After Her First 100 Days, The Future Looks Really Bright For Sam’s Club CEO Kath McLay

Sam’s Club has been on an upswing of late. According to Statista, comparable store sales increased roughly +4.0% from 2018 through 2019, and, from an innovation standpoint, Sam’s Club has also embarked upon a number of initiatives that have set it apart from the rest of the industry. The most significant of which was its groundbreaking Sam’s Club Now concept store in Texas (shown below).

For all intents and purposes, it has been a prolific last few years for Sam’s Club, which is why it was also no surprise when the former Sam’s Club CEO, John Furner, was named the new  President and CEO of Walmart U.S. this past November either.

The bigger question was really — who would replace him?

Enter Kathryn McLay or, as the folks at Sam’s Club like to call her, “Kath.” 

McLay assumed the CEO role immediately after Furner, but talk about a baptism by fire. Not only did McLay have big shoes to fill, but, by the end of her first 100 days on the job, she would also come head-to-head with a leadership challenge that no one saw coming and for which there was no successor’s handbook — COVID-19.

And, yet, despite it all, Sam’s Club somehow over these past few months has thrived, unleashing new innovations to the market in record time, like contactless concierge shopping for seniors. There is either something deeply ingrained in the culture of the company or something about “Kath” herself or both that continues to set it apart. 

So, I decided to find out what it is. 

In her first public interview since becoming CEO, I sat down with Kath McLay to talk about her first 100 days on the job. We discussed what it has been like for her to face such an unexpected crisis, how her priorities have changed as a result, and, most importantly, what, if anything, is the special sauce that makes Sam’s Club one of the most innovative retailers in America. 

You can watch the full interview below and decide for yourself, but overall there were five key lessons from the interview that show why Sam’s Club is likely in very good hands with Kath McLay going forward:

#1 — She has a great pedigree

McLay has been in retail for over 20 years. She first cut her teeth in retail growing up in Australia, when she was by her own account just “14 years and 9 months” of age working for a butcher on Thursday nights and Saturday mornings “handing meat over the counter.”

Not long after her seminal deli meat slicing experience, McLay later started her more “formal” (my quotes) retail career with Woolworths Australia back in 2001. There she held numerous roles, mostly focused on auditing, cost control, supply chain, and operations.

Then five years ago Walmart came calling and recruited her to Bentonville, where she took a role in strategy, then moved into supply chain, and later became the Head of Walmart’s Neighborhood Markets.

All in all, McLay’s resume reads bi-hemispherical, bi-continental, and bi-large scale mass retailer from head to toe. Classifications that, taken together, are hard to find.

#2 — She’s not a merchant, but she gets Product

The strength of her resume notwithstanding, however, one missing item does stand out. McLay has never been a merchant.

But, wait for it, this lack of experience is actually a complete blessing in disguise because she understands something far more important — not the small “p” products on shelves, but, rather, the big “P” meaning of Product, as in the Silicon Valley discipline of Product Management.

Merchants are a dime a dozen these days. The days of the merchant princes, like Mickey Drexler or Les Wexner, leading retail companies are over. 

In the olden days, picking products better than the next guy or gal was all that mattered because consumers had no other options. But, in the age of 21st century omnichannel retailing, products of all shapes and sizes are more available than they have ever been. Stores are no longer default methods of convenient product acquisition (see Blockbuster, Toys “R” Us, etc.) and the barriers to entry for some young whippersnapper with a pipe dream and an Instagram account to offer consumers something comparable from the very same factories in China direct-to-consumer are almost zero.

As a result, the core of retailing is now about the product of the brand or the product of Sam’s Club itself far more than it is about anything that sits on a shelf. Yes, products are a part of a retailer’s brand expression, but so too is a retailer’s e-commerce experience, its mobile app, its curbside pickup experience, its return experience, etc. All of them wrapped together are the real business any retailer is in.

Sam’s Club is no different.

McLay gets the punchline to this joke and isn’t afraid to go on record and to say how important this line of thinking is either. 

For instance, Sam’s Club is unique in how it defines the role of its Chief Product Officer. Unlike many retail companies, where the head of product is generally just in charge of a website, Sam’s Club’s Chief Product Officer is in charge of everything, from the website all the way down to in-store employee tools and even the stanchions one puts up in a parking lot amid a viral outbreak. Said another way, Sam’s Club’s Chief Product Officer is in charge of the full digital, physical, and human blend of how the entire brand comes together as one unified Sam’s Club experience.

McLay, as seen in the must watch clip above, believes this wide-ranging oversight is so “vitally important to Sam’s Club continuing to transform” that when asked if she would recommend such an approach to the rest of the industry, she smiled a big wide grin and simply remarked that it is “something delightful about Sam’s . . . but I don’t know that I want everyone else to get on board with it.”

“Let’s just keep it in the Walmart family,” she said.

Which, if reading between the lines, mean McLay is coy, smart, and totally gets it.

#3 — She’s moves fast

According to McLay her focus is on three things: 1) The safety of associates and club members 2) Continuing to adapt amid an ever-changing COVID world 3) Reimagining the future.

Striking a balance across the three is no easy feat, but, as evidenced by this section and the section that follows, McLay understands both how to take the right actions for the short- and the long-term. 

First, it all starts with adapting her leadership. To this end, McLay set up a “mandate tracker” to track all the various needs of the roughly 600 Sam’s Club stores across the nation in real-time. During the first weeks of the outbreak, she and her leadership team convened over what she called a “Daily Catch Up” for an hour and half each day, seven days a week, to review how best to meet the needs of all these stores on an individual level, and they continue to take a similar approach to this day. 

Second, it comes from getting out and doing the work. While many retailers early on in the outbreak had begun devoting specific in-store shopping hours to seniors and at-risk customers, Sam’s Club went out and did the industry one better. 

In just six days, Sam’s Club’s product team, with the help of its frontline employees, created a new concierge shopping service for Sam’s Club’s customers, whereby seniors and at-risk club members could shop at Sam’s Club without ever having to leave their cars. 

Similarly, Sam’s Club was also one of the first retailers to take one of its stores in the Detroit area offline and to convert it to pickup only, via what it calls its new “Quick Pick” mobile app. Such a concept may not seem like much now, but it is actually a smart first experiment towards a safer way for customers to shop in the short-term amid COVID-19 and also a great first step for learning the long-term ins and outs of localized fulfillment and automation.

Doing all these things as fast as Sam’s Club has done them and amid a backdrop of COVID-19 that no one has ever before seen is just downright impressive.

#4 — She understands innovation can be inspirational

The best part of the interview (seen in the clip below) is where McLay discusses the value of concept testing and the beacon on the hill that is Sam’s Club Now. 

Sam’s Club Now, for those unfamiliar, is Sam’s Club’s Concept Store in Texas, where the entire shopping experience is done through one’s mobile phone. Sam’s Club has had scan-and-go mobile shopping across all its stores since 2016, but Sam’s Club Now is scan-and-go on steroids. 

The store is what McLay calls Sam’s Club’s “secret weapon” for two reasons.

One, the store is a living, breathing lab where engineers work directly with store employees to create new products and services. It is a place where people can practice the muscle memory of innovation, so to speak.

And, then, two, it is also something so much more than that as well. It is also what McLay and her Chief Product Officer Eddie Garcia call a place of “lighthouse moments,” i.e. a place where Sam’s Club team members can get a glimpse of the future and be inspired by what lies ahead. 

Most retailers don’t have such “lighthouses.” In fact, one can probably count on one hand the number of true, honest to god concept stores there are across American retail right now. They are just that few and far between. 

But they matter, not because they are the right answers all the time, but because they are a vision of the possible. They are what can inspire creativity amongst those inside an organization that need inspiration the most.  

If only department stores, like Macy’s, JCPenney, etc., had taken a page from this lighthouse playbook years ago. 

Oh, what a different world it could be!

#5 — She’s authentic 

Her wide brimming smile aside, the final thing that stood about McLay is how down to earth she seems. When asked about her first 100 days on the job, she spoke of listening to employees and club members informally over and over again and of how little cues, things like how people would go on and on about the technological changes that made their lives better, showed just how important maintaining the ethos of innovation at Sam’s Club needs to be for her.

Plus, she wasn’t afraid to let everyone under the covers about who she is in her first public interview either, which is something retail CEOs almost never do. 

But, not McLay. 

As shown below, she was unafraid to take questions about the scope of her millennial habits, including her favorite social media apps and guilty pleasure Instagram follows, even going so far as to let the cat out of the bag and letting it be known that sometimes she just needs a little taste of Australia (i.e. Hugh Jackman) to keep her going.

And, maybe that is the moral of the story here. 

Everyone needs their lighthouses, each in their own way. 

Sam’s Club has been that light for the retail industry over these past few years, and, under McLay’s early leadership, signs are that the light may only get brighter in the years ahead.