NEW YORK (
has given investors the jitters, as U.S. sales decline, merchandise is in disarray, management keeps changing, and the company tries to figure out its long-term growth plan.
This week, alone, the discount giant announced the
, as 10-year veteran, Tom Schoewe, prematurely resigned.
Given all of this, we have received several e-mails from concerned investors and consumers, all sharing a similar theme: Wal-Mart needs to shape up. Here are my responses to these complaints.
We start with a note from JOHN T. HARLING:
"Yes, sales for retail overall have slipped. But Walmart could have taken a real advantage of this through the famous customer service Walmart was founded on and continued until the Walton family gave up control to Wall Street. Until recently, we would have had no problem getting an associate to take the time to help its loyal customers. When the economic woes began hitting Americans hard and the mass job losses began, Walmart followed suit and began looking at ways to use this to boost profits. Doing so meant cutting the staff at stores by almost one half and dropping such things like layaway and putting customers first.... Sales dropped in existing stores and so did the staff along with the service. In my eyes, Walmart can easily regain the place it held for many years as one of the best companies in America and for workers. It should shift back to customers and associates, before investors. I can assure you, the customers lost will be back in droves spending their money. It may even be the catalyst to open the eyes of other American companies to begin producing again and hiring."
Wal-Mart announced on Thursday that it plans on increasing its headcount 36% to 3 million over the next five years. Unfortunately, most of these new hires will be located outside the U.S., as the company expands into emerging markets like Africa. Currently, Wal-Mart has 2.2 million employees around the world.
This, of course, doesn't help the issues here in the U.S., where Wal-Mart has seen same-store sales decline over five consecutive quarters and is poised to report yet another drop in its third quarter.
The company has been charged by some as ignoring the problems in the states, masking them with promises of international growth. Case-in-point:
Wal-Mart's new CFO Charles Holley, who will be replacing Schoewe, also has been credited for spearheading the company's international expansion. You can always tell the direction of a company by its leaders, and this new appointment would suggest international is Wal-Mart's real future.
ALLISON WHITMER writes:
"I am a set decorator and art director. Eight months ago, we could go into any Wal-Mart at 10 p.m. and get fabric in all textures and sizes, dollar-a-yard fabric, hardware, and tools. This is heaven when you are in a remote location and the director requests a giant cowboy-themed boy's room at 8 a.m. Well, that is all mostly all gone; replaced by the "celebration aisle." Why should I shop there if it is not a resource? I don't need to celebrate. I need supplies! So, my trips to Wal-Mart have been cut by over 80%...I'm not a fan of their store brand, the labeling is generic and cheap, and they have cut back drastically on their nicest George line, which we used for wardrobe purchases. So, instead we buy water and snacks and develop photos."
GAYLON WEST has a similar complaint:
"I live in a small town in California with a small WalMart store. A few months ago Walmart decided that our store needed upgrading. Not true. While not completely satisfied with the old store, we were much more satisfied with that one than the one they put back in. The new store doesn't carry many of the items the old one did, it does, however, have many more frozen foods and refrigerated items. We have three very good supermarkets that carry those types of items in them. Many of the items we went to Walmart to buy are no longer there. I don't know whose idea it was to spend so much money to degrade the store here in this town. If they did this all across the country, the people that made the decision...should have been fired. We depended on Walmart for several items that we can no longer get there. My wife came home the other day absolutely fuming because they no longer carry much in the way of cloth-yardage supplies. I don't go there anymore because they don't carry much in the way of home, fishing, auto repair and other items. They have also cheapened the products they do carry. We are a small town, but not a stupid town. They do have a much larger food department that we do not need in this area."
These two e-mails sum up Wal-Mart's biggest issue currently: it's failing when it comes to product. Through its "Project Impact," Wal-Mart removed many items from its shelves that it deemed "unprofitable," favoring higher-margin grocery items.
Wal-Mart says it is currently in the process of restocking some of those items. The company has already put dry grocery items back on the shelves and is now working on hardware and fishing. U.S. CEO Bill Simon said at a conference earlier this month that they are "going as fast as we can" to get products consumers have demanded back into the stores.
Simon is well aware "Project Impact" has deterred shoppers. "We didn't see loss of customers, but the number of trips. I believe this loss of trips were because we couldn't fill our assortment," Simon said. "As we bring items back it should boost traffic."
But it's possible Wal-Mart's credibility has already been tarnished for some. Also, Simon's decision to not fill the role of chief merchandising officer, after John Fleming resigned this summer, has raised concern about merchandise.
Instead, the company appointed four new heads of product to adopt these responsibilities. Wal-Mart has created four core merchandising areas around general merchandise and replenishment, food, softlines, and consumables, health and wellness, as well as Walmart.com. John Westling, Jack Sinclair, Andy Barron and Duncan MacNaughton, will head up those divisions, respectively.
With price rollbacks unsuccessful in enticing shoppers in its second quarter and merchandise still influx, it leaves investors questioning what exactly will drive sales?
I'll close with a note from JIM ROBERTS, who provided his reasons why Wal-Mart's U.S. sales are on a decline:
"Poor inventory control -- they are frequently out of common items, apparently in an effort to squeeze out more inventory turns per year. Online competition -- on several recent occasions I've returned unopened items to Wal-Mart for a refund after finding the identical item online, with a delivered-to-the-front-door price that was substantially less than Wal-Mart's. Big-box hassle -- it seems you need a passport to go from the Super Wal-Mart Deli to their Sporting Goods or Automotive department. And the parking lot is a headache. Miscellaneous issues -- Dim lighting (energy savings efforts?), chronically crowded aisles, and staff that often seems poorly trained and motivated (perhaps due to being poorly paid)."
If you have any other questions or comments about Wal-Mart, or retail in general, e-mail
, or Tweet
>>Wal-Mart Adds More Uncertainty