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Why Walmart Is Cutting 7,000 Jobs at Its Stores

Sep 01, 2016

Walmart (wmt) will cut some 7,000 accounting and invoicing positions within its U.S. stores as the discount retailer redeploys workers to improve in-store customer service.

The largest U.S. retailer, also the country’s largest private employer, plans to eliminate those jobs over the next several months, the Wall Street Journal wrote on Thursday. Those jobs are typically occupied by long-term and often higher-paid store employees, wrote the Journal, which was first to report the news.

The benefit for Walmart is that it could then put more workers on the floor helping customers, something infinitely more valuable to the retailer as it looks to give people a reason to shop at its stores rather than on Amazon.com (amzn) A company spokesperson confirmed that Walmart expects the affected employees are likely to find customer-facing roles at the Walmart store.

The move follows a test earlier this summer at 500 stores, mostly west of Colorado, to eliminate three administrative jobs related to accounting and invoicing at each store and see if those functions could be replaced by workers in the home office and by machines. The jobs being eliminated involve counting cash or managing invoices for suppliers. Invoicing will be handled by a central office at company headquarters in Arkansas, while money will be counted at each store by a "cash recycler" machine.

The new cuts come as Walmart looks to shift more of its spending onto employees who work on the store floor stocking shelves and interacting with customers. The company said at its annual shareholder meeting in June that customer satisfaction scores had risen 79 weeks in a row, a momentum it wants to continue. Walmart has enjoyed eight straight quarters of U.S. same-store sales gains, while traffic has improved for seven periods. At the same time, the company is looking to recover some of what it is spending on wage increases through cost cuts.

Walmart has spent $2.7 billion on raises for store workers to keep them motivated at a time their jobs are more complex than they used to be because of new technologies. The wage hikes over the past two calendar years have taken the minimum hourly pay for store workers to $10 an hour. Walmart employs 1.4 million people in the U.S. Last year the company cut 450 jobs at its headquarters in Bentonville, Ark. to become nimbler.

Walmart's improving online performance last quarter was the result of years and billions of dollars in investment the retailer has made to bolster its digital offerings, including from the roll-out of its Walmart Pay mobile app to the expansion of free grocery pickup service for orders placed on line, all of which add to a store employee’s workload.

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