Wal-Mart Weekly: Lee Scott's legacy

What Lee Scott created

Wal-Mart has become the envy of most retailers in many ways. The company's recent public slogan -- Always Low Prices -- was recently replaced with Save Money. Live Better. Everything about the retailer is poised to give the impression that it exists for a single purpose: to save customers money. In many ways, that is the only perception many of its customers have. I have yet to find a customer that lauds Wal-Mart for its friendly customer service, amazing product selections or its inviting environment. Customers go there for one thing: to save money. Period.

Scott had a direct hand in promulgating that perception from the time he took over. Wal-Mart has seen its business with China grow by leaps and bounds under Scott's leadership so that its customers could continue to save even more money at the same time the retailer grew its yearly sales to hundreds of billions of dollars. Soon, Wal-Mart alone will have half a trillion dollars in worldwide sales in all its divisions globally. Maybe that's what Scott's overall vision was. If so, he indeed is leaving at the peak of his tenure with the retailer.

What Lee Scott leaves behind

In many ways, Wal-Mart has become the social equalizer. It provides the same goods as the competition but for lower prices. It attempts to let customers trapped by single-minded, smaller retailers into a big-box format where everything from tires to haircuts to milk is available for the lowest price. It also employs over a million workers. In the richest country in the world -- with a personal per capita income of under $50,000 -- it saves money for each customer it serves. Sounds like I'm convinced, right? Wrong.

That's the perception, and perception equals reality. Wal-Mart does in fact save money for each shopper in most cases, but at what cost? There is always a cost, and Wal-Mart's abandoning of many U.S.-based suppliers for cheaper overseas goods is a touchless idea many customers probably can't grasp unless it directly affects them. U.S. shoppers are conditioned to shop on bargain and low price perception.

But then, Wal-Mart has to make money -- so how are those low prices afforded by the retailer? That's the question Scott probably gave his lieutenants years ago, which trickled down to the retailer's buyers. Answer: give suppliers a cost ultimatum. If they don't meet it, find another who will.

And so, Wal-Mart grew its sales under Scott's stewardship. He explains how he did this -- and all the global variables that has continually driven his thinking -- in an interview with Charlie Rose.

Handing off the world's largest company from one leader to another

Scott's successor, Michael Duke, has been with the retailer for 13 years and worked his way up inside Wal-Mart's famous logistics operation; you know, the unit that knows when you buy a can of automobile touch-up paint and automatically notifies the warehouse that another replenishment unit is needed. That's a very simple example, but its the unseen backbone that has allowed Wal-Mart to blossom like it has. Without Scott and Duke heading up those areas it's hard to say what limits Wal-Mart may have had. Apparently, it faced very little based on its growth in just the last decade -- Scott's watch.

What is next? Well, Scott oversaw unprecedented expansion and sales growth in the U.S. in his tenure there. Duke's legacy will be to propel the retailer's international business as fast and furious as Scott has grown the U.S. side of things. There is infinitely more complex variables at play in that scenario, and in 2020, Duke's success (if he is one) may overshadow Scott's success.

Wal-Mart's recent focus on becoming more green and making its suppliers cut waste (thereby, lowering prices while helping the planet) will continue to be successful. Don't think for a second that anything and everything that can allow Wal-Mart to contain costs and provide the lowest prices for its global customers won't be the company's -- and Duke's -- sole focus moving forward.

Scott started this theory and popularized it beyond belief, but will he finish it. It's undeniable that Scott's mark on the world can be measured by where Wal-Mart was when he took over and where it is in 2009 when he will be leaving. That tenure could be seen as one of the greatest business successes in the history of commerce and supply/demand economics, or the selling out of American business to the benefit of ... the American consumer.

Join me right here next week for another edition of the Wal-Mart Weekly. Until then, have a great week.