Why Wal-Mart is cutting office jobs, but sparing stores
Many iconic retail chains are cutting back these days. But one year after raising the wages of its retail staff, Wal-Mart is instead cutting back at the corporate level.
Many iconic retail chains are cutting back these days. But one year after raising the wages of its retail staff, Wal-Mart is instead cutting back at the corporate level.
Even the world鈥檚 largest retailer can鈥檛 avoid the challenges facing brick-and-mortar stores. Wal-Mart will soon cut hundreds of jobs from its Bentonville, Ark., headquarters and its regional offices, as The Wall Street Journal first reported this week.
The announcement comes amid a downturn for some traditional retail stores. Macy鈥檚 and Sears听are cutting back, as 海角大神 reported last week,听as more consumers shop online or at discount-rack stores, although some segments, like fast fashion, have bucked the trend. Wal-Mart, which predicts flat earnings growth for its next fiscal year, is also feeling the pinch. 鈥淲e are always looking for ways to operate more efficiently and effectively,鈥� spokesman Greg Hitt told Fortune, although he did not confirm job cuts.
But unlike other troubled chains, which have closed stores and laid off retail staff, Wal-Mart is cutting costs at the corporate level. Meanwhile, it鈥檚 continuing an expensive 鈥� and controversial 鈥� effort to improve its stores by paying workers more.
For years, labor groups criticized Wal-Mart for its treatment of retail staff, including its wages and a lack of unions.听A 2011 study from the University of California, Berkeley听found that its employees earned an estimated 12.4 percent less than retail workers as a whole, and 14.5 percent less than workers in large retail in general.
Last year, the chain announced a "two-year, $2.7 billion investment in workers," in which all employees hired before January 1st, 2016 would receive at least $10 per hour; new hires' wages would start at $9 per hour, but increase to $10 after they complete a training program.
Amid rising concerns about inequality and low minimum wages, this pay hike at the world鈥檚 largest retailer sparked debate. Some saw the wage hikes as a smart business decision that听better motivated workers听and reversed years of customer complaints about poor service.
But others saw the wage increase as trouble for Wal-Mart鈥檚 bottom line, and dismissed some arguments in favor of it听鈥� such as the idea that better-paid employees would spend more in-store, helping to offset the losses of paying higher wages.听
Other critics argued the wage hike didn't go far enough, as the Monitor reported in 2015:
This week's job-cutting news听comes as the latest of several Wal-Mart cost-cutting measures which have left white-collar employees in Bentonville uneasy. In September, the company announced it would cut 7,000 back-office positions; last October, it eliminated 450 positions at headquarters, a move it said would make Wal-Mart more "nimble."
But unlike their counterparts at Sears or Macy鈥檚, the sales associates at your local Wal-Mart are probably breathing a sigh of relief.