It is never a good sign when the nation’s largest private employer says it’s cutting jobs at headquarters, especially in an economic environment — and industry — that is on high alert for bad news.
But as much as Walmart’s decision to lay off workers at the company’s Bentonville, Arkansas, base reflects the troubling trends surrounding it — and the entire retail sector — context is critical.
Read more: Walmart Cuts Jobs at Corporate, Bracing for Sales Slowdown
“Obviously, as customers continue to evolve, it is important that we continue to evolve too,” Walmart’s Director of Global Communications Jimmy Carter told PYMNTS in a telephone conversation and emailed statement.
The fact that the headcount reduction comes just one week after the company’s reduced profit outlook and prior announcement that it was accelerating markdowns to clear unsold inventory did not help matters and served to frame the implications more ominously.
See more: Walmart Cuts Q2, FY23 Profit Outlook as It Lowers Prices to Move Goods
The Context
For starters, 200 employees on a base of 1.6 million domestic workers is literally a drop in the ocean, as in, 1/8,000th of a percent, and that figure excludes the 700,000 people Walmart employs outside the United States.
There is also the fact that the retailer currently has nearly 59,000 open job postings on LinkedIn and its own Careers website and has been adding benefits and raising wages for more than a year to attract new workers amid a highly competitive, challenging and tight job market.
For example, the retail giant announced in April that it was increasing base pay for new truck drivers to $110,000 per year.
Read more: Walmart Hikes Driver Pay, Launches Private Fleet Program
The following month, it rolled out a program to fast-track recent college graduates into $200,000 store manager positions.
See more: Walmart Aims to Fast-Track Grads Into $200k+ Store Managers
This is not to minimize job losses — or what looks set to be internal career reassignment in some cases — as much as it reflects an ongoing focus on cost reduction as well as the continuation of Walmart’s own transformation and digital shift.
“We’re updating our structure and evolving select roles to provide clarity and better position the company for a strong future,” Carter said, noting the plan to further invest in key growth areas such as “eCommerce, technology, health and wellness, supply chain and advertising sales.”
While still too early in the process to identify firm numbers, final attrition or reassignment results, Carter stressed that the retailer is also creating new roles to support other growth in new services, including those that support customers and suppliers.
Cut Here, Grow There
To be sure, Walmart and all its major rivals, including Amazon, Target and countless other chains and digital brands, would prefer that the economy was stronger, and that double-digit inflation and supply chain woes were not as they currently are — especially after two years of pandemic upheaval.
While anecdotal evidence and PYMNTS’ studies clearly reflect that high prices are changing consumers’ habits and causing trade-down purchasing of cheaper brands as well as a prioritization of essential items over discretionary spending, there has not been a deep economic retraction or sharp spike in unemployment.
Read more: Inflation Causes Widespread Digital Pullback by Financially Strapped Consumers
The result, in the meantime, is that Walmart and other businesses both large and small, can only operate in the environment they have and adjust to things they can control themselves.
To that point, Walmart’s efforts to grow exposure to healthcare and become an “increasingly digital business” will not stop anytime soon, and its headcount evolution will also reflect that.
See more: Walmart Says ‘Business Is Increasingly Digital,’ Pledges Further Investment in Tech
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