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Here's the one photo Walmart's CEO keeps on his phone to stoke 'healthy paranoia' in race against Amazon

Key Points
  • Walmart CEO Doug McMillon keeps a photo on his phone that lists the top 10 retailers in the U.S. over the past few decades.
  • Walmart has held the No. 1 spot since the 1990s, when it overtook Sears.
  • McMillon says the retailer maintains a "healthy paranoia" to stay ahead of rivals.
Walmart's Doug McMillon keeps a list of the top 10 retailers over the decades to remind him you have to innovate and adapt constantly.
Becky Quick | CNBC

Walmart CEO Doug McMillon keeps a photo on his phone that lists the top 10 retailers in the U.S. over the past few decades to remind him how so many companies come and go. Walmart wants to keep its No. 1 spot, which it's held since the 1990s when it overtook Sears.

"After learning from so many people ... we know that retailers come and go," McMillon told CNBC's Becky Quick Thursday, after he spoke in Washington, D.C., at the Business Roundtable CEO Innovation Summit. "Businesses grow and they don't change enough and they decline over time. Retailers do that on a bit of a faster cycle."

McMillon added Walmart has a "healthy paranoia" to stay ahead of rivals. Today, the retailer is seen as neck and neck with Amazon, which is starting to invest more in real estate and open stores while building out a bigger platform for food and apparel online. In fact, the e-commerce giant is expected to overtake Walmart as the No. 1 apparel retailer in the U.S. by the end of this year, according to Morgan Stanley.

Walmart CEO Doug McMillon on the future of the retail industry

Walmart, in turn, is fighting back by acquiring digital brands and remodeling its stores — two key parts of its growth strategy. Thursday it announced its plans to acquire to bolster its home decor business, following recent acquisitions of lingerie brand Bare Necessities and plus-size clothing retailer Eloquii. It's said it could one day own as many as 40 e-commerce businesses, while Amazon has taken a different approach to growth. Instead, it continues to partner with established brands like Nike and J.Crew to sell their merchandise on Amazon.

"You see the rise and fall of Sears and others," McMillon said. "It's just a reminder that this can happen to us too."