Wal-Mart wages rise $200 million to add more store employees

by The City Wire staff (info@thecitywire.com) 4 views 

An area Wal-Mart is most hammered on by media and unions is the reduction in employees per store – especially when the retailer’s customer ratings are mixed and sales are sluggish.

Wal-Mart appears to have taken steps to add employees to stores in the recent quarter to the tune of $200 million in added wages and salaries from the year-ago period.

“During the quarter, we allocated additional associate hours to specific areas of the store, such as front end, deli, bakery, and overnight stocking to improve overall customer service. We also sustained incremental labor expenses related to major department re-lays in entertainment and sporting goods. In total, salaries and wages were up more than $200 million compared to last year,” according to Randy Hargrove, Walmart spokesman.

Hargrove said Wal-Mart will continue to invest in wages for the rest of this year, mostly adding hours to existing workers schedules.

In March, Bill Simon, then CEO of Walmart U.S., acknowledged the retailer was losing $3 billion annually from lost sales because shelves were not always being replenished in a timely manner. Wal-Mart said then it would adjust store labor levels and give employees opportunities to work more hours.

In June, Cleveland Research noted that “labor investments had been very selective to almost non-existent,” adding that was the ”biggest problem by far” with respect to the retailer’s continued on-shelf availability shortfalls.

John Marshall, senior capital market analyst for the United Food and Commercial Workers Union, said his group welcomes the announcement that more labor will be put back into stores.

“I want to be clear we are hopeful that the new CEO Greg Foran will work to help this continue, because we haven’t really seen it yet,” Marshall told The City Wire.

Wal-Mart confirmed that store managers have the most say as to how many workers it employs. But Marshall said after many discussions with store managers he was told a computer model predicts the number of workers needed and that often is more than a store budget can handle.

Sherry Curtis-Swenson, a store manager of the new supercenter in Springdale, recently said the new store employed a few more than 300, and skewed heavier than normal for managers, which she said was important for effective operations given it was a new store with more new hires than transfers.

Marshall said Arkansas is one state where store employee counts have remained higher than most states. He said Wal-Mart workers are optimistic in Foran’s leadership given his vast experience in operations. 

“We take him at his word that he is serious about making sure stores are in-stock, clean and running efficiently,” Marshall said.

Foran noted in the pre-recorded earnings call that he will be in stores hearing directly from customers and associates and tracking performance. He said during the retailer’s manufacturing summit in Denver on Aug.14 that Wal-Mart must perform better because consumers today have a long list of shopping options.

He said a consumer decision is based on many factors, including distance to the store, how clean it was during the last visit, lines at the cash register, adequately stock shelves and price. Foran said they quickly review those factors and that’s what dictates where they will shop. Foran said it is he and his army of 1.1 million workers to make sure the choice is Wal-Mart.