Why Eliminating 7,000 Jobs Is Great News for Walmart


Walter Loeb

September 6, 2016

With an eye on Wall Street, Walmart has announced that it will centralize some functions leading to the elimination of 7,000 back office and support positions throughout its domestic chain. It sounds like Walmart is cutting a lot of people, but in fact it is less than 4% of the 2 million store associates that work for the company throughout the United States. With over 4000 U.S. stores, the cut is only a reduction of one or two people at any given store.

Over the last two years, the company has spent $2.7 billion on pay raises lifting associate wages to $10 an hour. Now it is concentrating on cutting positions that counted cash or managed supplier invoices at each store.  A new central office in North Carolina with 1,000 associates will handle all invoices.  That should have been done a long time ago. Technology is playing a big part in the initiative.  A cash-recycling machine that interfaces with the central accounting office will now be installed in each store. The technology is expected to make cash registers more efficient and faster for customer service. The key is that Walmart is harnessing technology to its advantage, which is long overdue. The company has many areas where it can improve processes, reduce operating expense, and improve profitability.

Since the company’s effort to bring more help to the selling floor has already payed off by boosting customer satisfaction scores I can only applaud the effort. Associates will be offered other positions in the company, many on the selling floor. This is great, as many more associates will now interact with customers. Today there are once again hosts who welcome customers and guide them to their destination. They also act as security watchdogs to prevent shrinkage, an added benefit.

There are many ways that modern technological advancements and supply chain development can be incorporated to improve efficiency at Walmart. We have heard very little about the company using big data or artificial intelligence – which is when a machine mimics cognitive functions that humans associate with other human minds. Years ago we were impressed by the mastery of logistics at Walmart. It made them the low cost provider in retail. Today we take this for granted. Now there are many ways technology can be applied to make the customer a happier and more frequent shopper.

Recently other major retailers have announced store closings. Macy’s is leading the charge by closing about 14% of their chain, or 100 units. That may mean another 7,000 or more Macy associates may also lose their job. Most of the employees will be offered jobs in other Macy locations, but some will not fit or may not want to relocate. The industry is going through a difficult time, where a more focused approach will result in better customer service and, hopefully, greater enthusiasm for shopping again.

This article was written by Walter Loeb from Forbes and was legally licensed through the NewsCred publisher network.

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