Walmart worker activists have been saying for a while that the company is causing itself problems by understaffing stores, leading not just to overworked and underpaid workers but to poorly stocked shelves and long checkout lines, but big-money investors weren't listening. Now, a major Bloomberg article by Renee Dudley backs them up:
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. [...]
Wal-Mart is entangled in what [MIT operations management professor Zeynep] Ton calls the “vicious cycle” of under-staffing. Too few workers leads to operational problems. Those problems lead to poor store sales, which lead to lower labor budgets.
While Walmart has added 455 stores in the past five years, it has cut its workforce by about 20,000. Workers complain that they're too short-staffed to move products from the stockrooms to the aisles, while customers complain that they can't find basic goods, leading some to shop at competitors, including Costco and Trader Joe's among others.
Costco's CEO recently argued to raise the minimum wage, but Walmart management is attempting to keep labor costs at rock bottom levels. Apparently Walmart's efforts to minimize labor costs are backfiring. Costco's better paid employees are happier and more productive. Higher worker productivity at Costco is making up for the difference in wage rates.
Costco isn't the only chain to find that better pay translates into higher productivity; the same is true at Trader Joe's and convenience-store chain QuikTrip.
Walmart dismisses the complaints about bare shelves and lack of customer service as coming from "a handful of people." But when a reporter goes into a store and sees lines "about five deep" and "empty spaces on shelves large enough for a grown man to lie down," sights replicated at multiple stores, more than a handful of people are affected.
Thanks again to Kathleen on a parallel post for that nifty promo piece and glossy photo. Too bad the photographer didn't go inside to photo the overworked and underpaid workers, the bare shelves, the long lines, and customers made dizzy for the store's chemicals and lighting. Have at it all you Walmart supporters!