Great ResignationInflationSupply ChainsLeadership

Walmart hiring 150,000 temps as the coronavirus crisis boosts business

March 20, 2020, 6:15 PM UTC

It may seem counterintuitive that at a time Americans are sharply curtailing much of their spending, a retailer’s shares would flirt with their all-time highs.

But this week, Walmart Inc’s stock briefly reached an apex as analysts said the discount retailer’s infrastructure and merchandise mix put it in a great position to benefit from changing shopping patterns long after the coronavirus crisis eases.

The world’s largest retailer, whose namesake U.S. stores had sales of $341 billion last year, said late Thursday that demand for the everyday goods such as food and house essentials had surged to the point that it would hire 150,000 temporary workers to handle it. The announcement follows a similar one from Amazon on Monday, where Walmart’s chief rival said it would hire 100,000 workers.

Walmart’s new employees will for the most part work in distribution centers, with many likely to made permanent staff over time, Walmart said in a statement

Retailers like Walmart, Costco Wholesale, and Target have seen a jump in business similar to what they see during the holidays as millions of Americans stock up on essentials all while many indirect rivals such as department stores and apparel chains, notably Macy’s, Kohl’s, and The Gap, are MIA as they close temporarily. Target CEO Brian Cornell said earlier this week the company was seeing a “continued surge” in business.

Also helping Walmart and its ilk? Restaurant closings that mean Americans are buying more groceries, Dan Bartlett, Walmart’s executive vice president of corporate affairs, told reporters on a call. The retail’s supply chain is “catching its breath,” he said, as Walmart, the country top grocer, and other food sellers keep shelves stocked.

That supply chain, along with Walmart’s clout with vendors and its massive store and e-commerce infrastructure are why Walmart is breaking away from the pack, analysts say.

Earlier this week, Credit Suisse upgraded Walmart’s stock, saying that the coronavirus crisis is “accelerating structural change” in how Americans shop, notably in ordering groceries online and then retrieving them at the store, capabilities Walmart has spent billions of dollars in years building and that are hard for Amazon to match, even with its network of Whole Foods stores and Amazon Fresh business.

Last year, Walmart’s digital sales rose 35%, the bulk of the growth coming from grocery and helped by the ability of stores to have orders ready for customers. Customers have notably liked the option to just drive by and have a Walmart worker pop the groceries in the trunk. Walmart, which has 4,700 stores, offers online grocery pickup at 3,200 of those locations and delivery from 1,600. About 90% of the Americans live within 10 miles of a Walmart store.

Another way this crisis could help Walmart long after things return to normal: The retailer is getting new customers who might not have wanted to shop there before. In recent years, it has improved its apparel and home goods offerings to better compete with Target and department stores and overhauled its grocery business with nicer store presentation and more fresh food and things like higher-end steaks. Many such people are shopping at Walmart for the first time.

“This change should be stuck, and favor [Walmart], as it’s invested in its infrastructure, technology and people, to evolve its model,” Credit Suisse analysts wrote in a research note on Wednesday.

But capitalizing on this means having motivated staff, willing to work during a dangerous virus outbreak that could hit them too. So Walmart, which started increasing wages several years ago to improve retention and customer service, said on Thursday that all U.S. hourly employees will receive a cash bonus on April 2: $300 for full-time staff and $150 for part-time worker. That and other moves will cost Walmart more than $545 million in all, a relatively small amount given the opportunity to win some market share. Walmart U.S. had an operating profit of $17.8 billion last year.

On Friday, Target, also poised to be a big winner from the crisis, joined in on the action, announcing $2-an-hour raises for store workers and distribution center staff through May 2, among the initiatives that will cost it $300 million.

Both Target and Walmart, along with drugstore chains CVS pharmacy and Walgreens, said last week they were offering up space in their parking lots to make coronavirus testing available. CVS opened its first site outside Boston on Thursday, while Walmart looks set to go with a pilot near Chicago this weekend, with tests for healthcare workers and first responders, as is the case with the Boston-area CVS.

“Everything is ready to go, said Walmart’s Dan Bartlett. “We have the tents. It should be up and running soon.” The tests will be primarily for healthcare workers and first responders.

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