When Wal-Mart began its rise in the 80s, it gained lots of positive press for its commitment to buying American, its treatment of employees, its innovative methods for handling inventory and the way that it worked with its suppliers to cut costs. Wal-Mart’s stores at that time were small, friendly, well maintained, stocked with quality merchandise, and a were a nice alternative to the K-Marts of the world.
Sadly, this is no longer the case. Wal-Mart went from a place that most of us liked to shop to a place we hate but frequent anyway because of its “Always Low Prices”. In recent years, as gas prices and a downturn in the economy have hurt Wal-Mart’s core audience of lower income shoppers, the retailer has seen hits to its bottom line. In contrast, slightly more upscale retailers like Target have seen their fortunes grow. So what can Wal-Mart do to improve its bottom line?
1) Close the stores overnight — This may seem counterintuitive, but it would allow Wal-Mart to remedy many of the issues that it has that drive more affluent customers to Target and other retailers. Closing the store would allow Wal-Mart to clean the store each night, restock and reorganize the shelves, and allow it to create more consistent schedules for its employees. It also may help reduce theft at the stores, which has seen a steady increase in recent years.
2) Hire more people — In Charles Fishman’s excellent book, The Wal-Mart Effect, he points out that Wal-Mart sells $178,125 per employee, while competitors like Target and Whole Foods sell tens of thousands of dollars less per employee. This has nothing to do with the excellent salesmanship of Wal-Mart employees, but rather the stark contrast in staffing at the retailers. In a recent trip to our local Wal-Mart, we had to wait 25 minutes to check out because there were only two full service and three express lanes open in the entire Supercenter. These long waits and inability to find help when you need it make more affluent shoppers go elsewhere for groceries and supplies. Additionally, inadequate staffing also leads to lower employee morale and higher turnover as employees find themselves scheduled at undesirable times and fighting a losing battle of trying to keep up with the demands of the store.
3) Stop lowering prices and start improving products — We bought my daughter a new watering can at Wal-Mart a few weeks ago. Although it was less than $2, even that seemed too expensive. Rather than the sturdy, durable plastic that these cans were made out of just a few years previously, this can was made out of plastic flimsier than those used to make 2 liter bottles. Wal-Mart has created a culture in which almost everything we buy seems disposable, even electronics costing hundreds of dollars. While cost cutting makes sense if it eliminates waste (like reducing packaging or improving manufacturing techniques), Wal-Mart has forced producers to cheapen everything so that they can continue to “rollback” prices. At one time, Wal-Mart sold quality items at low prices. Now it seems as though the low prices have remained while quality is rock bottom.
4) Read and digest the Behind the Counter blog — Behind the Counter provides an almost daily first hand account of Wal-Mart’s woes through the eyes of a disgruntled Wal-Mart employee. The anonymous author makes compelling points about Wal-Mart’s clientelle, quality of products, treatment of employees, and problems with shrinkage.
5) Improve the upkeep of the store — Most local Wal-Mart stores are a mess. Shelves are stocked haphazardly. Bathrooms are filthy. Shopping carts are stacked out into the driving lanes of the parking lot. Magazines are strewn across the magazine racks. Pallets are left unloaded in the aisles. . Psychologically, seeing the apathy of the parent company in keeping up the store contributes to the apathy of those who visit and work in the store? If they don’t care how the store looks, why should we? Those who continue to shop there begin to treat the store with contempt, while the rest grow tired of the shopping experience and take their business someplace more appealing.
6) Improve grocery offerings — Wal-Mart’s grocery isn’t horrible, but offers fewer selections and options than regular grocery stores like Meijer and Kroger. Wal-Mart offers fewer brands and less items within those brands than these competitors. Wal-Mart’s meat, especially beef, is substandard and often packaged in large quantities than smaller households can use. While this lack of selection is certainly a result of Wal-Mart’s cost cutting tactics, it is another sticking point for busy people who like to be able to buy the things they want all in one place.
Wal-Mart is in no danger of being knocked off its retailing throne anytime soon, but if it doesn’t start taking steps like the ones listed above, it may be only a decade or so away from finding itself the next Sears or K-Mart; a once proud retailer trying to figure out what went wrong.