Walmart Hits Limitations of its Profit-at-Any-Cost Business Model

In the business world, Walmart has long been praised for its extraordinary ability to cut costs and maintain an incredible profit margin. Recently, however, the company has posted disappointing numbers in terms of growth. A series of recent articles indicates that Walmart’s cost cutting practices may be coming at a cost to the business. Customers are fleeing to competitors as understaffing leaves stores with long lines and empty shelves.

According to Bloomberg’s“Customers Flee Walmart Empty Shelves for Target, Costco” article:

 “In the past five years, the world’s largest retailer added 455 U.S. Walmart 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.”

“A thinly spread workforce has other consequences: Longer check-out lines, less help with electronics and jewelry and more disorganized stores, according to Hancock, other shoppers and store workers. Last month, Walmart 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.”

“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.”

A number of other stories detail the issue. In its article “Hey Walmart, It’s Hard to Make Sales When Store Shelves Are Empty” Time wrote:

 “One way that Walmart keeps prices low is with minimal staffing levels in stores. But shoppers and workers alike are complaining that Walmart is understaffed, and the results include annoyingly long checkout lines and shelves that are barren—because there’s no one available to restock them.”

Similarly, the Examiner’s “Walmart’s Emptying Shelves and Low Staffing Send Customers to Other Outlet” stated:

 “The public is dismayed with Walmart reaping record profits while its labor force relies on taxpayer dollars for support. However, empty shelves, absent help, fleeing customers and long lines at the checkout are signs of major customer dissatisfaction with the product, which is one-stop shopping and good customer service at discounted prices.”

Customers aren’t the only group that is dismayed. Workers have been very vocal about issues with understaffing for over a year. Regardless of where the issue lies, a MSN Money article “Walmart Shows Signs of Self-Destructing” nicely concludes: “Regardless of what’s causing Walmart’s problems, rolling back both customer service and available merchandise generally isn’t considered a recipe for retailing success.”

 

39 thoughts on “Walmart Hits Limitations of its Profit-at-Any-Cost Business Model

  1. I am on SS retirement so we usually shop at Costco and Walmart, I have noticed lately that Walmart shelves are not stocked like they used to be.lack of enough employees to stock shelves is because they keep employees on part time so they don’t have to give benefits. It’s the one stop shop that keeps me going there

      • The Huff Po is a liberal rag and not to be believed. I never read it. Got something from a real source. She what she did to her rental penthouse apartment to understand what she thinks of the common man.

      • If Jesus Christ appeared in front of you and told you the earth was round, you’d complain about the fact that he was a liberal and say he was lying.

        How about getting off your bed pan and finding something from one of those neo-Nazi Conservative websites you worship that proves you’re point. Maybe you could take a lead from that Conservative hero of old white men, Rush Limbaugh. On his radio show this week, Rush Limbaugh was excited to find a 13-year-old caller who discovered “lots of evidence” that global warming is a hoax. Maybe there’s a 13 year old out there that can help you with your claims.

      • No facts, just invective once again. I look at global warming facts daily (now called climate change as it the earth has not warmed in 2 decades. I know more about it than you will ever know. I go to the source material.

      • Why do you even care about global warming, an old man like you will be dead before anything serious happens.

      • I care about the liberals ruining the economy now becasue of the hoax. I also unlike you have progeny that will live on. Where do you get this weird idea that I am old. I work more daily than you do weakly?

      • I believe that you do work more than I do. It’s not easy being a corporate shill for Walmart.

      • You still just don’t get it. I don’t work for Wal-Mart. Never have. I just believe in the American way. I believe in free enterprise. I live it daily. I get great joy in helping folks become interdependent and break the yoke of dependance. You on the other hand are plain lazy and want something for nothing. You are not willing to work for success. You are on the bottom and are a bitter person. You are to be pitied for wasting whatever talents you might have.

      • Oh, pardon me, I guess I don’t understand. Let’s see if we can clarify this so I understand it better. 99% of the comments on this website are replied to by you. Those replies, (and original comments), made by you are usually nasty, intimidating, condescending and bullying; if someone questions what you have to say then the you start with the name calling; but you say have no ax to grind here, your only goal in life is to help people. Got it! Perhaps you’ll be nominated for the Nobel Peace Prize this year. They’re looking for a replacement for Mother Theresa; you should apply for the job.

      • You are not too good at clarifying. The Nobel Peace Prize is way undervalued since peopole like Arafat, Jimmy Carter, AlGore, and Nobama have been awarded it.

  2. Walmart is getting too big for it’s britches. Their stores are too big for one thing and people like me, who have mobility issues need places where we can sit down, for one thing!! Spending hours on my feet is not an option and I don’t want to rely on their little go carts…..not yet. I would also like to see them go back to the “made in America” attitude. I’m tired of supporting other countries that make horribley cheap products while people right here in America could sure use the work!!!!!!!

  3. Customer service at Walmart is out the window. They dont have enough bodies to work the floor & help customers in the depts they are supposed to be in. If you need help in crafts for material, someone in paints has to cover. Yep I want someone is paints to help me get material cut & have to wait till they get done with helping their customers. Or wait in line 10 deep with all carts full to cash out. while no one is calling for back up to help ring. Shelves so high the average women cant reach for the product. No one who stocks watches dates on pkging, All because they dont want to pay plp to work. Got to keep those store hours for employees low, yes walmart your just getting by but we the consumers are finding alternatives to your ways.

    • If you don’t like it, then don’t shop there. You think hours are low now, wait until ObamaCare kicks in 2014 and max will be 29 hours.

      • How can I prove something that doesn’t happen until 2014. Think things through, Do you not know anything about ObamaCare?

      • For those who read about it, pretty easy to grasp. Work 30 hours and either pay a $2,000 fine or supply a gold plated $7,000 ObamaCare approved medical plan. For an idiot like you, the decision would not be clear, but for the unskilled work who isn’t worth either of these, they will find themselves at 29 hours. Can’t prove it, but logic and the other business folks I talk to will be separating their employees into two categories , those worth it and those not worth it. There will be very few employees working between 30 and 40 hours. Stop and think about it.

      • If you read the article (that’s assuming you can read), you will note that Walmart has reached its breaking point as far as reducing hours. If it wants to stay in business, it has to have products on the shelves. The only cutting they can do now is closing their doors. I don’t believe in god, but that’s certainly something I would consider praying for.

      • When I go into Wal-Mart they do in fact have items on the shelf. They are the largest selling retailer on earth. They can not be doing this with empty shelves. The new ObamaCare standards of 29 hours are going to be in place for Wal-Mart and all other employers over 49 employees starting 1/1/2014. The worker’s world will change then. Employers will have to decided if an employee is worth the mandated $7,000 ObamaCare healthcare policy or payment of the $2,000 fine. Those unskilled workers and employees that have not demonstrated their worth to the company will be forced to the 29 hour rule. You need to keep up on the news and you won’t get it reading only the union inspired news.

  4. All I can say is: GOOD! Means the local small business owner will be bakc in business soon. and will be able to compete with American made goods that will improve the economy. Now, to work on the OIL industry. Sadly with ;ess than the cost of the Bush wars…every home in America could have gone full solar and saved every American citizen the cost for power. What are these men thinking in Washington?

    • You obviously have no clue about the cost of solar. The power generated does not even come close to the time value of the installed cost of capital. If it worked like you seem to think. When you get your solar, then complain about everybody else. It is a joke.

      • You’re heroes in Bentonville disagree with you! They are not going to like the fact that you are speaking against their corporate policy. Sounds like Walmart’s corporate shill get’s it wrong again!

        Wal-Mart has now covered 200 of its 4,500 domestic stores and distribution centers with solar panels, and it plans to expand that number. It just announced a deal with SolarCity (NASDAQ: SCTY ) to install solar panels on up to 60 more stores in California, bringing solar to 75% of stores in the sunny state. Solar is more than a PR stunt for Wal-Mart, it’s a core piece of the company’s energy policy, plus it’s just good business.

        http://www.fool.com/investing/general/2013/03/14/why-wal-mart-loves-solar.aspx

        Last week, Walmart announced that it was working with SolarCity to install solar panels on 12 stores throughout Ohio.
        http://www.siliconbeat.com/2013/03/11/walmarts-solar-strategy/

        Walmart likes wind power too:

        Welcome To Walmart: Wind Energy Is Key Part Of Retailer’s Plans
        http://www.nawindpower.com/naw/e107_plugins/content/content.php?content.11278#.UWLIwqLqmE4

      • Wind power is a joke and anybody who has looked at it will know. Only those looking at it as a political tool will like it. I don’t care if Wal-Mart or the Vatican has them, the facts remain. I will go by the facts. How many solar panels or wind mills do you have?

      • The Gestapo in Bentonville is not going to be happy that you are not towing the corporate line.

      • Once again, wind and solar are a bad idea at this state of technology. Now now many of each do you have? You are a hypocrite if you keep pushing others to have them and don’t yourself. Fisker Electric Cars fired 80% of their employees and haven’t made a car since June. They were rewarded a $529 MILLION grant from the US taxpayers.

      • Wind power has been around for hundreds of years. US subsidies for electrical generation from wind generators have been around since the 1980′s. It is a failed proposition. The fact that you think it is “new” demonstrates it’s lack of success and your lack of knowledge of the basics. The failure in the North Sea, Germany and Spain demonstrated the other guy’s lack of knowledge also. Any other questions, dumbo?

  5. Shop local. Freds stores here in the south have almost exclusively American products, aggressively hire disabled workers, support the Baddour Center which houses and supports mentally disabled people. The Baddour Center is famous for it’s choir which performs all over the country. They do all of this at the same or better prices than Walmart and serve you with a smile. The owners are real Christians and don’t advertise their service to the country but we can!

  6. let get
    Walmart change into United Food And Commercial Workers Unionize Walmart
    Store for all Walmart Cashier Workers and for all Walmart Produce Workers and
    for all Walmart Deli Department Workers and for all Walmart Bakery Department
    Workers and for all Walmart Pharmacy Workers,
    let get Walmart change into Teamster Unionize Walmart Store for all
    Walmart and Sam’s Club Truck Driver Workers and for all Sam’s Club Forklift
    Driver@Stock Person Workers and for all Walmart Stock Person Workers and for
    all Sam’s Club Cashier Workers and for all Sam’s Club Meat Cutter@Meat Wrapper
    Workers and for all Sam’s Club Produce Workers and for all Sam’s Club Deli
    Department Workers and for all Sam’s Club Bakery Department Workers and for all
    Walmart Customer Services Desk Workers and for all Sam’s Club Membership Desk
    Workers and for all Walmart Courtesy Association Workers and for all Sam’s Club
    Cart Attendance Workers and for all Walmart Maintenance Association Workers and
    for all Sam’s Club Maintenance Workers and for all Sam’s Club Pharmacy Workers,
    let get Walmart Change into Communication Workers of America Workers Unionize
    Walmart Store for all Walmart and Sam’ Electronics Workers, let get Walmart
    change into United Auto Workers Unionize Walmart Store for all Walmart
    Tire@Lube Express Workers and for all Sam’s Club Tire@Car Battery Installment
    Workers right of away and right now please by make Walmart give all Walmart
    Workers and all Sam’s Club Workers a Living Wage With Affordable Health Care
    Right of away and right now please without close down all the Walmart Store and
    without close down all the Sam’s Wholesale Club

    Think You Very Much

    From Tom P Noonan

    • Yeeeaaaaahhhhhhhhh………… That rant says it all. Your grammar is about as good as your IQ. What an idiot you are Mister Tom P Noonan

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