Sam's Club Downsizing

By Thursday Review staff | published Saturday, January 25, 2014 |

In a move which may indicate serious realignment in the retail marketplace, Wal-Mart announced plans this week to lay off at least 2300 employees from its Sam’s Club division. Nearly half of those layoffs will include middle managers and assistant managers at hundreds of under-performing store locations in North America. This is the second-largest layoff in Wal-Mart or Sam’s Club history.

Sam’s Club, the membership-only component of the Bentonville, Arkansas retail giant Wal-Mart, is facing intense competition from online seller Amazon. Sam’s has also lost ground in the last few years to its closest U.S. competitor, Costco Wholesale.

Sales were slower in the fourth quarter for almost all retail sectors, and many business experts blame the severity of winter conditions for shepherding customers toward online sales during the holiday period. But according to a number of consumer surveys, the massive cyber-attack on Target, in which the credit card and debit card information of millions of Americans was compromised, further inhibited in-store buying.

Over the holidays, online retailer Amazon had their best season yet, and the U.S. Commerce Department reported that web-based sales increased 1.4% in December 2013. During the Christmas sales period, even retail colossus Wal-Mart had difficulty competing with Amazon.

Wal-Mart’s announcement follows similar plans by other retailers, such as JC Penney and Target, to lay off employees or close underperforming stores.

Wal-Mart’s troubles may go more deeply, however, as many market watchers say savvy consumers are edging away from Wal-Mart and its Sam’s division because of the company’s reputation for low pay, weak benefits and poor working conditions.


Related Thursday Review articles:

Target to Lay Off Hundreds; Thursday Review; January 23, 2014

JC Penney to Close 33 Stores; Thursday Review; January 18, 2014

Not Hooked on Nook; Thursday Review; January 15, 2014