Wal-Mart’s 2014 Strategy: Keep Shelves Stocked, Workers Employed
Last month, Wal-Mart Stores (NYSE:WMT) forecast annual profit that fell short of analyst estimates, evidencing the hit the company has taken from the struggling U.S. economy and government benefit cuts. Now, new CEO Doug McMillon is taking the company’s future into his own hands; he and 7,000 other associates met at Wal-Mart’s Year Beginning Meeting in March to discuss the retailer’s new plans. Bloomberg reported on the meeting last weekend and illuminated Wal-Mart’s new game plan to ensure that all stores are better stocked and employ a number of staff members who can sufficiently support in-store operations.
According to Bloomberg, “in-stocks,” or the measure of how much merchandise is available for shoppers to buy, is one area that Wal-Mart needs to focus on in 2014. Over the past year, its attention to keeping store shelves full has declined, and not only have executives noticed, shoppers have, too. The lack of merchandise has caused some loyal Wal-Mart customers to turn to the chain’s competitors, like Target (NYSE:TGT) and Amazon (NASDAQ:AMZN), at a time when Wal-Mart’s earnings are lower than they have been in many quarters.
The problem, at least according to many associates, is that Wal-Mart does not employ enough workers, and therefore those who do work at the chain are overworked and stretched too thin. Bloomberg reported last weekend that U.S. staff at the main Wal-Mart chain and Sam’s Club warehouse chains fell by about 20,000 between 2008 and January of this year, and that over that same period, the company added more than 650 U.S. Wal-Mart stores, bringing the total to more than 4,200.
The rising number of store locations and falling number of employees may be great for Wal-Mart’s cost picture, but it’s not always easy for the employees who take on the increased workload. Richard Reynoso, an overnight stocker who has worked at Wal-Mart for almost three years in Duarte, California, told Bloomberg, “When you have to pick up the slack of people not there, you can’t do the job the right way,” and that’s where the empty shelf problem comes in. Workers are scrambling to get everything done and many times are simply unable to get the products in all the places they need to be.
That’s what Wal-Mart executives are now working to change, at least according to their assertions at the Year Beginning Meeting in March. Executives said at the summit in Orlando, Florida, that Wal-Mart has plans to add labor hours as part of an effort to sustain “in-store execution.” This could end up being a $3 billion opportunity for the company if the increase in Wal-Mart’s labor force successfully leads to the improvement of “in-stocks.” Increasing labor hours is expected to help the Wal-Mart staff’s ability to transfer inventory from the stockroom and get the products in the right places on the store floor.
The 7,000 associates who attended the Wal-Mart summit more than two weeks ago now know what to expect from their employer for 2014. Although there has been significant frustration amongst employees over wages and the company’s management practices, leading to ongoing strikes and protests, Bloomberg reported that there was a lot of “positive energy” at Wal-Mart’s Year Beginning Meeting. David Tovar, a spokesman for the company, told Bloomberg, “We used the meeting as an opportunity to listen to our store managers and give them the tools they need to succeed so they can do what they do best, take care of customers.”