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Walmart refocuses

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BENTONVILLE, Ark. — Walmart continues to fine-tune operations in pursuit of its growth strategy. Recent alterations include elimination of its smallest store format, the closure of underperforming stores in the United States and internationally, pay raises for more than 1.2 million U.S. employees and consolidation of its technology teams.

The pillars of the company’s growth strategy remain its Supercenters, its online retailing platform and the Neighborhood Market store format that permits Walmart to do business in more urban neighborhoods, company officials have said in recent weeks.

Walmart president and chief executive officer Doug McMillon commented last month that the decision to close 269 stores worldwide, including all 102 of its small-format Walmart Express stores in the United States, was part of an ongoing portfolio management process that is essential to maintaining a healthy business. “This allows us to create an even stronger Walmart by winning with our proven store formats and deepening our relationships with customers,” McMillon said in a question and answer session with Walmart employees conducted over the company’s website. “Ultimately, this is in the best interest of our company and reflects the priorities of our growth plan,” he explained. “That plan is focused on winning with stores, deepening our digital relationships with customers and enhancing critical capabilities through technology and data, a next-generation supply chain and talent.”

The store closings will affect 16,000 employees, including 10,000 in the United States, McMillon noted. The decision also spells the end of an experiment launched in 2011 to diversify the store base via a hybrid format featuring Express stores of between 10,000 and 15,000 square feet offering groceries, usually a pharmacy and, in some cases, gasoline. Walmart will continue to add Neighborhood Market stores, offering fresh produce and meat to urban shoppers in stores of about 35,000 square feet, McMillon said. The number of Supercenters will continue to grow, as well, as the company adds suburban and rural stores ranging in size from 100,000 square feet to more than 250,000 square feet. Walmart plans to open more than 300 new stores over the coming year, McMillon said. In the United States, it plans to add between 50 and 60 Supercenters, 85 to 95 Neighborhood Markets and seven to 10 Sam’s Clubs.

The recently announced pay raises for Walmart and Sam’s Club workers represents the second phase of the company’s two-year, $2.7 billion investment in workers, which also involves enhanced worker training.

“The pay raise, which takes effect February 20, will be one of the largest single-day private sector pay increases ever,” Walmart noted in a statement. “As an industry leader for competitive pay and benefits, Walmart is also implementing new short-term disability and simplified time-off programs. The combined changes will expand support for associates dealing with extended health issues and provide associates greater control over their paid time away from work.”

Once the plan is implemented, all employees hired before January 1 will earn at least $10 an hour. New entry-level employees hired after January 1 will continue to receive $9 an hour and will get a raise to $10 after successfully completing a new program, called Pathways, designed to raise workers’ retail skills.

Thomson Reuters reported last month that Walmart will merge an Arkansas-based division that develops computer systems for its stores with its @Walmart Labs technology unit based in Silicon Valley that is working to improve the retailer’s e-commerce capabilities. The merged units will comprise a new group called Walmart Technology, which will employ about 8,000 people. Walmart cited the recent launch of its Walmart Pay mobile payment service as an example of the kind of collaboration between the teams that might he spurred by the merger.

Additionally, the new technology unit should help Walmart ramp up its online grocery pick-up service to better compete with Inc.’s food delivery efforts. Walmart has invested billions of dollars in e-commerce, with a view to offering customers a seamless shopping experience.


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