Wal-Mart to Cut Thousands of Store-Management Roles
A day after embarking on a pay hike, Wal-Mart Stores Inc. is taking steps to shake up management at thousands of its stores.
The world’s biggest retailer is removing about 3,500 store co-managers, a salaried role that acts as a lieutenant underneath each store manager, according to people familiar with the move. It’s also adding about 1,700 assistant store managers, a slightly lower-paid role, who will oversee fast-growing areas like online orders, one of the people said.
All co-managers will be notified Friday, and those affected will be able to apply for other roles, said the people, who asked not to be identified because the move hasn’t been announced publicly.
The overhaul aims to weed out poor performers and create clearer paths to leadership, part of broader efforts to make Wal-Mart more efficient. As part of the changes, the company moved to close 63 Sam’s Club warehouse locations on Thursday. And it reorganized U.S. store operations several months ago — consolidating six divisions into four — to react more quickly and compete better with the likes of Amazon.com Inc.
Even as it eliminates some jobs, Wal-Mart is boosting its wages — a move spurred by federal tax cuts. The retailer said on Thursday that it would boost its starting wage to $11 an hour and dole out $400 million in one-time bonuses to its employees.
“Retail is changing rapidly, and we are transforming to meet the needs of our customers,” a Wal-Mart spokesman said in an emailed statement on Friday. “To help compete and win in this environment, we must make changes across our company to enable further investments in our strategic business priorities and growth.”
Though Wal-Mart faces a bigger threat from Amazon these days, it has seen a resurgence in sales growth in recent quarters. That’s given it more of a cushion to raise pay and make other investments. The shares climbed 43 percent last year, capping a second straight year of gains. On Friday, they rose less than 1 percent to $100.87.
In the wake of Friday’s shake-up, the remaining co-managers will hold those jobs for no more than two or three years, one of the people said. Then they’ll be expected to move into store manager roles.
Stores will now be allocated a certain number of co-managers depending on their sales volume. Previously, supercenters that typically generate more than $100 million in annual revenue could have had as many as four co-managers.
Now, smaller stores under $80 million in annual sales won’t have any co-managers; mid-sized locations between $80 million and $90 million will have one; stores from $90 million to $125 million will have two; and the highest-volume locations will have three.