Walmart Cuts Some Overnight Shifts in Latest Streamlining Move
(Bloomberg) -- Walmart Inc. is cutting the graveyard shift in hundreds of stores while also expanding the use of a labor-saving product sorting machine -- the latest efforts by the world’s largest retailer to whittle down expenses across its sprawling U.S. operations.
The company is eliminating the overnight shift that restocks the aisles at about 300 stores, and will aim to transition those employees to other hours. The impacted stores are primarily smaller ones with lower annual sales or customer traffic. At the same time, Walmart’s expanding the use of a backroom conveyor system that takes boxes of products from trucks and scans them to speed their delivery to the shelves. The so-called “FAST Unloader” machine will be in 1,700 stores by the end of the year, up from 400 now.
The moves show how Walmart, despite strong sales, is grappling to keep a lid on operating expenses -- especially as labor and transportation costs and e-commerce investments weigh on margins. The automation of everyday tasks like scrubbing floors and checking shelves for out-of-stock products can boost productivity and free employees up to interact with customers, Walmart has said.
Walmart’s 4,756 U.S. stores will see “lots more change,” U.S. Chief Executive Officer Greg Foran said at an October investor meeting. “Roles will change, how we work will change.”
Those changes include transitioning Walmart’s trademark store greeters to “customer hosts,” a role with broader responsibilities such as checking shopping carts for theft and handling refunds. That move prompted a wave of criticism as some disabled greeters feared they would lose their jobs if they couldn’t handle the additional duties. On Thursday night Foran addressed the issue, releasing a memo that promised to give those greeters more time to find a new job than the usual 60 days.
Foran’s memo spoke of his need to make “tougher choices related to the roles our associates play and how we staff our stores. I never make these lightly.”
Walmart’s U.S. chief has been making those choices for several years now, including a decision in 2018 to remove 3,500 co-manager positions along with cuts to its headquarters staff. The retailer has also added roles, such as the 37,000 workers who currently pick and pack orders for its online grocery pickup service, which is offered in more than 2,000 locations and will expand to another 1,000 stores this year. For eight consecutive quarters, Walmart’s U.S. sales growth has outpaced the rise of expenses like labor, a key metric that the company refers to as “leveraging expenses.”
Walmart has even adopted the zero-based budgeting approach popularized by companies such as Budweiser maker Anheuser-Busch InBev SA. The strategy asks managers to justify costs without regard to previous spending levels.
The elimination of overnight shifts is part of that broader belt-tightening, and it has precedent: In 2017, Foran cut the shifts from Walmart’s Neighborhood Market stores, which are roughly the same size as traditional supermarkets. At the time, Walmart said that associates who had worked the overnight shift “told us they liked the ability to move to day shift.”
“If someone wants to keep their overnight shift, we will work with nearby supercenters or distribution centers to see if there are options to better fit their schedules,” Walmart said at the time.
Cierra Harrington, a single mother, said her move off of the overnight shift wasn’t handled well, however. She had worked the overnight shift at the Walmart in Grantsboro, North Carolina for four years. In early December, she said the 25-person overnight shift was called in to a meeting and told that they had to transition to daytime hours.
Harrington’s new assigned shift was 4 a.m. to 1 p.m. -- a time slot she couldn’t manage because it would leave her 4-year-old daughter unattended. So she quit, and now works as a tax preparer.
The company should have allowed for more flexibility, since “it’s not our fault that our overnight positions are going away,” Harrington, 22, said.
Walmart said it expects 95 percent of employees impacted by the change to find new jobs with the company.
“As we continue to focus on making sure our associates are working when and where our customers need them most, we’re shifting some overnight work to daytime hours,” Justin Rushing, a Walmart spokesman, said in response to questions from Bloomberg. “By shifting these hours, we’re able to make sure more associates are on the floor during peak customer times, resulting in better customer service.”
The unloading machines, meanwhile, reduce the number of people needed to unpack trucks and will help move products out of backrooms faster. The system prioritizes items that are currently out of stock, a vexing problem that Foran addressed at a meeting of Walmart’s suppliers this week.
“We are not even close to where we want to be” when it comes to in-stock levels, Foran said at the meeting, according to notes taken by two people who attended and who declined to be identified as the meeting wasn’t public.
©2019 Bloomberg L.P.