NEW YORK (AP) - Wal-Mart Stores Inc. will cut about 11,200 jobs
at Sam's Club warehouses as it turns over the task of in-store
product demonstrations to an outside marketing company.
The move is an effort to improve sales at Sam's Club and comes
on top of a decision to close 10 underperforming warehouse
locations, which cost 1,500 jobs.
The cuts represent about 10 percent of the warehouse club
operator's 110,000 staffers across its 600 stores. That includes
10,000 workers, mostly part-timers, who offer food samples and
showcase products to customers. The company also eliminated 1,200
workers who recruit new members.
Employees were told the news at mandatory meetings on Sunday
"In the club channel, demo sampling events are a very important
part of the experience," said Sam's Club CEO Brian Cornell in a
phone interview with The Associated Press. "Shopper Events
specializes in this area and they can take our sampling program to
the next level."
Shopper Events, based in Rogers, Ark., currently works with
Wal-Mart's namesake stores on in-store demonstrations. Sam's Club
is looking to the company to improve sampling in areas such as
electronics, personal wellness products and food items to entice
shoppers to spend more.
Sam's Club has underperformed the Walmart chain in the U.S. and
abroad. Cornell has been working to improve results since taking
the helm in early 2009, introducing new store formats, price cuts
and offering more variety and more brands of items from take-home
meals to baked goods.
As consumers eat out less in the shaky economy, Sam's Club has
tried to steal customers from grocery chains and rival warehouse
stores like Costco Wholesale Corp. by offering more everyday goods
like food and health and beauty items and paring its assortment of
general merchandise like furniture and clothes.
But during Wal-Mart Stores' most recent quarter, revenue at the
Sam's Club division slipped nearly 1 percent to $11.55 billion
while U.S. Walmart stores posted a 1.2 percent sales increase to
"Sam's has been the relative laggard, and it has lagged
relative to its direct competitors, Costco and the smaller BJ's
(Wholesale Club)," said Craig Johnson, president of retail
consultancy Customer Growth Partners.
The move to outsource its food sampling efforts is a way for the
company to tout its fresh food offerings in a cost-effective
manner, Johnson said.
"'Fresh' is where the real competitive battles are being fought
in the club sector," he said.
Shopper Events will launch a new demo program called "Tastes
and Tips" with new carts, signs, uniforms and a trained team, said
Cornell. He said the move was not made to save money.
"It's not a cost cutting measure, its really an investment in
enhancing our demo program," he said. Cornell added that Shopper
Events plans to hire "roughly the same number of people" cut, and
said Sam's Club workers are invited to apply for those positions.
Cornell said Sam's Club decided to eliminate its membership
recruiting unit because "we have found that we can more
effectively drive membership through targeted member acquisition
events and by increasing our partner membership programs."
"I feel betrayed," said Sally Grueling, 56, who had worked at
Sam's Club for nine years, most recently in Hilliard, Ohio as a new
business membership rep.
In a memo to employees, Cornell said eligible workers will
receive severance pay and benefits, and that the company will help
them find opportunities at other Sam's Clubs and in Walmart stores,
in addition to Shopper Events positions.
The cuts come as many Americans had hoped job losses would abate
as the economy slowly recovers. However, analysts said Sunday that
while this marks Wal-Mart Stores' largest job cut, they expect many
employees to be picked up by Shopper Events, so the net effect on
the economy probably won't be that bad.
"I would argue that from an economic standpoint it's somewhat
nominal," said David Strasser, a retail analyst with Janney
Montgomery Scott. "It looks a lot worse than it really is from a
layoff standpoint. My read is the majority of employees are going
to be picked up by Shopper Events."
Strasser said he did not expect the move to materially affect
Wal-Mart Stores' fourth-quarter earnings results. Wal-Mart reports
results for the quarter and full year in February.
"It really should be neutral to the economy," Johnson agreed.
He said Wal-Mart remains the largest private employer in the world
and in the U.S. "None of that changes."
The number of jobs created via Shopper Events may not be
one-to-one, he said, "but should be fairly close. Net net I don't
think it makes a huge difference on the economy."
(Copyright 2010 by The Associated Press. All Rights Reserved.)