Surreal to so real – Sam’s closes 63 clubs after Walmart announces pay raise
Yesterday, Walmart announced to wide press coverage that it is raising the minimum wage it pays all its hourly workers to $11 while also giving eligible employees one-time bonus payments between $200 and $1,000. Later in the day, the company’s Sam’s Club division announced it will close 63 clubs, potentially putting thousands out of work. Huh?
Sam’s is closing underperforming clubs while planning to repurpose others as distribution centers to handle orders for the chain’s online business. With the closures, Sam’s will now have 597 clubs operating in the U.S.
Costco, the number one warehouse club chain, has 514 locations domestically. The retailer posted a same-store sales gain of 11.5 percent in December, the fifth straight month of double-digit increases for the business.
Walmart has said that it hopes to rehire as many affected workers as possible in nearby locations. Management pledged to provide affected employees with resources in helping to find work. It will also pay them the announced bonus and 60-day’s pay. Eligible workers will receive severance.
“We need great people to help lead us into the future and we hope that many of them will stay with the company at either a local store or club,” said John Furner, president and CEO of Sam’s, in a statement. “Change is never easy, but we’re making these decisions as part of running a healthy business.”
Sam’s has been putting greater emphasis on technology and e-commerce in recent years.
At last year’s Shoptalk conference, Jamie Iannone, president of SamsClub.com, discussed the company’s expansion of its Club Pickup click and collect service. He said the key to the service was inventory transparency and accuracy.
“All SKUs have to be online, whether bought digitally or in the club,” he said. “It’s part of the online experience.”
Sam’s has also been testing home delivery and its Scan & Go self-checkout app is available in all the chain’s clubs across the U.S.
- Sam’s Club Shares Changes to Club Fleet – Sam’s Club
- Sam’s Club closing dozens of stores; some being converted to distribution centers – USA Today
- Here’s a map of where Walmart is closing more than 60 Sam’s Club stores – CNBC
- Costco Clearly Not Hurt by the ‘Amazon Effect’ – TheStreet
- Sam’s says it’s scoring with club pickup – RetailWire
DISCUSSION QUESTIONS: What is your reaction yesterday to the announcement that Sam’s is closing 63 clubs on the heels of Walmart’s pay raise news earlier in the day? Could Walmart have handled the communications in a way that might have played better from a public relations perspective?