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    The Walmart Saga: Empty Shelves, Full Exec Pockets

    By Ramona on Wed, 03/27/2013 - 6:21am | Business, Personal
     

    I've been debating about writing about Wal-Mart for a while now for one very good reason:  If I write as a knowledgeable shopper, people will know I shop at Wal-Mart.  Chicken of me, I know, but some of my best friends, relatives and acquaintances refuse to shop at Wal-Mart, and they don't like to be reminded that I'm not one of them.

    I shop at Wal-Mart.  Not always, but often enough to be considered a Wal-Mart shopper. I will make no excuses for shopping there because I know that every one of my excuses can be shot down.  Sometimes when I'm walking into a Wal-Mart I think about all the storekeepers who will hate me for what I'm about to do and I beat them to it:  I hate me, too.  But I go in.

    So when I write that I've seen empty shelves in many Wal-Mart stores, you should know that I know what I'm talking about.

    Today Bloomberg News published an article about Wal-Mart's empty shelves and, while I wasn't completely shocked at the scope of it, I did feel vindicated, considering the lengths I've gone to to get the managers of the various Wal-marts to understand how irritating it is to go looking for a list of things and not find even one of them.

    For example, my morning must-have to go along with my essential mug of coffee is a two-square slab of Nabisco Nutter Butter Patties.  Our particular Wal-Mart up north stopped stocking them and when I went looking for the person responsible I was told that not enough people were buying them, so out they went during the periodic product purge. They were kind enough to order a case just for me, and what I didn't want out of the case they would put on the shelves and leave them there until they were purchased, either by me or some other Nutter Butter nut.  Fine.  Solved.  (No other store around sold them.  Really.  I looked.)

    Wal-Mart also makes an excellent blue cheese dressing, sold in the refrigerated section of the produce department.  It's like finding gold when we see them stocked, which isn't very often.  You would think they would at least pay attention to stocking their own brands.  But, no.

    Empty shelves are a given at every Wal-Mart now and the reason, we've finally confirmed (but should have known), has more to do with a scaling down of employees than it does with incompetent managers.  Not every manager of every store could be that incompetent.  No, this is about greed.  The Walton Companies rake in so much money entire countries (including this one) are green with envy, yet when it comes to money and the Waltons, there's no such thing as sharing without a fight.

    This from the Bloomberg piece (emphasis mine):

     Adding five full-time employees to Wal-Mart’s (WMT) U.S. supercenters and discount stores would add about a half- percentage point to selling, general and administrative expenses, according to an analysis by Poonam Goyal, a Bloomberg Industries senior analyst based in Skillman, New Jersey. Assuming the workers earned the federal minimum wage and industry standards for health benefits, the added costs would amount to about $448 million a year, she said. In the year ended Jan. 31, Wal-Mart generated $17 billion in profit on revenue of $469.2 billion.

    I, an admitted Wal-Mart shopper, have long despised Wal-Mart's employee practices.  That's my dilemma and my shame.  In my little corner of the country there are no Targets, no Kohls, no Costcos, no Meijers.  I wish there were, but there aren't.  But there are smaller supermarkets, other stores that don't offer one-stop shopping.  And there is the internet.

    So Sayonara Wal-Mart.  Raspberries to you.  And as a parting shot, here's how Costco does it and why it would be worth the $50 a year it costs to join if there was one in the neighborhood:

    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.”

     So, okay, most of Costco's goods come from China and other foreign countries, as do most if not all the goods in every other store, bulk or otherwise, but Costco gets it.  They understand that their success wouldn't be nearly as sweet if their employees weren't sharing in it, too.

    Trader Joe's is heading that way, too.  (Though TJ gets demerits for holding out for years before finally relenting and agreeing to give Florida tomato workers a raise of a penny a pound, and supporting better working conditions for those poor, poor, desperately poor pickers.  I mean. . .really? Years?)

    But, here. . .

    Many employers believe that one of the best ways to raise their profit margin is to cut labor costs. But companies like QuikTrip, the grocery-store chain Trader Joe's, and Costco Wholesale are proving that the decision to offer low wages is a choice, not an economic necessity. All three are low-cost retailers, a sector that is traditionally known for relying on part-time, low-paid employees. Yet these companies have all found that the act of valuing workers can pay off in the form of increased sales and productivity.
    "Retailers start with this philosophy of seeing employees as a cost to be minimized," says Zeynep Ton of MIT's Sloan School of Management. That can lead businesses into a vicious cycle. Underinvestment in workers can result in operational problems in stores, which decrease sales. And low sales often lead companies to slash labor costs even further. Middle-income jobs have declined recently as a share of total employment, as many employers have turned full-time jobs into part-time positions with no benefits and unpredictable schedules.

    So way to go, Wal-Mart!  You've finally figured out a way to make yourselves Numero Zilch!  It took a while but take a bow.  A long bow.  Hold it.  Just a little longer. . .


     

     
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    Comments

    We go perhaps once or twice a year. I showed my daughter, Wal-Mart: the High Cost of Low Price a decade ago, and she grouses at even the thought of us shopping there. When I'm out of town, my wife goes to Sam's Club with her sister, who is a member, but I find the place creepy. We briefly tried a local place called BJ's, but it was also creepy. And in both the food seems to be uniformly cheap and not really food.


    by Donal on Wed, 03/27/2013 - 8:23am

    Wait, what?  Not really food?  Those bastards!


    by Ramona on Wed, 03/27/2013 - 10:23am

    Great post, Mona. What Wal-Mart is doing to itself is what our larger economy is doing to itself, in lots of ways.

    And your secret is safe with me. ;)


    by Doctor Cleveland on Wed, 03/27/2013 - 9:00am

    I knew I could count on you, Doc. wink


    by Ramona on Wed, 03/27/2013 - 10:27am

    I am still stuck on the fact that Walmart pulls in half a trillion dollars every year!


    by Richard Day on Wed, 03/27/2013 - 10:21am

    Me, too, Richard.  But it doesn't all come from me.  Honest!

    But seriously, I don't know how they can do the things they do to their employees and still brag about their profits.  They're disgusting creatures--right up there at the top with a whole lot of other greedy capitalists who think we'll go on believing forever that they're saving our economy by keeping all the money for themselves.


    by Ramona on Wed, 03/27/2013 - 10:27am

    You are on a roll Ramona.  Good on you for choosing Costco, a unionized shop (at least in part) that treats its workers better than does Walmart.  Having said that, let me make it  clear that there are people all over the country who basically have no choice but to shop at Walmart for various goods.  On the other hand, in places where folks have a choice, Walmart deserves the criticism it gets and, I would urge folks in those places to shop elsewhere.  I live in a world where I don't have to look for Walmart forever so it's easy for me to stay away.  Of course, in places where Walmart has what is tantamount to monopolistic control over consumers, they got there because they put a bunch of small business owners out of business.  And it's a problem.

    I know quite a bit about Walmart and its employment policies as a consequence of litigation and labor disputes over the years.  Walmart, like other employers, used to lock cleaning workers "employed by subcontractors" in the stores overnight to prevent theft, and many of these cleaners--many of whom were undocumented and without much chance of a remedy--worked every single day of the year for less than minimum wage and without overtime pay. 

    That happened, it really did, and probably still does.  Again, those with a choice should think about whether it really is necessary to shop at Walmart.
     

     


    by Bruce Levine on Wed, 03/27/2013 - 1:16pm

    How do they get away with those practices once they're out in the open?  Locking people up inside a building is frowned upon in most courts, isn't it?  Another example of this country's insane need to keep the capitalists happy.

    Another thing WalMart does that just grinds me is that they will match any advertised price, so the poor schnooks who think they might beat WalMart's prices find that many of their own customers will take their ad into the Big W to do their one-stop shopping.

    I've sunk low but not that low.  I won't do it.  If I see something I want in a store ad I'll buy it at that store.  Why let them spend their advertising dollars so that W can profit?


    by Ramona on Wed, 03/27/2013 - 3:16pm

    Good question Ramona, but as I have learned, Walmart is not alone in locking cleaners inside major super stores at night.  Walmart is the largest, and its use of "subcontractors" and its hiding behind such third parties in an attempt to get away with their treatment of the people who make Walmart shine, should cause folks to think twice, if they can, before shopping at Walmart.


    by Bruce Levine on Wed, 03/27/2013 - 3:45pm

    Yes, to your last comment.  And if there are other major super stores doing it, we should stop shopping there, too.  I'm looking to write a piece about the right-wingedness of the home improvement superstores soon.  You just can't get away from those bastards.


    by Ramona on Thu, 03/28/2013 - 8:17am

    Walmart's customer decline started when they pulled the fabric department in most of their stores and put in party and wedding supplies.  There was on-line petitions being signed across the country and a letter campaign.  This was leaving many sewers with out needle art and fabric supplier in driving distance from their home.  That was because the small local shops were now gone when they could not compete with the large store on prices.  All the complaining from customers did not change the top brass from moving forward with dropping the fabric department.  It was a department that needed a trained clerk with knowledge of sewing and needle arts at all times during the day.  They couldn't not float someone in and out of the department or not cover it for dinner or breaks.  Buying fabric on line can lead to disappointment because you really need to see it and handle it before you buy.  Pictures and descriptions of modern blended fabrics don't always give the full story of the fabric.  Not like it was during the hay day of Montgomery Ward and Sears catalog when all the fabric was just a half a dozen types and most people only sewed cotton.  When Sam opened his first store, it was not doing well. Helen told him that if he put in a fabric dept. women would shop there.  She liked to sew and had to drive a long way to purchase her supplies for needle crafts and sewing.  In those days they only had one car and she had to load her little kids in the car for the long drive and take Sam to work.  So she kept pointing that out to Sam each time she had to do it.  He did not want to bother with having the extra employees for manning the cutting table and putting up all the tiny stock items.  People kept going to the Ben Franklin Store across the street and very few would bother with his.  He finally gave in and ordered fabric and a complete line of notions.  Everything came in and the new counters so he worked all day on a Sunday to get them put together.  He wasn't able to get it all done.  So on that Monday word got out that there was fabric at the Walton 5 & 10 and he was stuck all day cutting fabric and digging through boxes for zippers and thread for customers.  He had made more money that day then he had the whole month before.  The customers came for fabric and patterns but also shopped for everything else they might need.  After that the rest is history and he would not have been able to succeed with that first store had it not been for the fabric dept.  Helen took a big interest in that department and always had him add new items and trendy stuff while she was alive.  The loss of fabrics turned off many customers and others just shopped for other things near or in the direction of the fabric store they went to.  I lost interest in shopping at Walmart because my reason for shopping at the store was fabrics.  I could run over to Walmart in the middle of the night and get a zipper or thread I needed right then to finish a project I was in the middle of.  Not anymore I have to wait to the next day and go to the fabric store.  If I need anything else, I stop at other stores on the way because Walmart is in the other direction and out of the way. (Sorry, my enter key isn't working for paragraghing) This history is from Sam Walton's Biography that I read years ago.


    by trkingmomoe on Thu, 03/28/2013 - 4:20am

    Momoe, that's fascinating!  Yes, I remember when they gutted the fabric department, too.  Stupid.  But soon after they opened a WalMart up north in the town where I shop they also opened a small JoAnnes, so it was no big loss.

    When I lived on Maui the clothes were so expensive if I wanted Hawaiian muu muus for me and my daughters and Hawaiian shirts for my husband and my son I had to make them.  I bought my fabric at the Ben Franklin and they had such a huge stock of gorgeous fabrics I went nuts trying to decide which to choose.  I brought lengths of fabric back with me and when my husband and I celebrated our 25th Anniversary we chose a Hawaiian theme and I made our "fancy duds" out of that fabric.  I still have them tucked away.  I can't bear to give them away because they're like works of art to me.

    Anyway, I thought of it when you mentioned Ben Franklin.  On Maui in the 60s the stores stayed open late on Friday nights and for some reason everybody dressed up and met at the Kahului Shopping Center, where the anchor store was the Ben Franklin.  It was the only big store on the entire island and it had everything.  Somehow we managed to get along without a WalMart.  (But, yes, WalMart is there now.)


    by Ramona on Thu, 03/28/2013 - 8:33am

    I also noticed that items that was always at Walmart was now missing that started about the same time the fabric department was pulled.  They simply was not reordering slower moving items.  It used to be if you had a two and a half turn over in a line item for a season (3 month cycle), it was considered a good seller and stayed on the shelf or ordered for next year's season.  Now the large stores only want to handle very high turn over items.  They are working under a bad business model for short term gains.  They are not too big to fail.  I enjoy going to the new Dollar Store Market that opened last fall near me.  They have very limited line items but I like the people who work there.  They seem happy and friendly.  It is more like the old small neighborhood IGA stores many years ago only they don't cut their own meats.  It is shipped prepackaged.  I go there for things that are cheep and then drive to a grocery store for the other stuff. I only go to Walmart for a few things or for a midnight run for milk.  I don't have the money to just shop for something to do.  I have to need it and plan for it.  Winn Dixie offers fuel perks discount program.  You get a discount on your gas purchase with your store card.  They are partnered with Shell Oil Co.  The amount of discount you get depends on how much you spend on groceries and items that offer extra nickel off a gallon if you buy it.  I bought a tank of gas yesterday and got $2 off a gal.  There is a 20 gal. limit my car only takes 11 gal. So I always take my daughter with me with her car and we get the full 20 gal. I only use about a tank a gas a month.  So I shop carefully at Win Dixie so I don't pay too much for an item that is a fuel perk and figure out in my head if it is going to save me money at the store and fuel pump.  So why would I go to Walmart?  It is a great program for people with food stamps or working poor that is struggling to keep gas in their cars.  Walmart is way too big to be creative with sales promotions.  Other chain stores are figuring out how to attract Walmart shoppers into their stores.  


    by trkingmomoe on Thu, 03/28/2013 - 5:32am

    Down in the south where we're snowbirding we shop at Kroger's, which also has the gas plan.  We're leaving here on Saturday so we'll fill up tomorrow and we'll get 20 cents a gallon off of our gas price.  Our daughter is here, too, so we'll do the same thing you do.  We can get 35 gallons on that 20 cents off so it'll be enough to fill both tanks.  Every little bit counts.

    With the savings on our costs up north in the winter (electricity, propane, satellite dish, internet, etc.) it costs us only a little more to head south and spend the winter in relative warmth.  Because everything is at such a distance up north (120 mile round-trip to the city) we spend a fortune on gas for our car.  Down here everything is within a few miles, and the gas prices are 40 to 50 cents a gallon less than they are up north, so the savings on gas alone is pretty significant. 

    But you're right.  WalMart does have competition in most places and it's easy to side-step them.  It's the ease of one-stop shopping that is often the lure.


    by Ramona on Thu, 03/28/2013 - 9:11am

    If there was ever any doubt that Walmart is pure evil, their latest idea proves it.  In order to compete with Amazon.com, Walmart is thinking about asking their in-store customers to deliver packages to their online shoppers.  It's not enough to bust unions anymore, it's now asking the masses to assist in putting their own neighbors out of work.  Unbelievable. 

     

     


    by MrSmith1 on Thu, 03/28/2013 - 9:36am

    Oh, boy, leave it to WalMart!  We do this all the time up in the north country, though on a much smaller scale.  We were in a GFS 60 miles away from home last summer and someone up front yelled, "Anyone going to the island today?"   So we delivered a case of coffee cups to the gas station on our way home. 

    People make requests like that on our local Facebook pages all the time.  Nobody ever thought to make a business out of it.


    by Ramona on Thu, 03/28/2013 - 10:54am

    It's a lot different when you're in a somewhat remote location, like Nantucket or Whidbey island ... this is not islanders helping each other out because the mail service doesn't go there every day, or UPS only gets there once a week.  This is a deliberate attempt to eliminate their costs of doing business by using free labor and thus avoid hiring workers or using services like UPS, FedEx and the USPS.  It's unconscionable.   


    by MrSmith1 on Thu, 03/28/2013 - 12:20pm

    I was finally able to read that article, MrSmith.  For some reason it wouldn't load before.  I can't see it happening the way the title suggests.  The liability would be enormous, for one thing. 

    What I read was that they're looking at shipping online orders from local stores, but the idea of using customers to help deliver goods is in the talking stages and not expected to go much further.

    Wal-Mart has millions of customers visiting its stores each week. Some of these shoppers could tell the retailer where they live and sign up to drop off packages for online customers who live on their route back home, Anderson explained.

    Wal-Mart would offer a discount on the customers' shopping bill, effectively covering the cost of their gas in return for the delivery of packages, he added.

    "This is at the brain-storming stage, but it's possible in a year or two," said Jeff McAllister, senior vice president of Walmart U.S. innovations.

    Indeed, the likelihood of this being broadly adopted across the company's network of more than 4,000 stores in the United States is low, according to Matt Nemer, a retail analyst at Wells Fargo Securities.

    "I'm sure it will be a test in some stores," he added. "But they may only keep it for metro markets and for higher-priced items."

    By the way, we get our prescriptions through WalMart and they're shipped free via UPS.  Sometimes we get them the next day.  Our doctor keeps the WalMart generic list in his office ($3/30 days or $10/90 days) and tries to prescribe accordingly.  So there are a few things WalMart does right. (WalMart's move in that direction has prompted other major drug stores and supermarkets with pharmacies to do the same or nearly the same.  That's a good thing, too.)


    by Ramona on Thu, 03/28/2013 - 1:25pm

     We'll see ... Few people believed that Walmart could come into their town and devastate their mom and pop small businesses ... until they did.  

    Walmart has never played fair and if what they do results in something good for consumers, you have to ask, at what price?


    by MrSmith1 on Thu, 03/28/2013 - 9:25pm

    Congrats & Welcome to the club.  I just renewed my
    Costco membership.  I buy all of my gas at Costco and I purchase organic meat and high quality chocolate there regularly.  My daughter and I share a membership so it makes it even better.  We both stopped shopping at Walmart a few years ago.  I feel good about supporting businesses that are treating their employees well.  I would love to support more of them by voting for their business with my dollars.  Here's hoping it catches on.

     


    by synchronicity on Thu, 03/28/2013 - 9:25pm

    I remember the last time I was in Wal-mart five years ago.  I was in Sheridan, Wyoming for a construction project, it was Sunday, and I needed rubber boots due to mud/snow.  I still have self-loathing for succumbing to their accessibility.  Next time, rather than face the moral consequences, I choose to slog in my work boots.


    by Tim Danahey (not verified) on Thu, 04/11/2013 - 12:33pm