More corporate jobs cut at Wal-Mart’s home office to end the second fiscal quarter

by Kim Souza (ksouza@talkbusiness.net) 20,379 views 

Retail giant Wal-Mart Stores, the largest employer in Northwest Arkansas and nation, is purging more of its corporate jobs. This marks the third round of layoffs in Bentonville this calendar year.

Wal-Mart would not confirm the number of jobs being eliminated or areas of the business involved, but a source confirmed to Talk Business & Politics the number of jobs to be a few dozen. The company also said the action was part of its attempt to right-size in the wake of the changing retail industry.

Wal-Mart Stores CEO Doug McMillon has said the retailer is investing in technology – upwards of $6 billion including the acquisition of Jet, ModCloth, Moosejaw, ShoeBuy, Bonobos and investments in JD.com – and at the same time reducing the corporate headcount to facilitate more speed, less bureaucracy and lower costs.

News of this round of layoffs hit social media feeds Wednesday evening when employees began getting notices to report to a “support event” called by Human Resources on Thursday. Travel was canceled and all the vendor conference rooms have been booked by HR which points to another layoff, according to people familiar with the matter.

This has become a quarterly event and Wal-Mart has not said specifically how many jobs will be eliminated this year, noting it would evaluate the headcount periodically as it seeks to streamline the business. Retail insiders expect Wal-Mart will slash its corporate and support headcount by 10% in 2017 through a “piecemealing” strategy as opposed to one large layoff announcement like it made in former years.

Scott Crossett, of executive employment firm Cameron Smith & Associates in Rogers, told Talk Business & Politics his office heard the areas being impacted with this round include replenishment (layoffs Thursday) and merchandising (Friday) which includes buyers and planners. Transportation is another area likely to see cuts in the next few months, he said.

Wal-Mart sent the following in response to a Talk Business & Politics question about the layoffs: “As we said in January, we’re continuing to look at how the company is structured, which includes investing in and adding jobs in some areas and eliminating some in a few others. This is all about aligning and creating efficiencies as we change how we work to seamlessly serve our customer through our stores and e-commerce.”

AREAS HIT
Replenishment cuts would follow about a dozen jobs cut last week in Global Shared Services, according to sources. Those getting the notice to attend the Thursday meeting range from directors to mid- and junior-level managers. Sources also told Talk Business & Politics that some replenishment directors were being demoted and some director positions are being eliminated in the next 60 days.

The cuts to merchandising and replenishment could be linked to restructuring earlier this year when 200 jobs were lost in that department. A consultant who formerly worked on the merchandising side of Wal-Mart said the replenishment division had grown over the years in a separate silo from the merchandising divisions. Each division having a hierarchy that reported upward to keep buyers (whose earnings are impacted by sales) from also controlling replenishment. Earlier this year Wal-Mart restructured it’s replenishment and merchandising teams into multi-disciplined units. Under the new system the teams work together with suppliers and can now likely report up the same chain of command.

The ISD, a technology arm of Wal-Mart, also cut about 300 jobs in April along with a few hundred other jobs involving shared services, financial services, human resources and replenishment. ISD employees noted on social media they are seeing around 1,000 contractor badges revoked with third-party service suppliers and perhaps a few more Wal-Mart cuts as well. Wal-Mart did not confirm those numbers.

‘HARD CHOICES’
The cuts in 2017 – fiscal year 2018 for Wal-Mart – are on top of about 1,000 jobs which Wal-Mart purged throughout its company at the of end of its fiscal year on Jan. 31.

Earlier this year McMillon said in an email to employees: “To deliver the changes we ultimately want customers to see on the outside, we have to change on the inside.”

He forecast then that the need for continued investment and capital discipline would ultimately mean the elimination of positions in some areas of the business. He said Wal-Mart must be lean and nimble in order to change processes and become more digital.

“These are hard choices. We care about our friends and colleagues and will do our best to handle these transition smoothly and always with respect.” McMillon concluded.

Wal-Mart corporate spokesman Randy Hargrove said displaced workers are allowed to apply for other jobs within the company and they remain employed for 60 days while they look for another job. At the end of that time if they don’t find another job they will receive a severance package commensurate with their position and years of service.

Analysts have largely supported the personnel cuts at Wal-Mart, saying the retail sector is overstored and retailers must find ways to run leaner and more nimble organizations that integrate technology and provide an omnichannel experience. The entire retail sector has been troubled in recent years as more shopping gravitates online, according to Mervin Jebaraj, interim director for Center for Business & Economic Research at the University of Arkansas. He said Wal-Mart’s specific case and the competition it has with Amazon and the grocery chain is bound to mean tough choices for the retailer.

He was not surprised by the news of more job cuts by Wal-Mart saying it stands to reason that there is likely some duplication in roles given they have acquired five other online retailers in the last nine months.

“Wal-Mart was not only buying market share and unique customers they were also acquiring talent and it’s not surprising to see some local jobs lost in the process due to duplication of roles. Perhaps some of these displaced workers can find jobs in the supplier community if they want to remain in the region and are not in a position to retire,” Jebaraj said.

Crossett said some jobs cut at Wal-Mart pair up with open jobs in the supplier world, but often there is a pay differential. For instance a replenishment director would be a higher ranking role than a replenishment slot at a vendor and pay less. Other times he said the candidates coming from Wal-Mart don’t have expertise that lines up with local supplier teams and they must leave the area to find comparable salaries.

Crossett said Wal-Mart layoffs initially flood the market with veteran candidates and it also reverberates through the supplier community as they seek to learn what might happen next with their largest customer.

JOB GROWTH IN RECENT YEARS
Because the retailer is making several rounds of job cuts and not giving specifics, tracking the numbers has been complicated. In 2007, Wal-Mart reported having 1.36 million employees in the U.S. and 550,000 employed internationally for a total payroll of 1.91 million people. In 2017, Wal-Mart employed nearly 1.5 million in its U.S. division and 800,000 abroad for a total of 2.3 million people. Over the decade Wal-Mart has grown total employment by 390,000 people, or 20.4%.

Before this round, Wal-Mart eliminated about 18,000 jobs since early 2016. Many of the affected employees were reassigned to other company jobs. For instance, about 6,000 of the 7,000 store back-office jobs eliminated in September 2016 were reassigned.

Likewise, more than 50% of the 10,000 jobs lost with store closures in February 2016 were also retained. Wal-Mart announced earlier this year plans to hire 10,000 to staff its new store expansion (55 stores) this fiscal year. While Wal-Mart has slowed new store expansions, it plans to remodel 550 stores this year.

Wal-Mart has also increased its spending on higher employee wages, enhanced training academies, online fulfillment capacity and enhanced technology capabilities to the tune of more than $4 billion in the past two years. These moves were largely applauded by Wall Street even at the expense of earnings through next year.

Amid the layoffs on Thursday, Hargrove also said promotions were handed out to several dozen team assistants including category team assistants elevating them to merchandise specialists. These hourly employees work with buying teams in merchandising, Hargrove said.

“Elevating the position recognizes their critical work and also builds the talent pipeline for future buyers,” he added.

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