USA Today adds Doug McMillon, the CEO of Wal-Mart, said in an internal memo that the decision is “to better position our Home Office teams to move with speed and goal”. The Wall Street Journal had reported this week that Wal-Mart was preparing a round of layoffs at its headquarters.
Wal-Mart executives have admitted that the retail giant lost its way. Walmart is also facing a backlash from customers who have increasingly found items out of stock and complained the stores are messy and staff is unfriendly.
On Friday, Walmart announced it laid off 450 of its staff at its Arkansas headquarters as the largest retailer in the world looks to become more nimble so it can compete better with competitors such as Amazon.
“Our customers are changing”.
The workforce reduction – amounting to a 2.5% downsizing of Walmart’s 18,000 headquarter employees – had been anticipated since the company announced heavy investments in salaries and staffing for store-level employees earlier this year. Cost-cutting includes putting more pressure on suppliers who are now being charged storage fees for using Wal-Mart’s distribution centres, warehouses and shelf space.
Wal-Mart relies on customer feedback and a complex algorithm to rate its stores. Last month, per Bloomberg, the company slashed workers’ hours at a few of its store locations in an effort to check its costs. The results are plugged into a computer model that analyzes the progress each store is making, and managers get daily updates on the results. “We need to become a more agile company that can easily adapt to shifting customer demand”.
Wal-Mart reported weaker quarterly earnings in August and lowered its annual profit forecast due to various factors such as a squeeze on pharmacy margins, higher labour costs and a stronger dollar, which has crimped its overseas business.
“This may require a transformational change in the company’s culture”, he said.