After Sales Plummet, Walmart Realizes It Can't Run Stores Without Employees

How bad is it? Even ammo is running low...

You can't sell it if customers can't see it. And you can't stock it for them to see and buy if you cut the number of staffers and reduce employees' hours so much that they don't physically have the time to put the products out on the shelves.

In fact, Walmart is having so much trouble stocking merchandise in its stores that even ammunition is running low. In America! Needless to say, this has sparked conspiracy theories about where Walmart stands in the ongoing gun debate. Which would be funny if the real reason were not so pathetic: in an attempt to boost margins, the retail behemoth has systematically cut full-time, part-time and temp employment at its stores to such a radical degree that it can not stock enough merchandise to meet customer demand, further hurting sales and margins.

American retailers continue to flirt with the notion that employees are its biggest cost problem rather than accept the notion that well-trained and motivated staff are an investment in better margins and future sales growth. Observers may be forgiven for thinking that Best Buy's decision to fire its best sales people in order to save money was the low point in human resources strategy, but it appears that there remain some enterprises eager to test that hypothesis.

Walmart crafted the announcement that it was increasing seasonal hiring as a positive sign: part timers are being offered full time jobs and temps are being offered part time work. But the real reason for the pre-holiday hiring announcement is really about rampant cost reductions eating into sales and profits. Walmart appears to be learning the lesson about the difficulty of cutting one's way to growth. JL

Aviva Shen reports in Think Progress:

After cutting employees’ hours so deeply that stores could not keep their shelves stocked, Walmart is adding more full-time workers in time for the holiday shopping season. The retail giant has been shedding customers recently due to disorganized stores and empty shelves
Walmart started aggressively cutting staff during the recession. Over the past five years, its total American workforce dropped by 120,000, even as the company opened more than 500 new U.S. stores. The result is longer check-out lines, backlogged inventory, and poor customer service — not to mention employee protests all over the country. Now, amid plunging sales and massive strikes, even Walmart has conceded it can’t run a business on a skeleton crew. Over the next few months, the company will move 35,000 part-time workers to full-time, and another 35,000 temporary workers will become part-time staff.
After the Affordable Care Act kicks in January 1, Walmart’s new full-time employees will be eligible for health insurance after 90 days, a vast improvement on the retailer’s usual 6-month waiting period. To qualify for benefits, part-time staff must work an average of 30 hours a week for a year — no small feat at a company known to abruptly cancel shifts, cut hours, and lay off workers at any moment.
While most stores will hire an army of temporary workers to handle the holiday season rush, Walmart has been relying almost exclusively on temps year-round. A Reuters survey of 52 stores in June found that most were hiring only temps, who must re-apply for their jobs after 180 days. Meanwhile, existing long-time employees have seen their hours reduced drastically.
Walmart, as the nation’s largest private employer, exerts a powerful influence on other large companies. As Walmart slashed employees’ hours, jobs report after jobs report showed the biggest gains in a part-time, low-wage workforce.
Not only is the Walmart model bad for workers and business, it’s also terrible for the taxpayer. The company’s refusal to pay a living wage and benefits forces most of its employees onto public benefits like food stamps and Medicaid. Each store’s workforce consumes as much as $1.75 million in public benefits each year.
Walmart defends its poor labor practices as necessary to keep prices down. But as Walmart’s sales dropped with its payrolls, other retailers have proven that treating workers well is not mutually exclusive to a good deal. Walmart’s competitor, Costco, offers its employees an average wage of $21.96 an hour, about 40 percent more than Walmart employees make. Costco enjoyed a 19 percent increase in profits last quarter as Walmart sank, generating much more revenue and profit per worker. WinCo, a smaller grocery chain based in Idaho, boasts full health benefits for anyone working over 24 hours a week and retirement accounts for more than 400 workers — while maintaining prices even lower than Walmart’s.