Lee Scott’s final public remarks before stepping down as Wal-Mart CEO

After about twenty minutes of prepared remarks, Wal-Mart President and CEO Lee Scott spoke candidly with NRF President and CEO Tracy Mullin at NRF’s Annual Convention about Congress, the economy, retail trends, and his legacy. It was the last time Scott will speak in public as the leader of the company.

Retailers submitted questions in advance for Mullin to ask after Scott’s remarks. Here’s what he had to say about…

The environment in Washington:

“Every time I visit Washington, I am always reminded of how pleasant it is to live in Arkansas.” Still, he is optimistic about change. “This is a country that can be better if we will address these issues. I think it is time to do that and not to dump it on our children and our grandchildren.”

A bill recently proposed in Congress (aka: “card check“) that would eliminate the private ballot in employee elections to join a union:

“I don’t think you can amend this bill. It is fundamentally so flawed. I don’t want business 100% in control of everything. But the labor bosses have a history that’s not all that attractive either and we don’t want them in charge of everything. This country depends on checks and balances. Let’s keep the appropriate checks and balances in place.”

The struggling economy:

Scott said that Wal-Mart “took a lot of punishment” when gas prices started rising, as twenty percent of the companies’ customers live paycheck-to-paycheck and do not have a checking account.

“We all hope that by next Christmas it certainly isn’t any worse,” he said. “I don’t see anything that tells me it’s going to turn around quickly.”

On young people and spending:

Scott believes that retailers are beginning to see a fundamental sea change in consumer buying. He mentioned that he meets once a month with a group of about 50 young shoppers and he said that some of them have given up dining out, going to the movies, or shopping. “Every one of them had given up something and they were talking about how good they felt about doing that,” he said.

Even when the economy rebounds, Scott is “not convinced you’re going to have the same immediate desire to go back to consumption and debt. A lot of young people have learned what it’s like when you’re living on the edge and the bad times come. Their appetite is now towards more about living things differently.”

Even if shoppers have fundamentally changed, Scott said, there is a bit of a silver lining. “While it’s tough for us as retailers, I’m not sure if it’s all that bad from a societal standpoint,” he said. “I’ve been worried for a long time that someone in 2007 is selling furniture and your first payment is 2011. Is that healthy? I worry about those things.”

What retailers can do to become more successful:

“You had better understand your customer right now. And you had better understand your inventory.”

Trends in business or society that will affect retail:

Scott pointed to the aging of America and the fact that two-person households continue to increase. He said those two factors will have “a dramatic impact on all of us, more than we think about today.”

He also noted that just because the economy is struggling doesn’t mean that other facets of Americans’ lives have changed. For example, he said, Wal-Mart found that shoppers who traded down from dining out to making their own meals at home were still buying frozen foods. As a result, frozen food sales at Wal-Mart shot up. Why? “People didn’t have any more time just because the economy got worse,” he said. “They needed meal solutions that were convenient and healthy. You saw customers moving in that direction.”

Relationships with suppliers:

“Sam Walton always liked suppliers. He liked talking to them about what’s selling, what they’re doing. He wanted the best deal and wanted to drive costs down. [With suppliers], you need a real partnership or you’re going to have problems.”

How to become a successful global retailer:

When it comes to globalization, Scott admitted that getting there was a long road. “We’ve had a lot of horror stories,” he said. “Most of them are public.”

The biggest error, Scott said, was a belief that “the seed of all retail knowledge was Bentonville, Arkansas. We learned our lesson. You really have to manage locally.”

Scott said that the company currently lets retail management in each country run the company. “Until we were able to let go and let them operate based on their customer needs and the competitive set in those countries, we could not make it work.”

Lessons learned after three decades in retail:

“I’ve learned so many lessons, mostly the hard way. The most important lesson I’ve learned in my career is that in a big organization you have to hire people better than you are and you have to give them the credit. That isn’t easy for me.”

Biggest career successes:

“I have considered myself like Chauncey Gardiner in “Being There,”” he said. “But I’m proud of the team we put together. I’ve learned to do some pushback, but when they tell me it’s what we need to do, I listen.”

His legacy:

“I started out as assistant manager of the truck fleet,” he said, noting that most of his success was unplanned and unexpected.

At the end of the day, though, he reflects back on his years under Sam Walton’s leadership. “I want to be able to walk out of my office on the 31st of January, turn out the light, and believe that Sam Walton would be proud of me. If I can do that, I feel good about it.”

Watch the session in four parts.

Part 1:

Part 2:

Part 3:

Part 4: