Wal-Mart's poorly stocked shelves, few workers drive shoppers away


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Margaret Hancock has long considered the local Wal-Mart superstore her one-stop shopping destination. No longer.

During recent visits, the retired accountant from Newark, Del., 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 Ms. Hancock, 63.

Wal-Mart's loss was a gain for Kohl's, Safeway, Target and Walgreen -- the chains Ms. Hancock hit for the items she couldn't find at Wal-Mart.

"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."

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. At the same time, its total U.S. workforce, including Sam's Club employees, dropped by about 20,000, or 1.4 percent. Wal-Mart employs about 1.4 million U.S. workers.

A thinly spread work force has other consequences: longer checkout lines, less help with electronics and jewelry, and more disorganized stores, according to 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 Amazon.com.

"Our in-stock levels are up significantly in the last few years, so the premise of this story, which is based on the comments of a handful of people, is inaccurate and not representative of what is happening in our stores across the country," Brooke Buchanan, a Wal-Mart spokeswoman, said in an email. "Two-thirds of Americans shop in our stores each month because they know they can find the products they are looking for at low prices."

Last month, Bloomberg News reported that Wal-Mart was "getting worse" at stocking shelves, according to minutes of an officers' meeting. An executive vice president had been appointed to work on the problem, according to the document.

Wal-Mart's restocking challenge coincides with slowing sales growth. Same-store sales in the U.S. for the 13 weeks ending April 26 will be little changed, Bill Simon, the company's U.S. chief executive officer, said in a Feb. 21 earnings call.

"When times were good and people were still shopping, the lack of excellence was OK," said Zeynep Ton, a retail researcher and associate professor of operations management at the MIT Sloan School of Management in Cambridge, Mass. "Their view has been that they have the lowest prices so customers keep coming anyway. You don't see that so much anymore."

Shoppers are "so sick of this," said Ms. Ton, whose research, published in Harvard Business Review, examines how retailers benefit from offering good wages and benefits to all employees. "They're mad about the way they were treated or how much time they wasted looking for items that aren't there. ... When you tell retailers they have to invest in people, the typical response is: 'It's just too expensive.' "

Adding five full-time employees to Wal-Mart's U.S. supercenters and discount stores would add about a half- percentage point to selling, general and administrative expenses, according to an analysis by Poonam Goyal, a Bloomberg Industries senior analyst based in Skillman, N.J. Assuming the workers earned the federal minimum wage and industry standards for health benefits, the added costs would amount to about $448 million a year, she said. In the year ended Jan. 31, Wal-Mart generated $17 billion in profit on revenue of $469.2 billion.

Wal-Mart is entangled in what Ms. 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.

"It requires a wake-up call at a higher level," she said.

nation - businessnews


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