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Friday, May 3, 2013

Strategic CSR - Walmart

The article in the url below about Walmart caught me by surprise:
“Margaret Hancock [a retired CPA in Delaware] has long considered the local Wal-Mart superstore her one- stop shopping destination. No longer. During recent visits, the retired accountant from Newark, Delaware, says she failed to find more than a dozen basic items, including certain types of face cream, cold medicine, bandages, mouthwash, hangers, lamps and fabrics. The cosmetics section ‘looked like someone raided it,’ said Hancock, 63.”
The reason for her failure to find these products?
“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.”
The consequences of this discrepancy for Walmart are significant:
“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 Inc.”
In other words, for six years in a row, Walmart has failed to meet the basic expectations of its core organizational stakeholders—its employees and its consumers. And, it appears that its shareholders are also beginning to notice:
“Wal-Mart traded at a 1.4 percent discount to Target last week on a price-to-earnings basis after averaging a 5.9 percent premium to its smaller rival in the past two years. Wal-Mart traded as high as a 22 percent premium to Target in January 2012.”
I had no idea Walmart had cut its workforce by so much, nor that it had affected operations so drastically. The cumulative effect is that Walmart appears to have gone off the rails somewhat in recent years. In terms of strategy, its 2008 logo re-design and move to take some of the market staked out by Target forced it to try and differentiate itself at exactly the time when the economy was calling out for a laser-like focus on low costs (see: Strategic CSR – Wal-Mart). And, from a sustainability perspective, the efforts by Mike Duke to roll back Lee Scott’s commitments is generating similarly bad press (see: Strategic CSR – Walmart vs. Apple). The ultimate conclusion by Mrs. Hancock?
“‘If it’s not on the shelf, I can’t buy it,’ she said. ‘You hate to see a company self-destruct, but there are other places to go.’”
Have a good weekend.
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The library of CSR Newsletters are archived at:
Customers Flee Wal-Mart Empty Shelves for Target, Costco
By Renee Dudley
March 26, 2013
Walmart Faces the Cost of Cost-Cutting: Empty Shelves
By Renee Dudley
March 28, 2013
Bloomberg Businessweek