Wal-Mart is making some big changes in hopes of modernizing and streamlining its big box brand.
Falling profits and a promise to raise employee wages across the board has forced the Arkansas-based company to make some hard decisions about how its day-to-day business will run in the future. Creating a better shopping experience for in-store customers and becoming capable of competing with Amazon.com are among Wal-Mart’s most immediate goals.
As Wal-Mart grows…The average Wal-Mart Supercenter is home to about 120,000 different products, with displays scattered throughout the store to encourage impulse buys. As the store has grown, selection has become overwhelming and made the store difficult to navigate. That’s why the Wal-Mart corporation has already removed as many as 15 percent of their displays and 2,500 items in the past year.
Investors and suppliers are both fuming at the massive changes taking place in the big box store. Upon Wal-Mart’s prediction of a drop of as much as 12 percent in profits next year as it attempts to restructure the store online and off, the retailer’s stock value dropped 10 percent in a single day. The stock is now on pace for its worst year since 1973.
Determined to improve the customer experience. Despite the less than stellar reception from the financial world, Wal-Mart is determined to improve customer experiences by removing stock and making the store easier to navigate, investing in its eCommerce side and increasing pay to workers. Through 2017, the corporation intends to spend upwards of $2.7 billion to boost worker pay and funnel $2 billion into eCommerce investments.
Although it’s too early to tell if Wal-Mart’s efforts are having an impact, the indicators are good. In the last quarter, inventory rose 2.2 percent, but sales rose 4.8 percent. The company hopes this is a reflection of better inventorying practices and replacement of infrequently purchased items with more popular and profitable ones.
Suppliers are guarded about these changes, claiming that the short-term reduction in sales could have catastrophic results for supply lines. Wal-Mart, on the other hand, says it is simply bringing their store model in line with the rest of its industry and that while suppliers may experience short-term pain, they stand to benefit from huge long-term gains.