In the last year, Walmart has stopped selling Confederate-flag merchandise as well as assault rifles, has publicly supported gay rights and, after years of criticism, has raised its minimum starting wage to $9 an hour.
Now, progressives may be cheering, but Wall Street is not. Investors fear that Walmart’s heavy investments in labor, in the Internet and in discounts will weigh on the retailer’s short-term earnings — and many are running the other way.
“Walmart expects a return from these wagers,” Michael Lasser, a retail analyst at UBS, wrote in a note. Still, “it’s unclear if its investment of $1.5 billion in labor and ‘several billion dollars’ in pricing will push it ahead of others, or just keep pace.”
.. Walmart.com is set to offer 10 million products by the end of the year. That is impressive, until you consider that a shopper will find an estimated 300 million items for sale on Amazon.com.
.. Last year, Amazon sold almost $90 billion worth of products online, compared with just $12.2 billion Walmart sold through its website. E-commerce still makes up only about 2.5 percent of Walmart’s annual sales, and its growth online is slowing.
Data Show Healthy Job Growth but Also Signs of Weakness
As the pool of college graduates has grown larger, younger workers have found themselves forced to take jobs they once would have turned down cold.
“More kids are going to college and some of them don’t have any choice,” Mr. Gimbel said. “It’s not just the Big 10, Notre Dame and the Ivies anymore.” Students from less prestigious colleges or candidates with lower grade point averages are taking jobs at call centers earning $25,000 to $30,000 a year, he said.
Good Wages Are Not Enough
Employees need more respect and responsibilities.
.. And I think one of the other bigger obstacles is that a lot of companies are still making a lot of money through mediocrity. They offer bad service, they offer bad jobs, but they are still making money.
.. Large organizations work in silos, and they get nervous when they hear that lots of things need to work together to achieve this great outcome.
.. You could get a product all the way from China to the store, and then the product would get stuck in the back and never make it to the floor. For a supply-chain person like me, this was heartbreaking.
As I looked into why these problems happen, I found that stores that had more employee turnover had more problems. Stores that had less training and were understaffed had more problems. Part of the problem was labor practices, and retailers were operating in what I call a vicious cycle. They start with this mentality that labor is just a cost, so let’s try to minimize the cost. That leads to operational problems, which leads to poor sales, which means the labor budget shrinks. The vicious cycle continues.
.. Knafo: So why has there been so much resistance?
Ton: [Costco co-founder and former CEO] James Sinegal often used to say, “Wall Street is thinking about making money between now and next Thursday. We’re thinking about making money for the next 30 years.” It takes a courageous leader to say that to investors. But those investors who are long-term investors will stick with you.