Shelley Broader has impressive reflexes. Standing in the produce section of a new Walmart Supercentre, she’s chatting up a family of shoppers when the little boy suddenly chucks a tomato at her. She nimbly palms the fruit before it hits the ground, or her skirt. Since this is a photo shoot, the clean-up in Aisle 1 would have been captured for the cameras (and marked a tearful end to the tyke’s modelling career). Instead, the maneouvre—likely perfected raising her own two kids—draws light applause from her gathered entourage of public relations and store staff. She briefly mugs exasperation—Seriously, this is what I have to do in this job?!—before gamely returning to smiling and fondling nearby vegetables.
The Supercentre has been carefully chosen for this mise en scène to demonstrate how Walmart is arming for the coming war in Canadian retail. Located in Brampton, on the outer edge of suburban Toronto, flanked by two subdivisions under construction in a heavily south Asian area, the year-old site represents Walmart’s “store of the community,” a kind of mini-mall customized to local tastes. Not only does it stock brands the immigrant residents grew up on, but features a hair and nail salon, a doctor’s office, a pharmacy, a dry cleaner and a café. The large produce section right off the main entrance, bordered by a deli counter, gives the impression of walking into a standard supermarket. Broader points out private-label tarts, part of a recently introduced up-market line. “Our buyers are really sophisticated epicureans in many ways,” she says.
Not your image of the Walmart shopper? The company has some surprises in store as it rushes to expand, reposition and fine-tune before Target, America’s second-largest discounter, arrives here this spring—one of several U.S. chains crowding into Canada. It’s a seismic event for this country’s retail landscape, expected to cause weaker players, especially midsize chains, to merge or shut down as they get squeezed out of prime locations and undercut in the giants’ price wars. The title of a recent Retail Council of Canada study tersely summed up the challenge: “The easy days are over.” The next six months are a critical time for all the major players. “This will be an unusual opportunity for Canadian retailers to glue customers to their stores before Target opens its sparkling new units,” writes Perry Caicco, the respected retail analyst with CIBC World Markets, in a report.
It is Walmart, however, that faces the most direct collision with Target. The two companies—both of which celebrated their 50th anniversaries this year—have long been fierce rivals south of the border. Target’s offerings are more chic, and Walmart’s prices tend to be lower, but there are significant similarities between the two in store sizes and range of merchandise. A recent survey by KubasPrimedia of Canadian consumers who have shopped at cross-border Targets identified Walmart as one of two retailers with the most to lose from Target’s arrival.
Walmart is hardly running scared. For almost two decades, it has been successfully fending off incursions from dollar stores and specialty retailers, chalking up steady growth and market-share gains each year. While the company has been gearing up for heightened competition for some time, this year marks a major acceleration. Walmart is investing $750 million into 73 stores (some are new, others are revamps of existing sites), including conversions of 39 former Zellers outlets. It is the company’s largest expansion since it arrived in this country in 1994. And as anyone who’s been to Walmart lately has noticed—that would be 90% of you out there—the biggest change has been in food. More than half the stores carry fresh food today, and that ratio will grow rapidly.
Walmart’s new strategy will inevitably buffet other retailers. As incumbents refocus or shift direction to get out of an incoming rival’s crosshairs, their reactions in turn threaten other competitors, thus rippling out through the entire industry. From Loblaws to Dollarama to Costco, everyone is re-examining their game plan—and Walmart is doing more of it than anyone. “Sometimes, the reaction of a competitor to the new entrant causes more market disruption than the arrival of the new entrant itself,” says Caicco. “When Target arrives, Walmart’s responses may be more important than anything else in Canadian retail.”
Making sure the company defends its Canadian turf is Broader’s Job One. The 48-year-old American has kept a pretty low profile since she ascended to the CEO’s chair a year ago, but we’ll likely see a lot more of her in the coming months. A retailer on a charm offensive couldn’t ask for a better leader. Her charisma and high energy, warm laugh and blond good looks make her the model of Walmart’s prime customer: the busy mom. As she leads a tour of the store, offering up key sound bites, it seems almost like a job-imposed distraction from what she’d rather be doing: chatting up the staff. “A Supercentre is one-stop shopping. You can have something to eat, you can get a haircut, and with the price of gas, the idea you can get it all—Oh hi, how are you!” A Toy Story Woody pillow prompts a crack about buying it for her CFO. Pausing by some ’80s-themed apparel, she confesses her love for metal band Poison. Andrew Pelletier, Walmart Canada’s head of public relations, guards her like a bear, fully aware that “someone like Shelley” is a precious commodity for the often maligned retailer.
Broader isn’t just the cheerleader-in-chief, of course. She runs an $11-billion operation that represents 10% of the company’s sales outside the U.S. Canada is one of the prize markets in the Walmart empire, one that delivers outsize returns. Broader is a retail veteran, but this is by far her biggest assignment. Still, she knows from personal experience that Americans tend to underestimate the retail competition in Canada. “This is a very complex market,” she says. “That’s why foreign retailers come here and are often unsuccessful.” Target: you’ve been warned.
Broader’s own career in retail started inauspiciously. In the early 1990s, in her 20s and bored with investment banking, she decided to make a jump to one of her supermarket clients. Every hire at Hannaford Bros., a grocery chain in the northeastern United States, has to start in a store, no matter their eventual position. She was working a cash register when she saw a familiar face before her she couldn’t quite place. “What are you doing here?” said the customer. “We signed a multimillion-dollar debt deal with you two weeks ago!” Fumbling for an answer, she simply said: “I changed careers.”
Broader is telling this story from the podium at a Women in Influence luncheon last spring. For the umpteenth time during her ad-libbed speech, laughter ripples through the packed hall at the Metro Convention Centre in Toronto. Sporting a chic black suit and camera-ready makeup, she delivers a mix of personal history and leadership lessons, interspersed with genuinely funny, self-deprecating anecdotes. It’s easy to picture her as a TV host joshing with guests, a kind of Kelly Ripa. Her first job, in fact, after earning a journalism degree was at a small TV station. But she didn’t see it satisfying her ambition, “so I quit and went home to mom.”
She got into investment banking by bluffing her way into a small Boston firm. (“Do you know what a bond yield curve is?” “Yes…” “Do you invest in the markets?” “Yes …” When she got the job, “Never in my life have I studied so hard!” she says laughing.) After a few years, she again saw limited room to rise, so she switched tracks. Retail stuck. Undaunted by bagging groceries and cleaning out grease traps in the meat room, she rose from a marketing executive to eventually become CEO of Sweetbay Supermarket, a troubled Florida chain owned by Hannaford’s parent company. Stephen Smith, a marketing executive Broader hired at Sweetbay who followed her to other companies, says the chain’s culture had been “quite abusive,” with a rapid succession of leaders and vicious cost cutting. “She was full of energy and very human,” he recalls. “She rebuilt the culture into one of optimism and respect for the individual, which is now the Walmart line.” During that time, she came to believe that a leader is always on stage. “Hugh Farrington takes two creams in his coffee” became a mantra, based on her close observation of Hannaford’s CEO, which she used to remind herself and others that staff and customers are constantly watching you.
In 2008, she became president of North American crafts chain Michaels Stores, which gave her the first taste of the Canadian market. “I made my Canadian retail mistakes at another retailer,” she quipped during a Walmart press conference earlier this year. “One was underestimating the consumers’ price acumen. They’re loyal to their family, not to your brand.” Michaels wasn’t a happy time for Broader, reports a former colleague. In earlier positions, “she’d had fantastic bosses who had taken chances for her, moved her to important roles some thought she wasn’t ready for. At Michaels, she didn’t have that same kind of support system.”
When Walmart beckoned, all she knew of the discount giant was that “they wear blue vests and cheer.” But her rise has been brisk. After working with the Sam’s Club division in the U.S., she moved to Canada as chief merchandise officer in late 2010. Though little known in the Canadian industry, her elevation to country CEO made sense because of her background: 17 years in supermarkets prepared her well to guide Walmart’s food expansion, as did her Sam’s experience with so-called combination stores that stock both food and general merchandise. “Obviously, she’s been tested,” says John Williams, head of retail consultancy J. C. Williams Group. Walmart “moves these people around, and she’s been groomed for this. And she has David Cheesewright not too far away,” he says, referring to Walmart Canada’s former CEO who, as head of a new regional group, is now Broader’s boss.
Still, Williams adds that what really runs Walmart is the retailer’s deeply ingrained culture. “It’s very rigid and well defined,” he says. “You either fit in or you don’t very quickly.” It goes well beyond sales associate team-building gimmicks, to an earnest dedication to individual respect, family orientation and frugality. (Broader proudly reports that she sits at the beaten-up desk Walmart inherited from the former president of Woolco.) Whenever Williams visits a Walmart store, he says he makes a point of asking staff how they like working there—and is always told they love it.
Broader’s personality and management style have been a snug fit with Walmart. She’s taken to writing a weekly blog largely taken up with personal observations and family anecdotes (to her spouse’s and two school-age kids’ consternation). “These guys feel like they know me and my family,” she says of the more than 90,000 people toiling for Walmart Canada. “My husband had pneumonia, and everyone was asking me how he was doing.” Employees (about 70% of whom are female) often ask her for advice. Her favourite blog post to date was a response to a recently engaged associate seeking marital tips. (Don’t expect your spouse to change after marriage, she offered—and quit dating!)
Her informal camaraderie carries into the boardroom, but executives quickly learn it shouldn’t be mistaken for softness. “She puts people at ease, but proceed at your own caution,” warns former colleague Stephen Smith. “She’s tough. There were a few people in Florida that found their way out the door pretty quickly.” Broader has sharpened her judgment over the years, says Ron Hodge, her boss at Hannaford and a lifelong mentor. “Early in her career, some of her decision-making might have been more emotional than fact-based. After you’ve made some decisions that didn’t work out, based on your hat rather than your head, you learn.” One of those lessons was to surround herself with experts, and make sure they function—this is a favourite leadership analogy of Broader’s—like a cabinet rather than a house of representatives. “The marketing person isn’t there to represent the province of marketing. They’re there to help me run a multinational corporation.”
Although Broader was appointed CEO of Walmart Canada a year ago, her real coming-out happened six months later, when she hosted the annual analyst meeting for Walmart International in early April. The division comprises the retailer’s 26 markets outside the U.S., and Canada’s selection as host this year was a no-brainer: no other market has as much in the works, or at stake. This was the first time the new Canadian chief faced a large contingent of media and industry observers, all curious how Walmart planned to repel inroads from its big American rival.
Broader and Cheesewright faced their interlocutors on a fern-lined stage in a Toronto hotel: he with the trim, coiled look of a boxer; she radiating feminine glamour in a black suit, flashing leg. (Doug MacMillan, head of Walmart International, had to make an early exit when news of the bribery scandal in Mexico urgently demanded his presence.) Through the gruelling day of presentations and interviews, she seemed to lose her cool just once: when a TV interview experienced technical difficulties and had to be reshot, a touch of steel entered her face. “Let’s just do it,” she snapped. Over and over, she repeated the same messages: “Food is very close to my heart,” “Our job is to lower the cost of living for the Canadian consumer.” Not once did she utter the word “Target”—not even as a verb.
But that chain’s presence was heavy in the room, and all the plans Walmart executives laid out resonated against the coming changes to the retail landscape. Ever since Target acquired most Zellers store leases last year in a $1.8-billion transaction, the industry has been preparing for upheaval. Starting in March, the company plans to open roughly 130 stores nationwide over two years. Combined with recent or upcoming arrivals from Nordstrom, Marshalls and several other American chains, the retail sector is set to become very crowded, especially at the discount end.
After 18 years in this country, Walmart has the edge of knowing the consumer. Broader emphasizes that the Canadian discount shopper is a distinct species: multicultural, well educated and progressive. In fact, Walmart Canada shares less than a quarter of its merchandise with U.S. stores. Canadians also want to know they’re getting a bargain, which has forced Walmart to adapt its everyday-low-price strategy that eschews sales, with regular “rollback” promotions to draw in customers. Most important, says Broader, “the consumer doesn’t have a stigma about where she shops, which is very different than in the U.S. or Mexico.” CIBC’s Caicco points out that Walmart’s Canadian customers are “more aspirational and affluent” than in its home market. There, those adjectives would better describe Target’s customer. Which brings the question: Do these people shop at Walmart only because Target hasn’t been here to serve them?
Walmart will be most vulnerable to Target in apparel, housewares and other “hardlines”—areas where Target’s more fashion-forward offerings and chic brand will appeal to the urban middle class. In that context, a push into food makes a sensible defensive tactic. It also offers the advantage of drawing new customers and driving regular visits. Fresh food is already available in more than half of Walmart’s 337 stores, and the company has nearly doubled its grocery market share over the past couple of years. While Target has teamed up with Sobeys to supply it with frozen, dairy and dry goods, that’s unlikely to threaten Walmart’s growing franchise. “We are really in our infancy in bringing fresh food to Canada,” says Broader. “I intend to put food into every store where it can fit and makes sense.”
This, of course, is lousy news for supermarkets, whose profits are already being squeezed by price wars and flat sales. In the past two years, the grocery sector’s share of Canadian food purchases declined from 67% to 63%, mainly to the benefit of mass merchandisers—Walmart in particular. Ed Strapagiel, a retail consultant with KubasPrimedia, says this development shouldn’t have come as a surprise to supermarkets, as combination stores have been a distinct category in the U.S. for 20 years. The hardest-hit so far has been Loblaws, whose market share has been slipping, especially in produce and meat.
Walmart’s massive Supercentres won’t be the only outlets selling food. Earlier this year, the company opened a prototype Urban90 store in suburban Toronto. The location takes half the space of its typical big box, yet features almost a full cross-section of a Supercentre’s food offerings. The company’s acquisition of 39 Zellers sites from Target last year gives it an opportunity to experiment with new formats. “Zellers is a card from every suit in the deck,” says Broader. “It allows us to test smaller boxes.”
In designing Urban90 and the larger grocery push, Walmart Canada leaned on its U.K. sister, ASDA, which is primarily a grocer. Combined with its massive purchasing power, Walmart’s ability to rely on its experience in diverse international markets is something no other retailer can match. The result is a “mass customization” approach, exploiting the size and scale of being part of a massive multinational but tailoring the product to local customers. The “store of the community” concept, which will guide many of Walmart’s new and refurbished locations, is the same idea in microcosm. “Eighty percent of the stuff is the same, cookie-cutter, so 20% can be perfect for each market,” Broader explains.
Back at the Brampton Supercentre, Broader shows off other changes in stock, ones that hint at an attempt to lure more up-market shoppers. In housewares, she oohs over the “can’t beat” price on a Sunbeam coffee maker, then aahs over an upscale Keurig Brewing System. “Walmart is increasingly about national brands,” she insists. “If you want to pay less for a Bosch, you should associate it with Walmart.” In cosmetics, the layout highlighting ritzy brands in glass cases mimics what you’d find in drug and department stores. Broader may never mention a competitor’s name, but the message is clear: you don’t need to go you-know-where to find the chic and the now.
As the industry shakes out over the next three years, Broader’s success at beating back rivals will undoubtedly be closely watched by Walmart brass in Bentonville, Ark. Getting the top job in Canada was “huge,” says Smith, who today heads up marketing for ASDA. “There are two marquee markets for Walmart International: Canada and U.K.” Both divisions have strong growth and profitability. Mentioning David Cheesewright as a case in point, Smith adds that inside the company, “there are definite trajectories that look apparent to everybody. For Shelley, this steps her up nicely for a career in Walmart. If she wants it.”