I've been discussing the warning signs for a while now. It used to be that the home office would come up with some big process change or whatever, maybe once or twice a year or something like that and those changes were ALWAYS an effort to reduce personnel, so let's stop denying the truth. But the things they have put in place this year are massive. We can sit here and discuss how bad these decisions are and how poorly they work, and how they have negatively impacted the operations and member satisfaction/service at the majority of the locations, and even speculate how readily apparent it is that they don't care about their employees anymore. But now we have to deal with what these changes have done so far and we see how one could argue that they don't care about their customers either. Here's what the truth really is: They don't care about anyone but themselves and their stockholders. And when I say stockholders I'm not talking about employees who have a few hundred or even a thousand shares. They don't matter to these guys either. It's those who have huge stakes in the company. We're talking millions. Those are the people who really matter and have the clout to drive policy. If they don't get a return on their investment, they walk. If you or I walk.....no one will ever know the difference. What's any company's largest expense? Personnel. What does every company under the sun do when quarterly numbers don't meet or exceed their target? Scramble around and look for ways to increase sales and profit and often make cuts and those cuts usually include personnel. The problem with a company as vast as Walmart is that they can still look at the Sam's Club branch of their business and while it still shows a profit every quarter, if that figure misses whatever the expectation is, that's a red flag. So you can sit there and say, "Well they did X billion in revenues and Y billion in profit, so it's crazy for anyone to say they're going to start closing stores and even sillier to believe they'll ever consider abandoning the whole Sam's Club model entirely." No it isn't. If those sales and profit figures continue to drop and future speculations reveal that they believe the pattern will continue in spite of anything they try to do to stay afloat, they will start closing up shop. And you know who will pressure them to do so? Those huge stockholders. The ones who aren't employees.
It would also not be ridiculous to suggest an extreme theory that all this is intentional, that they are doing this with the full knowledge that it will cause a loss of membership and, ultimately, a loss of business, both of which are going to happen anyway because more people are staying home and shopping online and there are no steps they can take to prevent that. Not even free or drastically reduced membership, big savings when you shop in store, etc. That way, when it comes time to start another rash of store closings, they can further justify doing so. But the shift in the way people shop will continue and that is why I will continue to contend that in five years, there will be no more Sam's Club, other than maybe online. It may be six or even seven. The last stores to go will be those that operate in markets that are able to support them. But they will eventually fall, too.
I've been asked if this is something I'm looking forward to or if I'm hoping that I'm right because I hate this company so much. Honestly, no, I'm not looking forward to it happening because I know that it doesn't just - to me - signify the end of Sam's Club. It spells the end for a lot of chains we are all familiar with. I'm still one of those who prefers to physically shop for what I'm looking for, but even I have to admit to buying more and more online with each passing year. Admittedly, though, YES I do hate Walmart. I hate what I've seen Walmart do to people. I hate how Walmart has absolutely trashed the legacy of Sam Walton and I think it's a truly tasteless joke on their part to continue to even speak about him in any way because this company has nothing to do with the values he conveyed and practiced. If he were still alive he would have been raided, bought out, pushed aside, and no longer part of the company.....by the shareholders and someone like Carl Icahn. And then they would still be doing what they're doing right now.
9 replies (most recent on top)
What you have written should be reposted here, every single week this website exist. No one should forget what was written.
Soliloquy
@1gwp - You seem to be under the impression that Walmart is trying to do things that will enable them to, "grow the company", which is correct, but not in the case of Sam's Club. With Sam's they are merely biding time and treading water. The growth they are interested in, lies in whatever allows them to compete with Amazon, which is in the online realm. If you don't live under a rock then you are well aware of the fact that this is where shopping is headed. This is not a fad or a flash in the pan. This is reality. And the more people spend shopping online, the less they spend inside the stores themselves. Walmart - and every other company hoping to stay alive through this - is putting enormous amounts of time and resources into their online existence. Eventually that existence will account for the greater portion of their sales, which eludes to less and less of a need to sink large amounts of money into keeping all these physical locations staffed and running. That is why I referred to Sam's Club as, "dead weight", in an earlier post. Shareholders demand that the company rid themselves of unnecessary and unsustainable expenses, which is what all these stores will ultimately end up being. The same will happen at all the other companies who will be fighting for their own existence, including Costco. This is what they really mean when they use the phrase, "in order for us to remain competitive."
Recent history has also shown that when Walmart has handed out raises, they follow it up with cuts. The last glaring example of which was when they pulled their, "We're giving our employees a billion dollars", publicity stunt. They bumped everyone up to a base rate of $11.00/hour and then in the blink of an eye they turned around and closed 63 Sam's Club stores. Did you know that 52 of those stores were located within ten miles of a Costco? I found that rather telling.
Oh, and while we're on the subject of Costco, who is mixing the Kool Aid you've been drinking? Did you really say that Sam's Club is following the footsteps of Costco? Did you actually say that? Wow. Have you ever shopped at a Costco? Have you ever been inside a Costco? Do you know anyone who works at a Costco? Do yourself a favor and take a look at how much activity the Costco section of this website gets. Go ahead, I'll wait. There are enormous differences between how Costco and Sam's Club do things. Differences that no Walmart corporate investor has any interest in pursuing because they will cost ridiculous amounts of money that investors don't want to appropriate. It would take years for Walmart to alter both the internal and external cultures at Sam's Club, so that they, "follow in the footsteps of Costco." That's literally billions of dollars they would have to spend. I don't think we're ever going to see them do that. A large chunk of that money would have to go toward turning the company's public image into a positive one. That doesn't happen by raising team leads to $18.00/hour and implementing an incentive program for fresh employees to earn more. If Walmart's stock value were based strictly on what public perception of the company is, we'd be looking at single digits. Costco doesn't have that problem. Nor do they have any issues with finding good employees. Walmart and Sam's Club are normally the last names on the list when people are out looking for jobs. That's what poor public perception does. You end up with whatever is left and those people taking those positions are only doing so because it's a job. They don't go home and celebrate afterwards.
@1zcy thank you for repeating what I said.
@1gwp you are so lost! If you knew anything about businesses and how they work TODAY you would see they all only care about the shareholders. All the moves they make are for them.
I gave it 5 years a year ago so my theory is now down to less than 4 years now
Ok. You got me, smarty. I'm an id–t.
You’re actually an id–t. There have been a lot of investment changes towards associates and it’s just the start. There’s a reason why theyre not giving everyone there raises at the same time. If you pay attention to detail. They gave pay raises to key areas to try to get associates to fill gaps then they went to the next area. The changes happening this year are massive but that’s because there has to be change to grow a company. Company’s either change now or file bankruptcy. If you knew anything you’d see a pattern. We’re following the same foot steps as Costco. They do day stocking, they care about stay at home moms (not business members), were lowering sku’s... the list goes on.
My favorite part of this whole long wasted message is that Walmart is the corporate devil. You act like Walmart is the only company that cares about shareholders and hitting financial goals. News flash that’s the corporate world.
I believe that you are most likely correct. You make many valid points.