A few days ago, The Atlantic reported on the unexpected success of stores like Quik-Trip and Trader Joe’s, which treat their employees better:
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.”
According to a Bloomberg News report, that’s what’s happened to Wal-Mart:
It’s not as though the merchandise isn’t there. It’s piling up in aisles and in the back of stores because Wal-Mart doesn’t have enough bodies to restock the shelves, according to interviews with store workers. In the past five years, the world’s largest retailer added 455 U.S. Wal-Mart 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. Wal-Mart employs about 1.4 million U.S. workers.
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, Wal-Mart 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. The dwindling level of customer service comes as Wal-Mart has touted its in-store experience to lure shoppers and counter rival Amazon.com Inc.
Kind of casts a different light on their experiment in crowdsourced delivery, doesn’t it? Maybe more desperate than innovative? Meanwhile, the company is under investigation for violating the Foreign Corrupt Practices Act in allegedly bribing Mexican officials. But hey, at least it’s getting into the higher education racket with a new concept store at ASU. What the heck is going on in Bentonville?