Wal-Mart Stores Inc.
announced that it is eliminating the job position of zone managers
from its U.S. stores in an effort to streamline its operations. The
change will affect around 14,000 employees, as there are generally
about six zone managers per store. The company will re-assign these
zone managers as assistants and department managers with no changes
in their pay structure, Bloomberg said.
The zone managers own responsibility of several departments,
which may include overseeing the pharmacy, health or beauty-product
sections. The position was created in addition to individual
department managers to improve efficiency and customer service and
However, the Bentonville, AK-based company reportedly found that
department managers better understand and interact with shoppers
instead of zone managers.
The decision to remove the zone managers' post is thus justified
on part of the retailer, as it has been working to improve customer
service. The move is expected to reduce bureaucracy, improve
customer service, and will give more responsibility to front-line
In addition to the shift of zone managers, the world's largest
retailer stated that it has plans to add 7,000 to 8,000 department
managers as part of an overhaul of its store operations. Increasing
the number of department managers will help the company better
understand customers' needs. The company is expected to complete
the changes by mid-June.
We note that Wal-Mart is undergoing a turnaround plan in order
to improve its sales, business operations and customer service. As
part of the strategy, the company expects to strengthen the roles
of the department managers and will raise the starting wage for
some of these positions to at least $13 an hour this summer and at
least $15 an hour early next year, as was stated in the open letter
to employees in February.
Walmart also stated that it will raise entry level wages to at
least $9 an hour this month and to at least $10 an hour by Feb
2016. In addition, the company would spend around $1 billion to
raise wages of approximately 500,000 full-time and part-time
associates at Wal-Mart U.S. stores and Sam's Clubs in the first
half of fiscal 2016. (Read:
Wal-Mart Pay Raise to Put Pressure on Other
The strategy also involves addressing other perceived weaknesses
such as poorly stocked shelves or stale grocery offering. (Read:
Wal-Mart Working to Improve Grocery Offerings
It is encouraging that Wal-Mart has been vigorously working on
improving its shopper trends through these initiatives. The company
also believes that assigning ownership of work to department
managers will help to retain good employees in a restricted labor
Wal-Mart has a Zacks Rank #4 (Sell).
Some better ranked stocks in the retail sector include The
, The Fresh Market Inc.
and Whole Foods Market, Inc.
. While Kroger sports a Zacks Rank #1 (Strong Buy), Fresh Market
and Whole Foods Market hold a Zacks Rank #2 (Buy).
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