There’s a large crowd gathered outside the main hall doors like an army of sports fans waiting to enter an arena. Some are armed with mini pom-poms; others are blowing into noise makers and one man has even brought a cow bell. The excitement helps take the chill off the early March morning.
Beyond the doors are enough seats to accommodate the 1,500 associates attending Walmart Canada’s annual company meeting, and a stage that is about to house an impromptu dance session and a boisterous rendition of the big-box retailer’s corporate cheer.
Employees from across Canada are in attendance – some even opted to make their own T-shirts with their store numbers proudly on display – and they’re all waiting to hear from their new president and CEO Gonzalo Gebara.
Gebara has an impressive 23-year career at Walmart. He joined the company in 2000 and has held roles in finance, strategy, e-commerce, marketing and operations across multiple markets including the United States, Argentina and, most recently, Chile.
He joins Walmart Canada at an interesting time. Over the past few years, successive changes have rocked the grocery industry, from supply chain disruptions and labour shortages to skyrocketing inflation and general cost-of-living challenges.
During his 10-minute speech at the annual meeting, which also includes a video call from his wife and kids, who at the time were still living abroad, Gebara shares areas of opportunity for the company and his optimism for its future success.
Canadian Grocer chatted with Gebara a few weeks after that meeting in Toronto to discuss some of those topics and to find out what, if anything, keeps him up at night. This interview has been edited for length and clarity.
You’ve been on the job two and a half months. How’s it going so far?
Very well. I’m excited by everything I’m seeing. Walmart Canada is a powerhouse. It’s not only a big business, but we’re doing very well with the community and with sustainability, regeneration, talent development and diversity. So many things are going on. It’s exciting to be here.
What surprises you about the Canadian market?
A few things, I’d say. I had visited Canada a couple of times, but never lived here, of course, and I just think it’s an interesting country not only because of the diversity of the people, but also how big it is and how diverse its geography is. You have metro areas and you have remote areas. And the thing that I like is, as Walmart, we’ve found a way to connect very well with communities across all of Canada. And the other thing I enjoy about Canada is the culture of embracing diversity and being interested in how anyone can contribute based on their histories. I come from a Latin American market, I was born and raised there, and the differences and nuances are quite interesting to see.
You recently told a parliamentary committee that Walmart Canada is not trying to profit from inflation. How are you communicating this to your consumers?
Well, the first thing is to highlight our EDLP [Every Day Low Prices] strategy. Our EDLP strategy is not just a commercial strategy, it’s basically the way we go to market: by keeping our costs low and by investing all the savings into prices so that we can pass along the savings to our customers. That’s the way we have been doing business forever, not only in Canada but around the world. The way I like to describe ourselves is that we are agents for our customers. We try to go as slow as we can so that we can keep prices low. We do that in inflationary times, and we do that outside of inflationary times – that’s the way we gain trust. And, unfortunately, inflation is one factor we’ve had to deal with over the last several years – there’s the pandemic, war in a certain part of the world affecting supply chain networks and production capabilities as well as supply shortages. So, it’s a combination of many things. And, as we evolve into the next stages of the post-pandemic era, we’re going to continue to work on developing processes and staying close to our customers so that we can keep prices low and continue to execute our EDLP strategy in Canada.
As inflation continues, food retailers are ramping up their private-label offering. What is Walmart’s strategy in this area?
Yes, our private label is a key component of our customer value proposition. I think it builds trust with our customers as we develop products that are high quality. We follow the highest standards together with the suppliers that produce our private-label brands. We have developed sourcing capabilities around the world to make sure we source from the right places in the right way, and we will continue to grow our private-label program. We have great brands that provide “great value.” [Great Value is the name of Walmart Canada’s private-label grocery brand.] I’m playing with words there, but it’s true. Also, we have brands that bring a lot of innovation and I think that’s the right way to connect with customers, by giving them options and giving them choices.
When calls for a grocery code of conduct were renewed in 2021, Walmart made it clear it wasn’t interested in participating. Where does the company stand today?
Well, I’m sure you’ve read or heard my comments during my participation at the committee a few weeks ago. I said there, and I’ll continue to say, we’re happy to participate in the discussions around the grocery code of conduct. We think if it’s the right thing for our customers, it’s great for the business. We recently got access to [a draft code] because we want to be engaged, so it’s a little bit premature to reach some conclusions. The other thing I would say is that we have a strict internal code of conduct, and integrity is one of the key pillars of our culture. We engage with customers and we drive value through this whole chain in a very good way, in a very transparent way. Our associates are committed to doing the right things across the whole chain all the time. What I’ve seen in Canada is that we have a good scenario where we can compete fairly across all the different components of the industry.
Have you read the draft? What are your initial thoughts?
The team has seen it. I haven’t been engaged yet, but I’m going to be briefed shortly. Our first impression is that it’s going in the right direction.
Jumping to e-commerce. In 2020, Walmart Canada announced plans to invest $3.5 billion over five years to improve service in stores and online, renovate 150 stores and build two distribution centres. Where are you on this journey?
We’re in the middle, not in the middle mathematically, but rhetorically in the middle of the journey. We’ve done quite a few of the things we said we would. We have invested in upgrading our supply chain network, we have opened distribution centres of different capacities, fulfilment centres for e-commerce, high velocity distribution centres and refrigerated supply chain networks. Our business is growing and we need to make sure our supply chain is developed to serve our customers in the way they want to shop with us. We want to be the best option for customers however they want to shop, whenever they want to shop. We’re building the network so we can support that the right way. That’s underway and we’re going to continue to invest in the supply chain network because it’s a critical component of that ability to deliver that value. Technology is another area where we’re investing and over-indexing compared to previous cycles, I would say And we will continue to do that. There’s a lot of value to unlock that we can deliver through additional technology and digital capabilities, not only in e-commerce, but also enhancing the experience in stores. Store remodels are also a key component of our investment program. We think updating and upgrading our stores to fulfil our customers’ needs when they choose to visit our stores is very important.
You mentioned digital capabilities, can you provide some examples?
The options are multiple and I couldn’t even start to describe all the crazy ideas we have around this, but one thing is customers can check prices using the Walmart app without the need to use a price verifier or go to the checkout. So, making our customer’s life easier is something technology is allowing us to do. Checking prices is just one of the many examples where the technology, and the technology built into cellphones, is going to bring new options and new experiences to our customers.
Self-checkout is an in-store tech that’s growing. How do you balance modernization against alienating those customers who aren’t comfortable using this kind of technology?
It goes back to the concept of choice. We need to provide choices and options to our customers. We have our own models on how many self-checkouts we need to have versus the traditional checkouts. It’s on a store-by-store basis, and we continue to learn based on customer behaviour and customer experience. We take all of that into consideration to define how many of each we open. The whole point is it must be a seamless and frictionless experience for our customers, whether they choose to have a regular checkout or whether they choose self-checkout.
How do you combat the perception that more in-store tech means less customer service?
I think we should be very clear with the customers, again, giving them options. It’s not one way or the other. It’s one way and the other so that you can choose as a customer. I think, in current times, giving customers more freedom to do their shopping the way they want is a point of differentiation. Servicing our customers is what we are here for and we will continue to provide a friendly service, and availability of products, and cleanliness, and easy and safe environments to shop. That’s never going to change. We are just complementing that with technology to make it easier for our customers to go through our stores.
More online shopping means more consumer data. What has Walmart learned about its customers over the last couple years from the increase in online shopping?
It’s interesting because when we get into data, I always reflect on the fact that Walmart has been a pioneer on managing data going back to the ‘80s. We have been sharing our sales information with our suppliers so we can build better networks, and sharing that information has been a big part of how we run our business together with our suppliers. Now, thanks to technology and to digital capabilities, we can take that one notch higher and better understand [shopper] behaviour so we can deliver on our customer value proposition faster and, again, get better options for our customers to solve their problems. The whole point of getting more information and data is to be able to better understand customer needs and customer expectations and adapt the way we deliver our customer value proposition so we can solve our customers’ needs.
Walmart recently launched Walmart Rewards in the U.S. as part of its paid subscription service Walmart+. Are there plans to launch these or similar initiatives in Canada?
I’ll start with the obvious, which is each market has its own nuances and even though we have lots of similarities across the markets, each market runs their business depending on what’s right for each market. The U.S. has done quite a few developments lately in that arena, and we have done a few as well with our Walmart Rewards [Mastercard credit] Card. But, we are not going to copy exactly the programs in any of the markets. We’re going to continue to try to understand customer needs, and develop the programs based on the information that we gather and the intelligence that we have behind it.
It’s a combination of different things. There are changes in the design and in the flow of how the categories are laid out and the adjacencies. There’s a lot of new technology related to equipment and making sure we have the right equipment and refrigeration so we can continue to grow the grocery business. Also, setting up a nice environment for our apparel, for our housewares and for our home products. We have great assortment in those categories and we want to continue to invest in the in-store shopping experience around those categories as well.
Last question. What keeps you up at night?
Well, I’m lucky that I can sleep very well at night. I have a very strong team, we are 100,000 [associates] strong in Canada. We wake up every morning thinking about our customers and how we can deliver value [to them] and solve their needs. But there are a few challenges. How can we deploy our ideas with speed? It’s a very intense, competitive landscape and we want to make sure that we remain as relevant, or even more so, for our customers. So, moving with speed is very important to me. Making sure we provide our teams with the right environment to continue to learn and upskill is another key priority for us. And, deploying technology to improve our customer value proposition and our customer experience in stores and online is another area that’s on my mind. [We’re] working on all those things, but I’m sleeping very well, fortunately