Wal-Mart Stores Inc. is cutting back hours of operations at about 40 of its supercenters as part of a pilot program designed to evaluate customer shopping habits.
Traditionally the retailer's large-format stores have operated 24 hours a day. Beginning next week stores in markets throughout the country will close from midnight to 6 a.m. Similar closures were made earlier this year, the company said.
"Based on a recent review of our customers' shopping patterns we have made the decision to adjust hours at some of our stores," Wal-Mart spokesman Brian Nick said. "This is the kind of decision we make on a store-by-store basis and will allow us the ability to reallocate resources to serve our customers during peak shopping hours."
Employees who have been working overnight shifts in the affected stores will have an opportunity to transfer to other locations or work different hours. Others, like those responsible for stocking shelves, will likely see no change to their hours, Nick said.
Hours were cut in "dozens" of other stores in the spring, Nick said.
Wal-Mart operates more than 3,400 supercenters in the U.S. and will open 60-70 of the stores this year, down about half from a year ago. Square footage in new large-format stores also is being cut as Wal-Mart ramps up investments in smaller-format stores and online, but Wal-Mart CEO Doug McMillon said last month that the large-format stores are still an important part of its overall strategy.
"People want to talk about how the supercenters are yesterday's news," McMillon said during a retail conference hosted by the University of Arkansas. "A well-run supercenter is a fantastic store format in this country that we'll be running for a long time. But they have to be well-run."
Executives have implemented a number of changes at the store level in hopes of improving worker morale and customer experience. Improving sales in U.S. stores is important for the retailer because those stores make up about 60 percent of the company's $486 billion in annual revenue.
Management structures in stores have been tweaked to help operations. Wal-Mart has pledged to keep more registers manned during peak hours.
Wal-Mart raised pay for hourly employees and managers this year, setting a minimum wage of $9 per hour. Minimum wage will rise to $10 an hour in February and the company is committing $1 billion for pay raises and other employee-focused initiatives.
Finding ways to trim costs is likely a priority for Wal-Mart right now, said Edward Jones retail analyst Brian Yarbrough. Cutting back hours in some stores provides Wal-Mart with an opportunity to evaluate whether the 24-hour format makes financial sense.
Many of Wal-Mart's competitors are no longer open 24 hours in all markets. Cutting hours will effectively allow Wal-Mart to trim some costs. Comparing those savings with potential lost revenue will be important for the retailer, Yarbrough said.
"For a company as massive as Wal-Mart we know they're lean operators," Yarbrough said. "That's been one of their big selling points and strengths. They have world-class supply chains and systems, but at their size there is probably always an opportunity here and there to cut costs. Evaluating if it makes sense to be open 24 hours a day is probably one of those opportunities."
Business on 07/23/2015