back to the customer. Not a bad rule for any business.
In an interesting response to a question, Herkert said that Wal-Mart is putting on a big push to expand their banking and financial services in Latin America because their clients are under served in this area. He said Wal-Mart had the lowest charges for a money transfer to Latin America. Nice business--two customers--every retailers dream. One customer has to walk through a Wal-Mart to initiate the transfer and the recipient has to walk through a Wal-Mart store to pick up their money. Also, Wal-Mart has 300 bank branches in Mexico, which makes them a formidable competitor there already. Look out Latin America, Banco Wal-Mart is coming and they already have brand recognition, locations and a reputation for providing low cost necessities to the underserved.
Maybe Wal-Mart would like to takeover running the U.S. government social programs for the under served! Everyone could become a Wal-Mart supplier ;)
