Wal-Mart to Cut 7,000 Back-Office Store Jobs

Wal-Mart Stores Inc. plans to cut thousands of back office positions around the country, a sign that the retailer's effort to make its cavernous stores more efficient is also changing the face of its workforce.

The country's largest private employer is eliminating about 7,000 U.S. store accounting and invoicing positions over the next several months, jobs mostly held by long-term employees, often some of the highest paid hourly workers in stores. The retailer wants those employees working with shoppers, not in backrooms, say company executives. Centralizing or automating much of those tasks is more efficient, they say.

The jobs are coveted as a rare desk job in retail. "You are not running around the store on your feet all day," and receive decent pay, says a Wal-Mart store accounting employee who earns about $13 an hour, or $27,000 a year. "Everybody wants to get in there. The jobs never open up," says this person, who has worked at the store for nine years.

The back office cuts to Wal-Mart's 4,600 U.S. stores is a sign that retail workers—one of the largest employee cohorts in America—face big changes as their employers spend heavily to compete with Amazon.com Inc. and grab foot traffic from other chains.

The positions Wal-Mart is eliminating manage an individual store's daily cash flow or processes claims from manufacturers delivering goods directly to stores, among other tasks. Starting early next year, much of that work will be handled by a central office or new money-counting "cash recycler" machines in stores. Wal-Mart tested the change in about 500 stores earlier this year.

The company believes most displaced employees will find customer-facing roles, says Deisha Barnett, a Wal-Mart spokeswoman. "We've seen many make smooth transitions during the pilot," she said. Their current wage level isn't guaranteed, she said.

Store workers at Wal-Mart and other retailers are being asked to work differently in many way as retailers adjust to industry changes. For example, Wal-Mart is rapidly expanding a service that lets shoppers order groceries online and pick up curbside. That requires employees to pick produce off shelves, pack orders and deliver them to a customer's car, jobs that didn't exist at Wal-Mart three years ago. Wal-Mart has changed how it stocks shelves to bring more employees to the sales floor during the day, not the middle of the night, to interact with customers.

Wal-Mart is spending billions to boost e-commerce sales and make stores more efficient and pleasant places to shop, reducing inventory and raising wages. Last year the retailer lifted its store employee starting wage to $9, or about $18,700 a year, for a full-time employee. Starting earlier this year new hires can move to $10 an hour after completing a six month training program. In August Wal-Mart said it planned to purchase discount online retailer Jet.com Inc. for $3.3 billion.

While Wal-Mart's online sales have been sluggish, sales in existing stores have risen for eight straight quarters, outshining many competitors struggling to compete for recession-weary customers or online shopping converts. Other retailers, including Target Corp. and Costco Wholesale Corp., are also raising starting wages.

In the wake of those investments in their workforces and online efforts, retailers are making other cuts. "Anytime one expense line goes up, you are likely to see a reduction in a corresponding expense line," says Joel Bines, co-head of consulting firm AlixPartners LLP's retail practice. In today's environment "any dollar not being spent on delivering a better experience to the customer or delivering the customer online is a wasted dollar," he says.

A typical Wal-Mart Supercenter employs hundreds of people from cashiers and cart wranglers to store managers who oversee around $100 million in annual sales in a busy location. In the many small towns and rural areas with a Wal-Mart, the store can be one of the largest employers.

"Right now I'm getting my resume together," said one Wal-Mart employee who works in invoicing earning about $15 an hour. After almost 21 years with the company the employee isn't interested in moving back out to the store floor, she says.

Write to Sarah Nassauer at [e-mail]

(END) Dow Jones Newswires

September 01, 2016 12:15 ET (16:15 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.