Wal-Mart cuts about 11,200 Sam's Club staffers

Discussion in 'Wall St. News' started by S2007S, Jan 24, 2010.

  1. S2007S


    What to make of this one. They said they are cutting the 11,200 staffers and hiring an outside marketing company, but also went on to say that the Shopper Events will most likely higher back all of these staffers. Going to be interesting to see how this plays out, I highly doubt all 11,200 that are let go will have a job the next day with Shopper Events. Who knows if the thousands of people let go will want to work for "Shopper Events" vs a Sams Club type of environment.

    Wal-Mart cuts about 11,200 Sam's Club staffers
    Wal-Mart Stores cuts about 11,200 Sam's Club jobs nationwide as it outsources product sampling

    By Mae Anderson, AP Retail Writer , On Sunday January 24, 2010, 5:13 pm EST

    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, which has underperformed the company's namesake stores in the U.S. and abroad.

    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 morning.

    "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 performed weaker than Wal-Mart Stores Inc.'s namesake stores 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 $61.81 billion. Earlier this month, Wal-Mart Stores closed 10 underperforming Sam's Club locations, resulting in the loss of about 1,500 jobs.

    "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 be slowing 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, 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 my 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."
  2. pupu


    Great news!!!

    When WMT, the poster child for a recession happy business is slowing down=recession is slowing down=>we have a full blown recovery on our hands=Huge rally will follow

    Buy Buy Buy!!!!!!!
  3. mkt up on news

    greeters will now consist of bag ladies with palms out
  4. I prefer Costco, but Sams is my 2nd.
  5. They were not very good employees anyway. I never thought they were very friendly. It's about time. Everyone goes there at lunch for the freebies. Now, hopefully, you get a hot young chick handing them out, instead of old fuglies.
  6. bettles


    This may be a way to cut salaries and benefits without being obvious about it. Shopper Events will probably pay lower wages, and I would be very surprised if the benefits are as great. If nothing else these employees will be starting with a new employer and have very little of the benefits that build up with seniority (vacation days, etc.).

  7. 1) Speaking as someone who doesn't shop at club stores, please explain this to me.......Why do people have to pay a membership fee to "belong" to a club store?
    2) If they want to improve sales, why not waive the membership fees? :confused: