Wal-Mart Stores Inc. (WMT), the world’s largest retailer, has removed greeters from the overnight shift at its U.S. supercenters, chipping away at a 30-year tradition of making sure all shoppers are welcomed to the store.
The move will save money and ensure Wal-Mart has the right staffing levels during peak and non-peak hours, David Tovar, a spokesman, said in a telephone interview. For the past six months, Wal-Mart has been reassigning greeters at the company’s approximately 3,000 U.S. supercenters from the third shift, which runs from 10 p.m. to 7 a.m., to other jobs, he said.
Founder Sam Walton added greeters in 1980 to make his giant low-price stores friendly and welcoming. Cutting back, even during the early morning hours, shows Wal-Mart is rethinking longheld traditions to boost profit margins and guarantee low prices, said David Strasser, an analyst with Janney Montgomery Scott LLC in Philadelphia.
“It’s risky,” Strasser, who recommends buying Wal-Mart shares, said in a phone interview. “Consumers have been going to Wal-Mart for years, and greeters have become an expectation. To a degree it defines Wal-Mart.”
“It’s important that they have it,” Plummer said in an interview. “Our job is to ask people if they have receipts. We also make them feel welcome and safe.”
Wal-Mart has been minding its costs as U.S. sales growth slows and dollar stores increase price competition, Strasser said. Same-store sales at Wal-Mart’s namesake U.S. locations declined for nine straight quarters before snapping the streak with a 1.3 percent gain for the quarter ended in October.
Protecting revenue and profit margins at Bentonville, Arkansas-based Wal-Mart’s U.S. stores is important because they accounted for 60 percent of total sales and 73 percent of operating income for the nine months ended October.
Many of the former third-shift greeters are now stocking shelves to make sure there is plenty of inventory for the busier morning shopping hours, Tovar said.
Wal-Mart management decided to make the change six months ago, around the same time that the company hired consultant Acosta Inc. to help make sure its stores had adequate inventory.
While greeters are an important part of Wal-Mart’s brand, so is restraining costs and prices, he said.
“We realized that it wasn’t necessary to have people greeting customers because it wasn’t peak shopping hours,” Tovar said. “It was meant to operate stores as efficiently as possible, which is also part of our DNA.”
Wal-Mart’s competitive advantage is low pricing, so constantly squeezing costs makes sense, said Matt Arnold, an analyst with Edward Jones & Co. in Des Peres, Missouri. While the company risks going too far by cutting staff, eliminating third-shift greeters may have minimal impact, said Arnold, who recommends buying the shares.
“That time of night, shopping at Wal-Mart is serve- yourself,” Arnold said in a telephone interview. “It’s probably a minimal impact on customer service.”
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