Kathryn McLay, President and CEO, Sam's Club
Interviewer: Beth Kowitt, FORTUNE

MPW Summit 2020: Tales from the Front Lines

Kathryn McLay, President and CEO, Sam's Club

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Running Sam’s Club was already a massive job. Then the pandemic hit. We talk with Walmart’s Kathryn McLay about navigating her business through uncertainty and how COVID-19 is transforming the retail landscape.


Hi, I am fortunate Senior editor and M. P. W. Summit co chair Beth Co it. When the pandemic hit the news in habits of shoppers changed at a dramatic pace. Sam's club already an innovator and cloud commerce and mobile technology quickly pivoted, shifting the way it does business. Ceo Catherine McLay was only a few months into her job at the helm as the covid prices unfolded, Cat joins us now. Hey beth how you doing? I'm well, thank you so much for being with us. We really, we really appreciate you being here and I thought it would be helpful to get things started just to give a sense of the scale of your business. So Sam's Club, If it were a standalone retailer would be the 10th biggest retailer in the us, you'd be the number 58 on the Fortune 500. So, so this is a big, this is a big job and you took, you took over in November. So tell us a little bit about what you thought was going to be the hardest, the hardest piece of this new, this new role. It was interesting because I started in november and if you think about that time of year for retail, I mean that's like, that's showtime, you have thanksgiving, you've got like friday cyber monday if you lead into christmas, so I did kind of feel like I've been thrown in the deep end, like this was the moment of the year, um and then I kind of got through christmas and I was like, okay, he's going to take a step back. And then actually I ended up having this great big kind of change in my leadership team in january and february, so I thought, okay, we're back in the deep end, and then I thought, okay, we got through that and I'd set up my team and we're kind of going kind of into february and March and then the pandemic hit and all the rules of the game changed. So actually looking back those deep, like jumping in the deep end of the pool actually feels like it was kind of more the shallow end really in preparation for kind of what we hit in March. So how, tell us a little bit about how you had to shift your priorities, you know, what has really come into focus for you as you've dealt with the pandemic? No, the economic uncertainty, the fight for racial justice, you know what, what's justice? Yeah, so I'd probably break that into a few different groups. So I think primary through all of the safety of our associates and safety of our members was like the first thing that we had to kind of anchor around. Um, and so there's a lot of work, very tactical work in that first kind of few months to make sure that we were set up to be able to be kind of have an environment where people felt safe and there they were able to thrive. Um, but during all of that to were very intent that all of this disruption actually gave us an opportunity to kind of accelerate our strategy. So going into the year, I knew that I wanted to grow membership, I knew that I wanted to um fast forward kind of on the curbside and some of our omni um, areas. And I also knew I had this great product called scan and go which enabled contact less payment, which was which I got amazing ratings from members on. And so I think my three kind of ambitions and I kind of, I think the pandemic gave us some momentum behind our strategy. That was a little unexpected. So instead of creating the momentum, we were on the front of the wave and it was like, okay, so how do we use this momentum to really push forward? So I think like that was the subtle ship. And then the other part is from the moment we went to work from home, we had to come up with very different ways of working. And so as a new ceo with a relatively new leadership team, we set up this kind of rhythm of meeting every day for an hour and a half and probably for the first four weeks. That was that was really primary in making sure that we're aligned, We're making quick decisions and that we were like, I guess all on top of what we needed to know. And then as we kind of passed through the four weeks, we dropped off some of those meetings, but we've, we've retained that way of working. So we meet three times a week, it's the key leaders of the business. No power points, you know, agenda just like, okay, what are the things we need to make decisions on and as a leadership team that has really built trust that we're linemen and we move fast. So what, you know, you're back, I know they're doing store tours. Why are these so important? And give us a sense of the kinds of things that you've learned that you've, that you've implemented as a result of kind of being back on the back on the ground. Yeah, So I think store tour is one of the most powerful tools you have in retail. And so I think the day we decided to move as a company to work from home, I actually got on a plane that day and flew to Chicago and I toured and I'm so glad I did because there's no way of imagining what that was like in the retail outlet unless you were standing in there, I was standing in a club in Chicago and I mean that was in the heavy period of panic buying and I have to tell you they're standing in there amongst that with so many people in there and they, I guess the anxiety on people's faces as they were concerned about what the future was going to look like and their ability to be able to get access to product. Um, Normally, when I tour, I'm touring to look for with the opportunity, how I grow the business. Like, you know, what, how do we help this club manager really kind of move forward on that day? Um, I had intended to tour familiarity, right? How do I make sure that the clubs know that I'm here with? I can really kind of observe and learn. I actually think the first half an hour of that too, I was in the parking lot collecting cards because I mean there was so many members, that was what we were short of. So I was out there grabbing carts and pulling them into the vegetable, because, you know, at the end of the day, you know, that was the most important thing that they needed in that club at that moment. But you know, as we've moved through the month of the pandemic, I mean a lot of touring has given me insights into how we've needed to adapt to change. And you know, we I think from that first couple of weeks, one of the things that was really important to us was how do we build empathy and kindness into all of our communication? Because what we're seeing out in the community was that people were saying there's a lot of anxiety, there was a lot of um uncertain, yeah, uncertainty about the future. And so we said as a leadership team, okay, let's let's see that our voices one that helps bring unity, that helps bring hope, that helps people feel reassured. So there's so many, like, wonderful insights that you glean from being out in the field that you can bring back and then help, kind of um, informed direction. Yeah, so I think it's clear that, you know, you mentioned at the beginning how well Sam's Club is doing, a lot of big retailers are really just clearly going to be the winners in this, but I know that a lot of your customers are small businesses. I mean, do you how do you think of that and worry about that as you think toward the future? And what does post pandemic world will look like? Yeah. Yes. Small businesses really vital important. Part of SAM's club business and what we really saw in those first few months was that their business is contracted and in some places like those businesses were in hibernation. And so we've kept very close links with our small business members. Um we joined forces with Lisk on how can we set up some grants to support them uh, with the local initiatives? And then we also, we had every single club manager ring their top 50 small business members and just talk to them about, Okay, as you're thinking about setting your business back up, what do you need? How can we help you, how do we get you access to plexiglass? How do we get you access to masks and gloves? And what else do you need? Because I think the whole economy grows when small businesses strong, so we really wanted to be an enabler to help support them. So I asked your colleague, Judith McKenna and um Home Depot's Emory Campbell this question and I want to know that came from you. How are you expecting retail to change coming out of this? You know, what, what is permanent and what is just sort of a blip urged friend in your view, you can look different. Yeah, I think there are some things around the acceleration to Omni, which I think will remain. I think as I look at um during the pandemic, we moved to kind of curb side because we're hearing from our members, okay, you've got club pick up, but I still have to come into the club to get it and that's actually not that convenient. I want to be able to do it curbside and remain in the remain in my vehicle. All of that move to curb side I think is just giving convenience to the member that that will continue to grow and thrive. I think contact less payment. I think that is going to endure. You know, we have this product called scan and go, which is effectively like purchasing online, but you're in the club so you're scanning the item's as you're walking around and then you just swipe for your transaction and then you bypass the whole front end and you head out the door. And I think that form of like kind of being in control of your, of your customer journey. I think it's important to members. So those innovations I think will remain. Um, but I also think businesses have changed, like at the moment, like we're working remotely and that is enabling us to be able to go fast and it's enabling, you know, a degree of productivity, but I'm also seeing green shoots of innovation kind of coming from the ground up. So I want to make sure that we keep those parts that are really successful about this model and make sure even when we return to some quantity office environment that we that we don't lose, that, can you give us an example of that maybe some sort of innovation or something that you've seen crop out crop up out of all this that you think could take off? Well, I think two things recently which I was really excited about and both of them came from just people in the organization that saw a problem and they wanted to solve it themselves. So it's not even like it was on our way before we tasked someone to do it. The first one was, I've talked a little bit about scan and go, um, one of the things that we've struggled with it, sometimes people don't want to have to download, download the app onto their phone. And so this person had this idea of, well, what if we made it like a digital demo? So when you're in the club, you could can a QR code and it actually enables you to try an instance of scanning, go without downloading the app. And so this whole kind of digital demo kind of thought has kind of grown through kind of covid. The other one was our associates. When they come into the club have to do health screens and they have to do a temperature check. Well, you know, an associate was watching this and you had this line of people waiting to go through the health rain and b b um temperature checked. And they're like, we could integrate that using tech, but when the person scans on, they can go to a monitor and do a voice prompted scan, do a thermal scan on their risk of the temperature and it is totally unaided and you know, it's quick and you still get all the data and connectivity and that's just somebody standing there going, I see a problem and I can fix it and I love that. So this is this is the future. I like that. Um so I want to talk about your background for a second. So you joined walmart five years ago, um you moved from Australia, your native Australia. Probably people can tell uh for the job what has been the most difficult thing for you to get used to moving to the US. Either personally or professionally. Yeah, I think the thing that has surprised me most is how beautiful Bet and Bill is. So I came from Sydney, which is right on the coast. Um six million, roughly. About 5.5 million people. I lived in a small town in new Zealand of about 15,000. And I was coming to Ben villain, Bentonville is actually, I said the best of both worlds. So you have the safety of like this small town feel where my kids can kind of ride up and down the streets and then you have all the culture and the arts has been invested into this kind of northwest Arkansas area. That has been an absolute delight. The part probably the professional challenge has been how to get your head around operating on a scale, like walmart, like, I don't think anything can prepare you for that. So I had come from a company that had like, it was a $60 billion Walmart and it was like, Oh my goodness, this is a scale that I had not appreciated and and there's a different style of working to be able to work at that scale. Tell me a little, just give me a sense of how you do that. How did you wrap your head around that and, and kind of figure out how to really work in that environment? Yeah, so I think the benefit I had from coming from, a smaller retailer was, I knew how all the pieces fit together and so that enabled me to be able to see up and downstream consequences, but you have to go deep and you have to know who to draw in when you're operating at scale because, you know, a slight design fork and have exponential kind of impacts. And so you really need to embrace the complexity and make sure you're designing in a way that is going to be seamless when it gets executed. Great. Well embracing the complexity, it definitely seems like the message uh, for the moment. So Cat, thank you so much for joining us. You really, really appreciate you being here. Thank you Beth was lovely.