When Cook started (he served as an inspector for the U.S. Treasury before landing in the accounting department), Wal-Mart’s sales were $55 billion at about 2,000 stores; those figures have risen to $443 billion and more than 10,000 stores today. Back then, an expansion beyond U.S. borders had just begun; now, Wal-Mart is in 27 countries and handles more than 200 million customer transactions a week.
To make it past Cook’s desk, first a product or proposal has to get there. That is not easy. Today, companies that vie for Cook’s attention range from executives at the world’s largest wireless carriers to, he says, “two guys in a garage who have a solution they think is the greatest thing since sliced bread.”
His to-do list is jammed with other multimillion-dollar issues, from the latest card-processing agreement in Brazil to the problem of robbers who have been targeting the armored cars that pick up cash at U.S. stores.
Wal-Mart is known for wielding its market power to force down prices, and payment systems are no exception. The company has spent much of the last decade locked in negotiations and courtroom battles with card networks like Visa over fees, fraud risks, and security standards.
The latest ideas from Silicon Valley are getting a similar treatment. If a technology doesn’t save Wal-Mart money, Cook calls it a “show stopper coming in the door.” Otherwise, he and his team of nearly three dozen employees consider whether the technology can improve the shopper’s experience or the security of transactions.
“Our objective is to make [paying] more efficient, thereby lowering our costs,” says Cook. Lower costs mean Wal-Mart can lower prices, which leads to more sales and yet more leverage to make suppliers reduce prices—a cycle people at the company call the “productivity loop.”
Cook’s team includes MBAs and CPAs, as well as industrial engineers who clock to the millisecond how long it takes a customer to hand a card to a cashier and for the money to enter Wal-Mart’s accounts. For example, every additional second it takes customers to pay at its U.S. stores costs Wal-Mart an average of $12 million in cashier wages, CFO Charles Holley said last month while announcing that Wal-Mart would introduce more self-checkout lanes where shoppers scan their own items.
The sliced-bread makers, Cook says, often don’t appreciate the complexity of Wal-Mart’s existing mix of sales terminals, including gas pumps, drive-throughs, and registers—nor the sheer size of its operations. “The unfortunate part is that people don’t envision the volume that we would create for them,” he says.
They may also underestimate the importance of cash to his stores’ shoppers. Although options for paying today have multiplied, credit cards still account for less than 15 percent of Wal-Mart’s total transactions. Cook says that shows things change more slowly than people think. Recently, he’s actually been working to make cash payments easier for Wal-Mart to accept—for example, by filling store ATMs with money collected at cash registers.