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Wal-Mart to cut 11,200 jobs at Sam's Club

The company will outsource in-store demonstrations and product sampling at the warehouse stores, cutting 10,000 workers. It will also eliminate about 1,200 positions in business membership recruiting.

January 25, 2010|By Dawn C. Chmielewski
  • The CEO of Sam's Club said the outsourcing was aimed at helping customers "discover new items." Above, workers prepare food samples at a store in Bentonville, Ark.
The CEO of Sam's Club said the outsourcing was aimed at helping customers… (April L. Brown / Associated…)

Wal-Mart Stores Inc., the world's largest retailer, will eliminate some 11,200 jobs at its Sam's Club stores as it brings in an independent marketing firm to perform in-store product demonstrations.

Outsourcing the in-store demonstrations to Shopper Events, a marketing firm based in Rogers, Ark., will trim about 10,000 jobs, or 9% of the company's workforce, the company said. Most of these positions are part time, the company said.

The retailer also will eliminate about 1,200 jobs in business membership recruiting, or about two positions at each of its U.S. warehouse clubs.

Warehouse clubs have been struggling because these cavernous stores don't survive on sales of toilet paper alone but on purchases of expensive, slow-moving items such as flat-panel TVs and jewelry, which have been hurt by the recession. After a decade of double-digit sales growth, even market leader Costco Wholesale Corp. saw its net sales drop 2% for fiscal 2009.

Sam's Club President and Chief Executive Brian Cornell wrote in a memo to employees that by outsourcing product demonstrations, he was seeking to give members "a chance to discover new items" -- in effect, stimulating sales. Sam's Club, a division of Bentonville, Ark.-based Wal-Mart, selected a company that already runs in-store product demonstrations at some 2,000 Wal-Mart Supercenters.

At one sales and marketing conference of grocery manufacturers, Wal-Mart executives said such sampling stations dramatically lifted the sales of hams, cakes and cookies over the Easter holiday.

Shopper Events estimates it hands out about 2.8 million samples a week on Thursdays through Sundays at Wal-Mart Supercenters, according to one In-Store Marketing Institute report.

Like the Bright Ideas stations at Wal-Mart, Shopper Events will develop a program for Sam's Club called Tastes and Tips with new stations, signs and approaches to selling.

"It will give us the opportunity to highlight our value and selection to our members in food and beverage products, personal wellness and electronics," Cornell said in the memo.

Since taking over last March, Cornell has tried a variety of strategies to boost store performance -- changing store formats, cutting prices and offering more take-home meals and baked goods -- in a bid to steal customers from grocery chains and competing warehouse clubs.

Burt P. Flickinger III, managing director of Strategic Resource Group, a retail consulting firm in New York, said the wholesale club has tried desperately to shore up sales, offering discounted summer memberships as well as special rates for students. But Wal-Mart's warehouse club continues to lag behind rivals such as Costco, whose highest-performing stores can bring in $150 million to $250 million each in annual revenue, about five times that of Sam's Clubs in the same market, he said.

"Wal-Mart, in copying from others -- in this case, with Sam's Club -- is not nearly as good as it was in innovating with discount stores," Flickinger said.

The latest cuts come as Wal-Mart announced this month that it would close 10 underperforming Sam's Club stores in the United States and lay off about 1,500 workers. Stores in La Quinta, Vista, Irvine and Sacramento are among those to be closed. Sam's Club operates about 600 U.S. stores and also has locations in Brazil, China, Mexico and Puerto Rico.

Wal-Mart would not make executives available for comment, beyond distributing a copy of Cornell's upbeat-sounding memo, which touted "Tastes and Tips: A new initiative designed to build member loyalty, attract new shoppers and drive growth for Sam's Club."

The company sought to downplay the effect of the job cuts by issuing a note of clarification, saying that Shopper Events plans to hire roughly the same number of employees to run demonstrations -- jobs for which the current employees would be able to apply.

"In terms of overall jobs in the U.S., it would not be a loss or a gain, but neutral," the company said.

dawn.chmielewski@

latimes.com

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