Wal-Mart Stores Inc. is cutting some workers' hours to keep costs down after instituting wage hikes, Bloomberg reports.
Despite the busy back-to-school shopping season, many workers are being asked to take long lunches or otherwise cut hours at stores where workers are “overscheduled,” according Wal-Mart.
The retail giant is juggling a renewed initiative to better attend to customer service in stores while spending $1 billion to pay its workforce better. The effort has cost Wal-Mart in its recent earnings, where profit dropped due to the investments and it lowered its full-year forecast.
Wal-Mart seems to be grappling with customer expectations to improve the condition of its stores and shelves with the added cost of paying workers more competitive wages. The better pay should, presumably, make store improvements that much easier. But employees are saying that schedules are being curtailed and hours shortened.
Even with higher wages—the base pay at Wal-Mart is up to $9, but that is still low compared to other retail opportunities in an improving economy—the retailer could end up losing workers to jobs that don’t just pay better, or even the same, but may also have more predictable schedules and more hours, experts say.
Wal-Mart is dealing with a multi-faceted new retail environment and may need more time to figure out which stores need more attention. Is it possible, though, that the company has more to do when it comes to store conditions like empty shelves or dirty stores?
The retailer looks to be balancing its payroll costs with store performance before it gives its better paid, better trained, (and possibly better motivated) employees a chance to make a difference. Or perhaps it’s looking too closely at its employees, and not closely enough at its stores as it anticipates the glare of its investors.
Target faced similar criticisms of poorly kept stores in Canada during its ill-fated expansion there, and opted to abandon its stores in that country. And Sears, which suffered much similar criticism over dirty stores and empty shelves, has been closing stores in a massive re-grouping that many say is too little too late.
Others, though, have noted that Sears has done the hard work of closing under-performing stores rather than propping them up, a move that has cut into the bottom line but that could pay off in the long term.
“If they didn’t invest heavily online and invested more in the stores, sales and profits would have looked better,” Don Ingham, director at Tenth Avenue Holdings and portfolio manager of the TAH Core Fund, which have investments in Sears, told Retail Dive regarding Sears, “but they would still be irrelevant because it would have been a waste of money.”
Wal-Mart may be saving money through cutting staffing at stores, but that could make underperforming stores that much weaker.