Global Biz

Wal-Mart cuts about 11,200 Sam's Club staffers

(Agencies)
Updated: 2010-01-25 11:22

Wal-Mart cuts about 11,200 Sam's Club staffers

In this June 4, 2009 file photo, associates ready samples in front of a case of Angus beef at a Sam's Club in Bentonville, Ark. [Agencies]

NEW YORK: Wal-Mart Stores Inc. will cut about 11,200 jobs at Sam's Club warehouses as it turns over the task of in-store product demonstrations to an outside marketing company.

The move is an effort to improve sales at Sam's Club, which has underperformed the company's namesake stores in the US and abroad.

The cuts represent about 10 percent of the warehouse club operator's 110,000 staffers across its 600 stores.

That includes 10,000 workers, mostly part-timers, who offer food samples and showcase products to customers. The company also eliminated 1,200 workers who recruit new members.

Employees were told the news at mandatory meetings on Sunday morning.

"In the club channel, demo sampling events are a very important part of the experience," said Sam's Club Chief Executive Brian Cornell in a phone interview. "Shopper Events specializes in this area and they can take our sampling program to the next level."

Shopper Events, based in Rogers, Arkansas, currently works with Wal-Mart's namesake stores on in-store demonstrations. Sam's Club is looking to the company to improve sampling in areas such as electronics, personal wellness products and food items to entice shoppers to spend more.

Sam's Club has performed weaker than Wal-Mart Stores Inc.'s namesake stores in the US and abroad. Cornell has been working to improve results since taking the helm in early 2009, introducing new store formats, price cuts and offering more variety and more brands of items from take-home meals to baked goods.

As consumers eat out less in the shaky economy, Sam's Club has tried to steal customers from grocery chains and rival warehouse stores like Costco Wholesale Corp. by offering more everyday goods like food and health and beauty items and paring its assortment of general merchandise like furniture and clothes.

But during Wal-Mart Stores' most recent quarter, revenue at the Sam's Club division slipped nearly 1 percent to $11.55 billion while US Walmart stores posted a 1.2 percent sales increase to $61.81 billion. Earlier this month, Wal-Mart Stores closed 10 underperforming Sam's Club locations, resulting in the loss of about 1,500 jobs.

"Sam's has been the relative laggard, and it has lagged relative to its direct competitors, Costco and the smaller BJ's (Wholesale Club)," said Craig Johnson, president of retail consultancy Customer Growth Partners.

The move to outsource its food sampling efforts is a way for the company to tout its fresh food offerings in a cost-effective manner, Johnson said.

"'Fresh' is where the real competitive battles are being fought in the club sector," he said.