Low-pay policy backfires on Walmart.

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It turns out that low-pay and low-benefits doesn't mean high profits for corporations. Walmart's fixation on lowering costs has led to shrinking sales, a declining public image, and a downgrade of their stock rating. The equities research firm Wolfe Research has downgraded Walmart's stock from a “market perform” rating to a “underperform” rating, and two out of three reasons stemmed from how the mega retailer treats their workers.

Those reasons included Walmart's understaffing, costs associated with pressure from workers trying to organize, and an erosion of the company's price advantage over other retailers. Because of these issues, the retailer has started adding more full-time employees, and running marketing campaigns about the benefits of working for Walmart. Those minimal efforts may help them regain their previous stock rating, but Walmart will have to do much more to make up for lost ground with their customers and their employees.

Thom Hartmann Administrator's picture
Thom Hartmann A...
Joined:
Dec. 29, 2009 9:59 am

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Not to worry.

They make up for it by cheating on their Sales Tax where they can.

For example, supporting the Gov.'s party and others here in Livingston Parish, Louisiana - where the rest of businesses comply with the 9.50% Sales Tax Law - Walmart charges 10% and "pockets" the excess (presumably to "donate" to favored politicians' campaigns).

So in reality they are really collecting the graft they pay for favorable laws being passed/enforced from the very people they are holding down with those laws.

That's about as low (and corrupt) as it gets.

(Oh, the stuff you notice when you're forced to stay in a place you can't stand.)

Rodger97321's picture
Rodger97321
Joined:
Jul. 31, 2007 3:01 pm

Some scattered thoughts on Walmart.

So much "common wisdom" of business was at one time passed along with all sorts of caveats, warnings, & exceptions. Somewhere along the line (apparently in the "Greed is Good" 1980s), those footnotes got deleted.

For instance, a business (particularly retail) has three core points of competition: price; customer service; inventory. In my experience, Walmart has pared these to the bone, & even twisted them around a bit. But there are rock-hard limits to each, & only so much you can mess with 'em.

Walmart customer service people? Willing, not unintelligent, but almost always clearly tired, stressed, harassed -- likely being told to "find something to do, go restock shampoo or straighten up shoes, don't just stand around waiting to help people!" The few floorwalkers are even less knowledgeable than Best Buy (e.g., teenagers trying to describe the benefits of a particular washing machine = FAIL). If you actually want credible input, you go to what many are calling "a real store" (as opposed to a warehouse like Walmart). When you buy power tools or ceiling fans at Walmart, does anyone really believe any Walmart employee would know how to use them properly? or even if you got something inappropriate for your needs? Better to spend another dollar & go to an actual hardware store.

Inventory? I predicted years ago that when Walmart finally saturated the nation, it would find itself painted into a corner -- its model NEEDS expansion. I've spotted some of its fortresses being pared back from "Superstore" status. At a few in this region, shelves are being quietly removed (like, from 6-high to 5-high) & flat items displayed vertically rather than just slapped down flat (to save space). At first the result will be an "airy," lighter feeling, but as it continues the impression will become downright "drafty." Walmart is (literally) banking on customers being addicted to the "lowest prices, every day" lie. Cynic that I am, I don't think it'll take long for many to twig that the general hard-goods selection is better at Menard's or Lowe's or HomeBase; add in a short trip to Target, & the bases are pretty much covered.

(I've had clothing from Walmart fall apart at the seams after one washing -- not, amusingly enough, their house "Faded Glory" brand, which seems quite well-made. We're talking Haynes & Levis & Dickies here. I'm kinda slim, so when I shelled out last fall for a big-name set of flannel jammies, I fretted that their "medium" was gonna be too baggy. Not to worry: after three washings -- in "warm" yet -- they're too small to wear!!)

Price? Cutting costs to the bone to eke out a skin-thin profit is hardly the invention of Sam Walton. The problem is in balancing supply/demand against ripples in future cost & how to maintain areliable stock without locking up cash for too long. In the old days, a small local store would sell what it had on-hand -- if they ran out, you might get a "rain check" until the manager spoke to regional sales & found out if the item could be ordered for you. But a Big Box pretends to have the same stuff everywhere, at the same price, seemingly for eternity. Alas, this Walmart game has been chipping for a few years: up here, Most blue-collar shoppers know that our town's Walmart prices are clearly a bit higher than at the Superstores 40 miles in either direction (which also have almost double the display items).Save the gas, don't waste time, just go to Penneys or True Value, split the difference, send NONE to Wal-Mart Central.

The shark is getting too big to swim. Walmart is now established enough to compete with Target, which has spent 15-20 years remaking itself as a sort of "30something middle-class hip" place, closing up auto-repair bays & the like. Walmart might do well to focus on the 40-60 blue-collar trailer-park mythos (the Duck Dynasty gewgaws being perfect), & the offspring (up to mid-20s).

But that's gonna take a reliable, motivated staff, not just Target's washouts. They will need to train, & retain. The first means that they'll have to hire trainable people; the second is necessary because otherwise Walmart will become just a "proving ground" as its trained/experienced employees get offers to go elsewhere for a buck more, or for less BS... or both.

Tony Raven's picture
Tony Raven
Joined:
Feb. 12, 2012 12:47 pm

You really can't blame Wal-Mart: we simply cannot sustain our middle class, so we need to spend as little as possible. We can't afford our government and government services, our infrastructure, our stores, our customer service, our elderly, our environment, we are even selling all our assets cut rate to China. As Thom likes to point out, we are the number one exporter of raw materials. Now we are even selling our land as a door matt for oil pipeline for Keystone.

We can't even afford to save the world from Global Warming.

Good luck kids!

Dr. Econ's picture
Dr. Econ
Joined:
Jul. 31, 2007 3:01 pm

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