More than 1,000 e-mailed complaints signal that Wal-Mart Stores Inc.’s (WMT) restocking challenges are more widespread than the world’s largest retailer has said.
Wal-Mart customers from Hawaii to Florida and from Texas to Vermont wrote to express their frustration after Bloomberg News reported March 26 that there aren’t enough workers in the stores to keep shelves stocked, cash registers manned and shoppers’ questions answered. In response to the original article, Brooke Buchanan, a Wal-Mart spokeswoman, said in part: “The premise of this story, which is based on the comments of a handful of people, is inaccurate and not representative of what is happening in our stores across the country.”
The e-mails began arriving shortly after the article was published and were still coming a week later. Most were from previously loyal Wal-Mart customers befuddled by what had happened to service at a company they’d once admired for its low prices and wide assortment. Many said they were paying more and driving farther to avoid the local Wal-Mart. Some had developed shopping strategies, including waiting until the last minute to grab ice cream, lest it melt in the lengthy checkout lines.
Wal-Mart founder “Sam Walton must be rolling over in his grave to see what has become of his business,” said Tony Martin, a 54-year-old forklift driver who once frequented a Wal- Mart store in Glen Carbon, Illinois.
Wal-Mart’s restocking challenges stem from a thinly spread labor force struggling to keep up with all the work that needs to be done, said Colin McGranahan, an analyst at Sanford C. Bernstein & Co. in New York. The Bentonville, Arkansas-based retailer’s workforce at its namesake and Sam’s Club warehouse chains in the U.S. fell by about 120,000 employees between 2008 and Jan. 31, according to a securities filing on March 26. The company now has about 1.3 million U.S. workers. In the same period, it has added about 455 U.S. Wal-Mart stores, bringing its total to 4,005.
McGranahan said he has talked to workers who say they’re being asked to do more than they can accomplish in a shift.
“Stuff gets backed up, and they’re forced to respond as best they can,” said McGranahan, who rates Wal-Mart market perform, the equivalent of a hold. “The result is an increasing amount of customer-encountered out-of-stocks.”
Those items are missing at a crucial time for Wal-Mart, when the U.S. economy already is restraining its shoppers’ spending. Same-store sales for Wal-Mart’s U.S. locations in the 13 weeks ending April 26 will be little changed, Bill Simon, chief executive officer of Wal-Mart U.S., said on a Feb. 21 earnings call.
Wal-Mart said the customers complaining to Bloomberg aren’t a sufficient sample size and don’t represent shoppers’ impressions of its stores nationwide. The company surveys more than 500,000 customers a month, asking them about checkout lines, store cleanliness and the helpfulness of workers, Buchanan said yesterday in e-mailed statement.
“These customers continue to tell us they have had a positive shopping experience and those numbers have trended upward over the past two years,” she said. “Our in-stock shelf availability is at historically high levels and averages between 90 and 95 percent. We will continue to work hard for our customers and meet their expectations by offering them everyday low prices on the broadest assortment of merchandise.”
Wal-Mart U.S. had sales of about $274.5 billion in the year ended Jan. 31, more than the total sales of Target Corp. (TGT:US) and Costco Wholesale Corp. (COST:US) combined in their comparable periods. Wal-Mart says two-thirds of Americans shop at Wal-Mart each month. The company also had 6.6 billion visits to its U.S. stores in the last year, up 23 million from a year earlier, Buchanan said.
Still, investors have lost some enthusiasm for Wal-Mart. It closed at a 0.2 percent discount to Target on a price-to- earnings basis yesterday, compared with an average 7.3 percent premium during the past year. Wal-Mart on March 20 traded at a 3.2 percent discount to its smaller rival, the lowest in more than a year. The shares rose 0.8 percent to $76.02 at the close in New York today.
Martin, the forklift driver, said Wal-Mart’s low prices don’t matter because he loses money on gas when the store isn’t the one-stop shopping destination it’s billed to be. All consumers appearing in this story were contacted to verify their identities and addresses.
“As much as I need to take advantage of the low prices that Wal-Mart has to offer, the money I would save” is spent on gas to drive to other stores to buy the items that the retailer doesn’t have on its shelves, he said. “So it is easier to just shop elsewhere.”
Customer service also drove him away. He tried to get a watch battery changed. No one could find the batteries and a worker didn’t know how to change it anyway, he said.
“The lady told me to go to a pawn shop to have it changed,” he said.
Bob Shank Jr., 68, of Tucson, Arizona, said he and his wife shopped at Wal-Mart and “experience exactly what you’ve described.”
Shank said there are two Wal-Mart stores in his area, one of them new. At the older one, there are “different items left on shelves where they don’t belong, items on the floor not replaced, empty shelves.” Even the brand-new store has “bare shelves” with yards of empty spaces and “few employees visible, especially at the check-out counters.” He said “you’re lucky to find one” at 7:30 a.m., when he used to shop.
Shank tried several times to buy his favorite type of rum at both of his local Wal-Mart stores. He eventually asked employees whether the brand had been discontinued. He got the same response at both stores: “‘No’, they said, ‘we just haven’t had time to re-stock.’”
He also used to buy jeans at Wal-Mart. “Now a lost cause,” he said, after failing repeatedly to find them in the sizes and style he wanted.
Shank buys his rum at Safeway Inc. (SWY), a grocery store, and his jeans, shirts and sneakers at Costco Wholesale Corp. (COST)
Dennis Austin, 54, who shops at the Wal-Mart Supercenter in Shreveport, Louisiana, said he avoids the store on Sundays when “you will find one cash register open and a line of 30 people trying to check out.”
Austin, a computer-support worker, used to buy pet food at Wal-Mart until noticing that “every time I needed to buy more dog food it was out of stock.” Now he buys it at PetSmart Inc. (PETM) Formerly a dedicated Wal-Mart shopper, Austin said gasoline is the only purchase he regularly makes there.
Jean Martin, 56, who read the Bloomberg News article after shopping at her local Wal-Mart in Quakertown, Pennsylvania, said the piece “backed up my experience 100 percent.”
Martin had gone to the store, which she described as a recently renovated supercenter, with a list of three items.
“They were out of all of them,” she said. “I picked up a couple of other things not on my list and then waited in line 15 minutes to pay for them.”
Martin, a materials engineer at a company that weaves specialty fabrics, said she has noticed for more than a year that some of her favorite items such as Good & Plenty candies and Suave hairspray are regularly not available. Although Wal- Mart conveniently is located about a mile from her office, Martin said she “will be shopping at Target (TGT) from now on.”
Mike Grimes, 61, shops at the Wal-Mart supercenter in Sikeston, Missouri. He and his wife expect to wait at the register.
“We wait until we’re about to put items on the conveyer belt, then one of us will run back and get the ice cream,” Grimes said of his family’s strategy. “Otherwise it will melt. We know we’ll be standing in line 20 minutes or more.”
“If you need help you can never get anyone to help,” said Grimes, who operates a furniture and appliance store. “If you stop an employee and ask for help they just point and tell you to ’go over there,’ and they go on.”
When Barry Hastings, 65, shops at the Wal-Mart in Fredericksburg, Virginia, he rarely emerges with everything on his list.
“They run out of Simply Lemonade. No stock on Dr. Pepper 7-ounce cans. No ground pork, no onions, no green beans and the list goes on and on,” he said.
Hastings takes pictures of empty shelves and shows them to the store’s managers as proof of the problem. He said he spends about $400 a month at other stores that he’d prefer to spend at Wal-Mart in order to get all his shopping done at once.
“Went to the store for 7 items and they had one,” he said. “Wal-Mart never has what I am looking for and I have given up.”
Michael Young, a 63-year-old accountant in Oklahoma City, goes to Wal-Mart “only when I need things I know I can usually get for less money.” He has to prepare himself for what he knows will be an unpleasant shopping experience.
“I really dislike the long checkout lines,” he said.
“When Sam Walton was alive and running things, one could go to Wal-Mart and get help all the time,” Young said. “No more.”
Bobby Blackmon, 37, lives in Jonesboro, Arkansas, Wal- Mart’s home state. He travels for his job working with cranes -- and no matter where he goes, he said he always has trouble finding things at Wal-Mart.
Two weeks ago, he was at the Wal-Mart in Baton Rouge, Louisiana, to buy energy drink mix, nicotine gum and ambrosia apples.
“Zero for three,” he said. “All the shelves were empty.”
Blackmon, who works as an emergency room nurse on the weekends, picked up some peanut butter and headed to a checkout line.
“There was one register open, and I was the tenth person back,” he said. “It was ridiculous. I just put it down and left without it.” Several of his fellow customers did the same.
Blackmon is married with four children, ages 12 and younger.
“We used to spend 40 percent of our income at Wal-Mart,” he said. “Now we just try to avoid it.”
Instead, Blackmon goes to Target and Dollar General Corp. (DG)
Rosemary Alvino-Ditmore, 63, of Sierra Vista, Arizona, always makes “a list before venturing to Wal-Mart, and I always end-up complaining to my husband about the barren shelves, missing merchandise aisle after aisle, and not being able to find what I want,” she said.
Alvino-Ditmore, a self-employed writer who shops at her local Wal-Mart at least twice a month, keeps a running list of items she’s been unable to find over the past year: oatmeal, nutrition bars, Suave shampoo, clothing patches, distilled water, drapes, sweatpants, knee-highs and more.
“Why have this huge Wal-Mart if you always have pegs empty or empty shelves?” she said.
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