It’s Just Good Business

So you’ve been reading about those bare shelves at WalMart.  Even I thought it was due to their vendors getting tired of being squeezed and late payments (contracts typically call for payment within 90 days of delivery, WalMart waits until the last possible moment to cut a check- always).

Well, there’s another reason that should have occured to me as a former supervisor of shipping and receiving (that’s the fancy title I put on my resume to point out I ran the loading dock and stockrooms, and handled inventory from the back of the truck to the sales floor along with returns to warehouse).

I seldom appeal to expertise, but I’ve seen this first hand.

Customers Flee Wal-Mart Empty Shelves for Target, Costco

By Renee Dudley, Bloomberg Business

Mar 26, 2013 9:47 AM ET

During recent visits … she failed to find more than a dozen basic items, including certain types of face cream, cold medicine, bandages, mouthwash, hangers, lamps and fabrics.

The cosmetics section “looked like someone raided it.”

…

“If it’s not on the shelf, I can’t buy it,” she said. “You hate to see a company self-destruct, but there are other places to go.”

But, but it’s there in the store!  We have the paperwork to prove it!

“Our in stock levels are up significantly in the last few years, so the premise of this story, which is based on the comments of a handful of people, is inaccurate and not representative of what is happening in our stores across the country,” Brooke Buchanan, a Wal-Mart spokeswoman, said in an e-mailed statement. “Two-thirds of Americans shop in our stores each month because they know they can find the products they are looking for at low prices.”

Well then where is it?

It’s not as though the merchandise isn’t there. It’s piling up in aisles and in the back of stores because Wal-Mart doesn’t have enough bodies to restock the shelves, according to interviews with store workers.

…

At the Kenosha, Wisconsin, Wal-Mart where Mary Pat Tifft has worked for nearly a quarter-century, merchandise ready for the sales floor remains on pallets and in steel bins lining the floor of the back room — an area so full that “no passable aisles” remain, she said. Meanwhile, the front of the store is increasingly barren, Tifft said. That landscape has worsened over the past several years as workers who leave aren’t replaced, she said.

“There’s a lot of voids out there, a lot of voids,” said Tifft, 58, who oversees grocery deliveries and is a member of OUR Walmart, a union-backed group seeking to improve working conditions at the discount chain. “Customers come in, they can’t find what they’re looking for, and they’re leaving.”

Years ago, supervisors drilled a message into employees’ heads: “In the door and to the floor,” Tifft said. That mantra now seems impossible to execute.

…

“The merchandise is in the store, it just can’t make the jump from the shelf in the back to the one in the front,” said Falletta, who works the second shift. “There’s not the people to do it.”

Well why is that do you suppose?

Retailers consider labor — usually their largest controllable expense — an easy cost-cutting target, Ton said. That’s what happened at Home Depot Inc. (HD) in the early 2000s, when Robert Nardelli, then chief executive officer, cut staffing levels and increased the percentage of part-time workers to trim expenses and boost profit. Eventually, customer service and customer satisfaction deteriorated and same-store sales growth dropped, Ton said.

…

In the past five years, the world’s largest retailer added 455 U.S. Wal-Mart stores, a 13 percent increase, according to filings and the company’s website. In the same period, its total U.S. workforce, which includes Sam’s Club employees, dropped by about 20,000, or 1.4 percent.

And of course moving stock from the truck to the shelves is not the only consequence of low staffing.

“We’re not getting as many sales because there’s simply no one to help the customers throughout the stores,” said Jackson, 24, who has worked at two Wal-Mart stores since 2009. “I asked, ‘Why can’t we have enough hours to make the store work?’ They said, ‘It’s orders from Home Office,'” she said.

…

Staff shortages at cash registers during peak hours require Jackson and her co-workers on the sales floor to check shoppers out “while we are trying to restock the shelves, help customers and do other assigned projects,” she said. The so-called Code 7 to the registers leaves a vacuum across the store’s departments, she said.

Customers looking for groceries ask salespeople in the shoe department for help because they can’t find what they’re looking for, Jackson said.

So what do you do about it?  Appoint a Vice President!

Last month, Bloomberg News reported that Wal-Mart was “getting worse” at stocking shelves, according to minutes of an officers’ meeting. An executive vice president had been appointed to work on the restocking issue, according to the document.

At the supercenter across the street from Wal-Mart’s Bentonville, Arkansas, home office, salespeople on March 14 handed out samples of Chobani yogurt and Clif Bars. Thirteen of 20 registers were manned — with no lines — and the shelves were fully stocked.

Three days earlier, about 10 people waited in a customer service line at a Wal-Mart in Secaucus, New Jersey, across the Hudson River from New York, the nation’s largest city. Twelve of 30 registers were open and the lines were about five deep. There were empty spaces on shelves large enough for a grown man to lie down, and a woman wandered around vainly seeking a frying pan.

Where are your customers WalMart?

“When times were good and people were still shopping, the lack of excellence was OK,” said Zeynep Ton, a retail researcher and associate professor of operations management at the MIT Sloan School of Management in Cambridge, Massachusetts. “Their view has been that they have the lowest prices so customers keep coming anyway. You don’t see that so much anymore.”

Shoppers are “so sick of this,” said Ton, whose research, published in Harvard Business Review, examines how retailers benefit from offering good wages and benefits to all employees. “They’re mad about the way they were treated or how much time they wasted looking for items that aren’t there.”

…

“When you tell retailers they have to invest in people, the typical response is: ‘It’s just too expensive,'” Ton said.

Adding five full-time employees to Wal-Mart’s (WMT) U.S. supercenters and discount stores would add about a half- percentage point to selling, general and administrative expenses, according to an analysis by Poonam Goyal, a Bloomberg Industries senior analyst based in Skillman, New Jersey. Assuming the workers earned the federal minimum wage and industry standards for health benefits, the added costs would amount to about $448 million a year, she said. In the year ended Jan. 31, Wal-Mart generated $17 billion in profit on revenue of $469.2 billion.

…

n the fall, Tim White, a 36-year-old attorney, tried to buy wall paint at the Wal-Mart near his home in Santee, California.

“You wait 20, 25 minutes for someone to help you, then the person was not trained on mixing paint,” White said. “It was like, you have to help them help you.”

White, who has six children, said while long checkout lines irritated him, “the number-one reason we gave up on Wal-Mart was its prolonged, horrible, maddening inability to keep items in stock.”

The store would go weeks without products he wanted to buy, such as men’s dress shirts, which he found only in very large or small sizes and unpopular colors, he said.

“Pretty soon, they were even out of those,” White said. “I would literally check every so often at different Wal-Marts. They would go two or three months with the shelves looking exactly the same.”

When Wal-Mart was out of stock of his preferred types of shaving lotion or razors, White would “drive next door to Target where they had it in stock all the time,” he said.

The White family’s visits to Wal-Mart — which had been a several times a week occurrence — became less and less frequent until they stopped this year. The eight-member clan now shops at Target and Costco Wholesale Corp (COST).

“Things might be a little bit more expensive, but not so much so that it would keep me away,” he said.