Walmart is generating higher earnings, yet reducing its workforce
Larger Profits, Smaller Workforce at Walmart
The masses converging at Walmart's employee festival this week are celebrating record-breaking revenue, new stores, and a stock price surpassing competitors. Yet, the number of employees hasn't mirrored this growth.
One of the world's biggest employers, Walmart, ended last year with 2,165,465 staff members — a figure that's almost 70,000 fewer than five years ago. In the same period, the retail giant boosted revenues by over $150 billion, more than the annual sales of most rivals.
Walmart aims to grow sales by 4% annually, but the company doesn't anticipate any significant increase in employment. The employee count has stagnated, even though it provides jobs for about 1.6 million Americans — a figure hardly budging in the last decade.
Analysts on Wall Street suggest Walmart's expansion without job creation reflects a heavy push into e-commerce and the automation of labor-intensive tasks. Artificial intelligence is poised to amplify these efforts. Walmart executives claim that technology investments create new jobs, not fewer.
But critics argue workers are losing out. While net sales at Walmart US have risen by 36% in the past five years, average US hourly wages have increased 28%, to $18.25. This discrepancy between sales growth and wage increases has sparked concerns.
John Marshall, capital strategies director at the United Food and Commercial Workers' Local 3000 division, remarks, "Walmart's jobless growth is a continuation of a pernicious trend that Walmart itself helped pioneer: squeezing more output from each hour of labor, and growing sales faster than wages."
Walmart's employment trajectory stands in stark contrast to other giants in the retail sector. In the past five years, Costco, Target, and Home Depot each added tens of thousands of employees. Amazon nearly doubled its worldwide workforce to 1.6 million.
Walmart's strategists lean heavily on automation, and the trend shows no signs of slowing down. Neil Saunders, a retail analyst at GlobalData, notes, "We've seen Walmart really lean heavily on that."
Currently, a 1,200 sq ft refrigerated warehouse at Walmart employs just one associate. Inside, algorithms and robots handle tasks like palletizing and sorting food items, drastically increasing efficiency. Walmart's DFW-5 fulfilment centre, which ships e-commerce orders, uses technology to condense ten steps into five, aiming for a 30% cost reduction this year.
Critics argue that these labor-saving advancements could lead to job losses. However, Walmart executives remain optimistic, emphasizing that technology opens up opportunities for growth and development within the company.
In the battle between human labor and technological advancements, the future of employment at Walmart remains uncertain. Whether the tale of this retail colossus is one of innovation and progress or a concerning shift in the labor market is yet to unfold.
Insights:
- The Growth of Automation: As a key driver in the retail industry, Walmart has been investing heavily in automation technologies to improve efficiency and reduce operational costs. This shift has potential implications for the workforce, with labor-intensive roles being impacted the most.
- Combating Labor Pressure: While Walmart's employment trends raise questions about the future of labor in the retail sector, the company emphasizes that their technological advancements create new roles rather than leading to fewer jobs.
- Industry Wide Impact: The trend toward automation is not unique to Walmart, with other retail giants like Amazon and Costco adopting similar strategies, affecting workforce dynamics across the sector.
- Employee Benefits: Walmart has sought to retain employees through pay rises and bonuses during the tight labor market since the Covid-19 pandemic. The company aims to maintain its leadership role in setting de facto wages for service-sector employment in many parts of the country.
- Despite the growth in revenues, Walmart's staff count has decreased significantly over the past five years, with a stagnation in employment predicted in the future.
- The increase in automation and e-commerce at Walmart, driven by technology investment, is believed to be the primary reason for the decrease in employment.
- Critics argue that this trend of automation and job loss at Walmart could affect the entire retail industry, with other giants like Amazon and Costco adopting similar strategies.
- Walmart executives, on the other hand, claim that these advancements open up new opportunities for growth and development within the company, suggesting that technology might not necessarily lead to a reduction in jobs.
