Wal-Mart just announced it would raise pay, ramp up training, and fix scheduling for associates.
Company executives say they are making these changes to retain good workers and improve customer service.
While this expensive investment is driving the share price down right now, it’s actually necessary for Wal-Mart’s long-term success.
“Pay and benefits are a key ingredient to improving the store experience,” CFO Charles Holley told press and analysts on the call.
Wal-Mart customers across the country have been complaining that they can’t find the products they want, and that could lead to dangerous consequences for the retailer.
“Wal-Mart shelves are empty because it cut back on its workforce and the employees can’t keep up,” customer service expert and best-selling author Grant Cardone told Business Insider. “It doesn’t work to be everywhere if you’re not offering an experience.”
The retailer’s empty shelves problem was first reported by Renee Dudley at Bloomberg News, who notes that company’s workforce has fallen by 120,000 since 2008.In the same time the company has added several hundred locations. In all, it employs 2.2 million people. Dudley said she received thousands of emails from disgruntled customers who complained of Wal-Mart’s poor selection, long check-out lines, and bad customer service. Cardone said that if Wal-Mart doesn’t amend the problem, it could go the same route as cable TV, which shows that “the size of the organisation doesn’t matter.” “We’ve seen 5 million people abandon cable in the past 18 months because there are better alternatives out there,” Cardone said. “Wal-Mart’s threat is the internet, and consumers won’t hesitate to leave.”
Victor Ireland, a former Wal-Mart customer, told us that he actively avoids the retailer because of its “understaffed” stores.
“Checkout is a nightmare with long lines and few cashiers, and I actively avoid Walmart stores for this very reason,” Ireland told us. “The hassle isn’t worth the potential savings.”
Cardone said that Wal-Mart needs to hire more associates, and fast.
“A negative experience can leave a bad taste in a customer’s mouth for a long time,” Cardone said. “If you’re not making life easier for them, they’re not going to come.”
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.