Wal-Mart Restructures Store Management Hierarchy, Closes Five Stores

Retail giant Wal-Mart Stores confirmed Friday (April 17) plans to eliminate the role of zone managers in its U.S. stores in the coming weeks. This impacts 14,000 workers who were told recently and given the opportunity to transition into other roles at like pay, the retailer said.

Walmart U.S. CEO Greg Foran told analysts April 1 that the retailer was adding back the position of “department manager” to better streamline the chain of command, but he made no mention of eliminating zone managers.

The retailer did recently outline plans to spend $1 billion this year in wages and staffing changes in its U.S. segment. This shift from zone to department mangers are part of this overhaul, according to Kory Lundberg, Wal-Mart spokesman.

There are about five zone managers in a typical supercenter and those employees will be reassigned to either department of assistant managers, he said. The role of a zone manager has typically been to oversee a few departments and came about as an effort to reduce store count away from department managers that were originally part of the retailer’s store operational structure, retail experts said.

Lundberg told The City Wire that increasing the number of department managers who look after just one area such as produce or electronics will allow managers to focus more on narrowly engaging with workers and ensuring their department is meeting customer needs.

“Our department managers are closest to our customers and are able to really understand what they are looking for in the department,” he said.

Other duties of the department managers include making sure the merchandise is getting from the back of the store to the shelves, making sure customers can find what they are looking for and the department managers will also have a say in merchandising.

“Bottom line is we think these changes will help make Walmart a better place to work and a better place to shop,” Lundberg said.

‘BETTER TOGETHER’
Experts said this store restructure is not unusual given the entire management team under CEO Doug McMillon has been revamped over the past year.

Foran wasted no time in shifting the roles of his top management so that the merchants, those tasked with the day-to-day purchase of goods for the retailer, report directly to him. Judith McKenna, his chief operating officer, has often spoken on “simplicity” which is part in parcel to the core goals of this management team. McKenna reportedly sees the need for closer internal collaboration between merchants and store operators at Wal-Mart.

The phrase “Better Together,” is how McKenna has previously characterized the internal collaboration she expects to see the company do a better job of going forward. She told analysts April 1 that reducing bureaucracy at the corporate level and putting more power in the hands of people running the stores is going to make a big difference in raising customer service levels, improving in-stock and ultimately boosting top line revenue growth.

Foran, a store operator at the core, said he’s been tasked to improve the overall shopping experience at Wal-Mart’s U.S. stores. He said that won’t happen overnight and it likely wouldn’t happen at all without first mobilizing the retailer’s army of some 1.4 million workers.

“Our job at the Bentonville home office is to serve our stores, and let’s be frank we have slipped away from this. We have to empower our stores to make decisions,” Foran said.

He said adding back between 8,000 department managers is just one of several initiatives underway. Raising store worker wages which went into effect earlier this month made national headlines in February when it was announced during the retailer’s earnings call.

Foran recently told analysts that while the wage increases grabbed the headlines, that was just part of the $1 billion investment in improving store operations. He said training will be improved and technology is being added to simplify manger workloads. Foran said his plan also allows store management more opportunity and insight on modular design merchandise offerings and features that cater to their unique shopper base.

STORE CLOSURES
The retailer also made headlines this week when it confirmed the temporary closure of five stores related to alleged plumbing issues. The 2,220 impacted workers were given little notice of the store closures which are expected to last up to six months. Wal-Mart said deciding to close a store is never taken lightly, but after careful consideration the retailer felt the extensive repairs must be made and the temporary closure was the solution chosen.

Even under performing stores are generally profitable and it’s unusual to see stores close for extended times even in the wake of major remodels, so employees in some of the affected stores are claiming they were targeted because of their outspoken views for needed changes at the retailer. Venanzi Luna was one of the 530 workers at the Pico Rivera Walmart store near Los Angeles notified this past week about the store closure.

“My coworkers and I were laid off with no guarantee that we can be transferred to a nearby store or get the same pay if we are … When our store reopens will have to reapply for our jobs,” Luna, a member of OUR Walmart, announced in a media statement on Saturday (April 18). “It’s clear Wal-Mart didn’t like that we were standing up and winning so they are targeting us to try and quiet us down. It’s not going to work.”

The five stores slated for temporary closure are in Los Angeles, Calif., Brandon, Fla., Tulsa, Okla., Livingston, Texas, and Midland, Texas.

Wal-Mart said the closures have “nothing to do with anything but the plumbing.” Wal-Mart told The City Wire that after careful consideration, “we felt it was necessary to make these repairs so we can better serve our customers and the community in the long run.”

CNN reports that full-time and part-time workers impacted by the store closures are being put on paid leave for two months, during which time they can try to transfer to a different Wal-Mart location. Full-time employees who don’t get another Walmart job by June 19 may be eligible for severance, which part time workers aren’t eligible for.