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Customers Abandon Wal-Mart As Their Treatment of Labor Wreaks Havoc on Sales
Wal-Mart’s infamously poor treatment of labor is starting to negatively impact its bottom line as customers abandon the superchain’s unstocked shelves, disorganized stores, and long waits for help.
Earlier this year, Wal-Mart’s low sales made the news, and then reports surfaced about their inability to keep the shelves stocked. Bloomberg reports that things are only getting worse for Wal-Mart:
Last month, Wal-Mart placed last among department and discount stores in the American Customer Satisfaction Index, the sixth year in a row the company had either tied or taken the last spot…
Wal-Mart is entangled in what Ton (Zeynep Ton, a retail researcher and associate professor of operations management at the MIT Sloan School of Management in Cambridge, Massachusetts) calls the “vicious cycle” of under-staffing. Too few workers leads to operational problems. Those problems lead to poor store sales, which lead to lower labor budgets.
“It requires a wake-up call at a higher level,” she said of the decision to hire more workers.
“When you tell retailers they have to invest in people, the typical response is: ‘It’s just too expensive,’” Ton told Bloomberg.
Last month, Wal-Mart was freaking out about their low sales, which they tried to blame on “the January 1 payroll tax ‘increase’ and higher gas prices.” “In emails leaked to Bloomberg News, Jerry Murray, Wal-Mart’s vice president of finance and logistics, called February the worst start to a month he had seen in his seven years with the company. An email from another company executive said in part, ‘Where are all the customers? And where’s their money?’”
Where are the customers? According to Bloomberg they fled Wal-Mart’s poor customer service for places like Costco. You know Costco, where they pay their workers a fair wage and back legislation to increase the minimum wage.
Costco proved the Republican Party and the corporate Scrooges wrong:
While Wal-Mart experienced February sales that were considered, “total disaster,” Costco’s earnings for the second quarter of the year climbed 39%. The New York Times reported, “Costco Wholesale’s net income for its second quarter climbed 39 percent as it pulled in more money from membership fees, sales improved and it recorded a large tax benefit.”
Costco CEO Craig Jelinek openly supports raising the minimum wage to $11.50 an hour, “At Costco, we know that paying employees good wages makes good sense for business. We pay a starting hourly wage of $11.50 in all states where we do business, and we are still able to keep our overhead costs low. An important reason for the success of Costco’s business model is the attraction and retention of great employees. Instead of minimizing wages, we know it’s a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment and loyalty. We support efforts to increase the federal minimum wage.”
Costco’s good treatment of labor results in higher productivity and less turnover. Bloomberg reported:
Ton’s research has centered on retailers that include discount club Costco, whose chief executive officer, Craig Jelinek, offered his support publicly earlier this month for legislation to raise the federal minimum wage.
Costco, which offers a starting hourly wage of $11.50 in all states and employee schedules that are generally predictable, has higher worker productivity and a lower rate of turnover than its competitors, Ton found.
Employees are an integral part of a company’s assets. Happy employees who feel good about working hard for a company that treats them fairly create good customer service. Costco is a great example of the long term viability generated by this old-fashioned business idea, before the age of gleeful, unapologetic greed and short term cash grabs.
Wal-Mart can’t keep its shelves stocked because it believes in cutting labor first in order to save money. Their utter disregard for long term business success has turned them into foolish Scrooges of flailing industry.
The customers are the market. If they’re not happy, they’ll go somewhere else. And they’re not happy with Wal-Mart. Wal-Mart’s entire business model is predicated upon sucking the most profit out of the least labor with no regard to their company image or customer satisfaction. That’s a short-term business model. The numbers don’t lie.
The chickens are coming home to roost for Wal-Mart. There’s only so long you can get by — even when offering the lowest prices — if your stores irritate and annoy shoppers to such an extent that they stop even trying to find what they need at your store. Wal-Mart was the leader in treating workers like crap, making sure they don’t work enough to qualify for health insurance, and thus forcing them into state and federal welfare programs even though they were employed.
It turns out that treating labor well is more than just the right thing to do. It’s also the key to long-term profitability. And contrary to what Republicans tell us, labor is not the enemy. Happy labor is actually a smart investment for a business.
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55 Responses to Customers Abandon Wal-Mart As Their Treatment of Labor Wreaks Havoc on Sales
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Chris Porter
Mar. 26th, 2013 at 1:30 pm
I used to shop at Walmart, but when i learned the wages they were paying their employees plus letting them sucking out Medicaid and Medicare; I stop shopping there. Moreover, Walmart is more expensive than the other retail stores. In Florida, Publix, Costco and BJ’s are superior to Walmart. As citizens we must continue to “BOYCOTT,” Walmart for the Capitalist greedy behavior. Thanks to the educators who’ve been educating the populace, we want WALMART to go broke and BANKRUPT. They are too GREEDY! Nice going AMERICA, it is more than time to take a stand.
Mike Jarboe
Mar. 27th, 2013 at 1:51 pm
I have never shopped at Walmart because of their anti-labor policies. The problem is that they have lowered the bar everywhere. Other department stores now run on skeleton staffs in an effort to be competitive with their prices. A damn shame.
sueinca
Mar. 26th, 2013 at 1:58 pm
I stopped shopping at WallyWorld’s Chinese Emporium two years ago. Even groceries there turned out to not be such a bargain when you consider flavor and texture of what you are eating. Safeway has even started comparing their ads to WallyMart’s pricing. Safeway, Raleys, Nob Hill, Costco pay their employees a decent wage. My loyalty goes to them.
majii
Mar. 26th, 2013 at 2:12 pm
I went to Walmart last week to purchase an item that I couldn’t find in other area stores. It was very obvious to me that this particular Walmart had cut the number of employees working on that particular day. Of about 12 checkouts, only four had cashiers. This made for long lines and long wait times to pay for purchases. None of the quick checkout lanes were manned. I also noticed that there were few employees available on the floor to assist customers. I know about not shopping at stores that are understaffed because I have stopped shopping at them in the past.
karen
Mar. 26th, 2013 at 2:13 pm
funny i should come across this article as just last wk i told my husband we were done with walmart. las vegas. they are forcing any customers to use self check out which have multiple issues, only 2 people checkers there with 10 people lined up at each. and this is a lg store. smiths has just as low of house brand items as walmart, and if you shop wisely anything else can be bought elsewhere.
david
Mar. 26th, 2013 at 2:15 pm
Target is another one…owned by the french..They won’t let Salvation Army bell ringers at their stores…cheap bastards won’t ever get a
dime of my $$$
Jo Hargis
Mar. 26th, 2013 at 2:36 pm
So? Salvation Army contributes to anti-LGBT groups and in some cases, actively discriminates against gay persons. You can boycott Target, I’ll boycott Salvation Army. I give my donations to people that don’t discriminate.
Jeff
Mar. 26th, 2013 at 10:02 pm
Target and Wal-mart both support anti-LGBT efforts. I rarely shop at either, and Target far less.
Nick
Mar. 26th, 2013 at 10:25 pm
Target is not French owned. Target started as the discount store division of Minnesota based Dayton’s department stores. In 1969 Dayton’s merged with Michigan based Hudson’s department stores, forming the The Dayton Hudson Corporation. A few years ago they changed their name to Target Corporation and sold their department store division to Macy’s and all former Dayton’s, Hudson’s and Marshall Field’s (also owned by Dayton Hudson Corp)have now been rebranded as Macy’s. The Target Corporation remains American owned. Target also pays it’s employees better than Wal Mart, has nicer stores, cleaner looking stores and a much better quality of merchandise.
Jo Hargis
Mar. 26th, 2013 at 2:33 pm
I **so** wish my small town had something besides WalMart. Yeah, we have the assortment of regular grocery stores like Brookshire Bros, Kroger, but that’s it. There are just some items that are considerably lower at WalMart. I try as much as I can to avoid WalMart. C’mon, CostCo! Open up a store here!
Tim
Mar. 26th, 2013 at 9:25 pm
Wal Mart is going to cheaper to shop than every place else. That’s the bottom line. You just have to make the decision on whether or not you are going to support the worst of the worst and pay cheaper, or sack up and stand for something. How much less is that cheaper product at Wal-Mart anyway? 2 dollars? Three. And yes, these other companies have their problems, but you have to do what you can. In this case, phase Wal-Mart out.
Rho
Mar. 27th, 2013 at 5:42 am
I know what you mean about having lack of choices in small towns. Oddly, even the newer Wal-mart 20 miles from my town’s store has better choices than the one we have here.
This town’s store was built in 1994, and you can see the wear-down on the exterior, but all the renovating on the interior is not going to fix the real problem. On the upside, this store has pretty much had the same people working here since it was first built.
In a town that is steadily growing, we do need more choices. Piggly Wiggly and Savalot are just not going to cut it.
robyn ryan
Mar. 26th, 2013 at 2:44 pm
Marx told them this would happen. Unbridled capitalism is not good business practice. Employees are an investment, which is why the privatizing of core government functions robs the People of the collective wisdom and experience of a vested cadre.
Nance
Mar. 26th, 2013 at 3:08 pm
I worked for several years for a company in the midwest called Meijer’s. When Walmart opened a superstore nearby, some of my fellow workers left for the promise of higher wages and promotions. Most of them were back at Meijer’s, which is considered a top privately-owned employer, with three months.
Charlotte
Mar. 26th, 2013 at 3:12 pm
The only time I have spent any time in our (Santa Fe, New Mexico) Wal-Mart was when I had to kill a couple of hours getting a brake job at the next-door Midas. I did not buy anything but set about looking at the origin tag of every item I could find. Almost everything was Made In China, with a few exceptions (which were Made in Vietnam). The only Made in America things I could find were some Libby glass items. Totally aside from their horrible labor policies and their unacceptable way of driving local businesses out – which has previously been my reason for not shopping with them – this complete lack of home-grown products is yet another. They will never see a dime of my money.
Kathy
Mar. 27th, 2013 at 11:49 pm
Yiu are very wrong on your belief that wm will never get a dime of your money. Those of us who don’t shop there are still subsidizing their low low prices and low low wages thru our tax $$$ in the form of social welfare benefits that the employees suck up.
Ain’t WM grand!
Shiva
Mar. 26th, 2013 at 3:31 pm
I worked at Sam’s Club for a while in the meat department. I was there for the seasonal work( Christmas). Right after I was let go, they also let go five meat cutters who had been there a minimum of 10 years. That means that the for meat cutters that were left had to cover 7 AM in the morning until 9 PM at night. There is a great deal of unhappiness among the workers. They pay the minimum wage in Tennessee here of $8.25 and that’s it. People who have been there long term make a little bit more and get garbage health insurance.
our Oak Ridge Walmart is usually packed. But I’ve noticed in the past few months that there are less and less cars there. That has to be pretty scary for the poor Walton family who is living on a mere pittance
kirsten h
Mar. 26th, 2013 at 3:31 pm
Target is american owned. founded in Minnesota.
they do not generally let anyone collect for charity because they donate a percentage of all sales to charity anyway
Stacey B. Lowell
Mar. 26th, 2013 at 3:56 pm
And I thought it was just me with the problem of Walmart…..I am off to BJs to do my next month’s worth of shopping….Walmart doesn’t care about its employees or its customers. So done with Walmart made in China goods and crappy service. Costco: Come to NH again. We’d love to have you here in Rochester!
Morgan
Mar. 26th, 2013 at 4:02 pm
I think this is celebrating too early. So Walmart had relatively low sales for 1 month. Stocks are $5 cheaper than they were. OMG! This must mean Walmart is going out of business! Not really. Financially speaking, it’s more like buy more Walmart shares because they’re cheaper right now.
The fact is that many Walmart shoppers can’t afford to shop at Costco, plus Costco has fewer locations than Walmart. So Walmart is not losing its base at all.
Anyone with experience at retailers knows that sales tend to be highest around Black Friday and lowest in January and February. People are still paying off credit cards from Christmas and only buying the essentials in those months.
I think you all need to need to quit celebrating this blip in the market as something permanent. Walmart has been around 50+ years and chances are it will be around another 50. Everyone likes to pick on the 900-pound gorilla (Walmart, Microsoft, etc.), and this is just another example of that phenomenon.
Shiva
Mar. 26th, 2013 at 6:36 pm
True. I never pay attention to the facts either
nabsentia23
Mar. 27th, 2013 at 5:26 pm
Walmart is cheaper than Costco?
I’m not sure about that when Ikea is cheaper than Walmart on many items (especially kitchen and dinner ware). I know because I’ve compared prices. Although Ikea may not have stellar labor relations, they do treat their employees better.
You may think its too early to celebrate, but if this trend keeps up, Walmart is in trouble. I’ve avoided Walmart primarily because they treat their employees badly. Why would I go to a store where I know I’m going to get bad customer service? This is what poor worker relations do. You can’t expect employees to treat customers well when you don’t treat them the same way.
Besides, in the long-run, Costco is cheaper than Walmart because you end up buying in bulk. To me, the deals you can get on toilet paper alone are worth the Costco membership. Where else can I buy 5 months worth of toilet paper for $18? And when I throw in the bulk laundry detergent, olive oil, and other goodies, it’s well worth it.
Bennihana
Mar. 27th, 2013 at 10:09 pm
Some people don’t have $18 for five months of toilet paper. Buying bulk isn’t always a “cheaper” option.
djchefron(Moderator)
Mar. 27th, 2013 at 11:14 pm
Yeah but you never have to worry about running out of toilet paper at the wrong time
Thomas Bell
Mar. 26th, 2013 at 4:41 pm
If January and February sales are the lowest, then why did Costco have a 39% increase during that time period?
Burzghash
Mar. 26th, 2013 at 7:38 pm
And that, ladies and gentlemen, is how you fight back in the interconnected digital age. I haven’t shopped at Walmart since protests start, and I don’t plan to start again until they pay their workers a livable wage.
Welcome to capitalism, fuck-faces.
Sally
Mar. 26th, 2013 at 8:16 pm
There’s a simple answer for Walmart and their employees. It’s called “stock option” or the ability to buy Walmart stock or be given Walmart stock. Let’s say a person works 20 hours a week, for every week they get 1/4 Walmart Stock. That’s an incentive to work. The employee owns some stock and feels as if they’re apart of the company. As it is now, they don’t.
Sara
Mar. 26th, 2013 at 9:15 pm
By the time you get done paying for the medicare and medicaid and fuel assistance and daycare assistance and food stamps that the employees are eligible for, you might as well shop somewhere you enjoy going, or at least somewhere that is more socially responsible and fair to their employees.
Plummit
Mar. 26th, 2013 at 10:38 pm
I haven’t darkened a walmart doorway in many years. Once they moved in, the other chains left. Friends and neighbors that used to make livable wages with insurance were (basically) forced to take a position at wallyworld. Minimum wages with no insurance. Some had spouses with insurance coverage, others had to get on state assistance. I choose to drive the 25 miles to shop at Target and occasionally K-Mart. I admit, I have a good paying job and can afford to shop elsewhere which may not be an option for some. I refuse to pay a few less dollars for an imported, crappy item (pretty much everything on the shelves at walmart) when, for a few dollars more, I can get better quality, and possibly American made! If we would all take a minute to understand how much better our economy would be if most people would put even a little effort into buying American made items, walmart would be either forced into stocking these things, or would just plain go away. I think most people know shopping walmart is bad… Some may be just thick enough to NOT get it. The ones that still go there knowing it is bad are those that could care less about anyone besides themselves. The “It’s all about me” mentality won’t get you too far in this world. Walmart is starting to feel that now. If you can, try shopping elsewhere and looking for Made in the USA tag. If you have a conscience, I promise you will feel better about yourself.
Squeak
Mar. 26th, 2013 at 10:51 pm
My fella uses Walmart like a rental place. He buys the most expensive tent he can find. We go camping for a couple of days and it rains. He stuffs the tent back in the bag and take it back for a full refund! They will take anything back!
Screw them!!
Wiseguy
Mar. 27th, 2013 at 12:01 am
On the other side of the coin can you imagine if Walmart went out of business (not likely they are too big financially) the number of employees that would be out of a job and the companies US and Canadian that supply them. But yes absolutely no harm in trying to hurt them to accept that they do pay crappy wages and benefits and get them to improve. Also they should be made to accept unions and give their employees rights and not penalise employees trying to start a union or close a store because of a human right. And yes squeak I do the same as your fellah and buy something get my use from it and return it for a refund
jeff
Mar. 27th, 2013 at 10:06 pm
if walmart went out of business it would be a temporary setback for the economy. other stores would soon pick up the slack. nature abhors a vacuum, and smart retailers would quickly pick up the most lucrative walmart stores.
on a related note, given last summer’s boom in business at chick fil a, has anybody else noticed how empty their parking lots are now? so much for the cons claims of the best chicken sandwich ever. even they don’t believe that anymore…..
jasmin
Mar. 27th, 2013 at 1:57 am
I recently quit my job at Wal-Mart in February. upon hire I was promised a supervisor position seeing how I had plenty of retail experience. that quickly dropped to just a regular associate. with pay only at eight twenty-five. my supervisor would tell us to was our hands after receiving stock and putting it on the shelves since it was constantly sprayed with pesticides while being shipped over seas from China I was in a section that was understaffed tryingto cover two sections by myself while constantly being asked to cashier. threatening to quit I would get talked into stay with false promises of a raise since I was such a good worker. needless to say I quit before my two weeks cuz working there was that unbearable.
chilipeppr111
Mar. 27th, 2013 at 2:30 am
I stopped supporting Walmart with my money when they changed their business model to one that supported selling substandard goods and foods in fluorescent-lighted, camera-infested wastelands, understaffed with poorly compensated employees who add to the taxpayer burden, because most of them are kept at less than full-time employment, and are eligible for food stamps and Medicaid. Why is that? Because Walmart bought off lawmakers around the country to make all of us foot the bill for their rampant profiteering, and attempts to monopolize their stores at the expense of local businesses.
Ron
Mar. 27th, 2013 at 3:18 am
Family Dollar also treats it’s employees like crap:…reduced hours, unable to pay our rent much less buy food, car/health insurance. Forcing managers to work 50+ hours per week.. some times in the stores by themselves. Expecting of us to put on a happy face.. only to disguise the truth from our customers of how unhappy we really are. I some times go to a local church that serves a hot meal to the poor in the evenings.
MarkD
Mar. 27th, 2013 at 8:43 am
I personally haven’t shopped at Walmart since I read they were locking people in their store at night to clean. Their embrace of conservatism also rubbed my scales the wrong way. I’ll never step foot in a WalMart until I read they’ve given every employee a $10 an hour raise. They can afford it. The Waltons sit upon a mountain of cash. They don’t need mine and won’t get mine.
AdgeDIY
Mar. 27th, 2013 at 9:11 am
The John Lewis Partnership in the UK are bucking the trend by growing their sales and expanding their number of stores while others decline. They are 100% owned by their employees – sorry, ‘partners’. They don’t do cheap, but they do do quality. The shop assistants are knowledgeable, helpful and happy bunnies. They should be – they just got a 17% bonus, which is their share of the company’s profits last year.
Treating your employees the way Walmart do sounds like something from a 19th century Charles Dickens novel.Companies need to recognise their responsibilities to their employees: shareholders invest their money, but employees invest their (and often their family’s) lives and welfare.
Shiva
Mar. 27th, 2013 at 9:44 am
Bingo on the Charles Dickens analogy
Bennihana
Mar. 27th, 2013 at 10:14 pm
JLP is a great organization that puts a ton of effort into maintaining inviting stores and happy partners.
T.S.
Mar. 27th, 2013 at 1:02 pm
In general I try to avoid going to Wal-Mart and I can for most things. Target is the lesser of the evils in case I need something like light bulbs or laundry soap. I kind of feel sad for anyone who doesn’t have an alternative, but with Wal-Mart starting to TANK finally, the market is open to fill the gap.
Fred
Mar. 27th, 2013 at 2:40 pm
The Walmart corporate rightarded Republicans blame it on Amazon, not their anti-American Republican treason-based ideologies that have killed our economy.
nabsentia23
Mar. 27th, 2013 at 5:33 pm
They blame Amazon? Really?
You can get a lot things from Amazon, but not everything. And sometimes, you don’t want to wait to get something in the mail. You want to be able to go to a store and get it the same day.
What idiots! Amazon has definitely caused a few other companies to tank (in particular bookstores), but it’s a stretch to blame Amazon for Walmart’s troubles.
David
Mar. 27th, 2013 at 2:52 pm
Home Depot is just as bad.
Sandra Hamilton
Mar. 27th, 2013 at 3:43 pm
Walmart was the first retailer to start stocking China items and in fact drove Rubber maid out of business in the early 1990s by going from massive amounts to nothing as they ordered it all from China….we need to take back our manufacturing jobs and support the ones that the company reinvests in itself by hiring and paying descent wages supporting companies making items in this country..we can create the new jobs this way and defeat the greedy ones trying to exploit us and shoveling money into their pockets without giving back… Hell No we won’t let you get away with it…
Shiva
Mar. 27th, 2013 at 3:54 pm
The only way we are going to take anything back from China is to simply stop buying things that come from China. Force the retailers to come back here and if they don’t want to do it than they can go out of business
Duane Alford
Mar. 27th, 2013 at 4:47 pm
I’ll hand it to Walmart for one thing. they do have some full time employees, and at least they don’t cut them to part time. Whhere’s the outrage with companies like Winn Dixie? Winn Dixie has plans to cut all their full time employees that aren’t in management to part time. So if you’ve been working there 25-30 years, you’re screwed. Absolutely shameful.
Ingrid Buxton
Mar. 27th, 2013 at 4:47 pm
I havent shopped at Walmart. Early on I learned how they destroyed good suppliers like Vlasic and Rubbermaid with their predatory business practices. Example is here: riverbendjournal.blogspot...
Gary
Mar. 27th, 2013 at 8:02 pm
I agree with Ron about Family Dollar. My daughter worked there and was Asst. Mgr. She was called part-time but worked a lot of hours and odd ones at that, no schedule to speak of. She would call me at closing a lot of times to come and follow her to the bank to make deposits, as the local police were at the doughnut shop I guess. I was so glad when she quit there and took another job. I just knew I was gonna go there or be called that she was killed in a robbery, as she was there by herself at night and they had no security cameras and an alarm that worked as often as the republicans in congress.
julia
Mar. 27th, 2013 at 11:04 pm
i also heard of something walmart does… when they move in and after a while, manage to put the previous stores out of business… they raise their prices ever so slyly. and make you think you’re still getting a deal.
djchefron(Moderator)
Mar. 27th, 2013 at 11:13 pm
Makes sense for vulture capitalist.Just wish people in real America realize that they are the carcass.
VeggieTart
Mar. 27th, 2013 at 11:10 pm
I have never set foot in a WalMart and hopefully will never have to. I’m lucky I live in a large city with lots of options (and a Target about half a mile away). As I live in a small apartment, Costco isn’t an option for me. And I do pretty well ordering online.
It seems like WalMart is hoist on its own petard. They tried to save money everywhere, screwing the workers, screwing their suppliers, forgetting that you have to spend money to make money. If WalMart tanks, I won’t shed a single tear; I’ll only hope that other retailers will be able to fill the gap quickly–and will learn from WalMart how not to do things and from Costco how to do things.
Speaking of which, the CEO of Costco makes far less than other CEOs–around $500K to $600K, I think. It’s quite a breath of fresh air and an indication that he values his labor force more than being able to buy homes on every continent.
Janet Thomas
Mar. 28th, 2013 at 1:54 am
I have been working for WM for over 18 years. I am thankful to have a job. I see where they say they pay holiday pay and cut back hours to make up for those who worked on that day. They give you an extra day off instead of paying it also. When we do get a bonus they cut back your hours so bad afterwards to make up what they paid out. Where is the holiday pay or bonus? It is not unusual to have only one person running a service area. We as associates try our our best to take care of the customers but can only do so much. We feel bad that our customer service is very lacking but we can’t be cloned.
djchefron(Moderator)
Mar. 28th, 2013 at 10:39 am
What can you say other than major FAIL!!!!
Exclusive: Wal-Mart may get customers to deliver packages to online buyers
www.reuters.com/article/2...
jeff
Mar. 29th, 2013 at 12:13 am
if they want me to deliver their packages for them they’ll have to do a lot more than give me a discount. the going rate for a non cdl driver in Pittsburgh is $11 an hour and I will accept no less……
it’s like the self checkout in the stores. they figured out a way to get you to do the work yourself. sad thing is, even many of the employees don’t realize this is cutting their own jobs….
Don Pickle Jr
Mar. 29th, 2013 at 8:13 am
I’ve stopped shopping at WalMart as a labor leader can’t go in in and feel good about it. I go to cosco just bought a cake there for Easter and will take all my families business there.