Sunday, January 24, 2010
Sam’s Club Cuts 11,200 Jobs
Sam's Club, the No. 2 U.S. warehouse club, and division of Wal-Mart Stores Inc is outsourcing about 10 percent of their in-store product demonstrations and is eliminating its new business membership representative jobs, essentially cutting around 11,200 jobs. The warehouse club will cut 10,000 jobs primarily held by part-time workers, and instead use Shopper Events, a third-party company, to run its in-store product demonstrations. However, the current demo employees will have the opportunity to apply for new positions with Shopper Events. The Chief Executive Officer of Sam's Club, Brian Cornell defends these cutbacks by saying, "We look at this as an investment in the in-club experience. This is not a cost-cutting move for us in the short term. We really hope it will be cost neutral for our operation. It's an investment in building loyalty, enhancing the member experience and driving future growth."
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This shows how companies are willing to restructure and even outsource for labor to cut down cost structure of a company. Sam's club is restructuring the way their advertising works to reduce costs. Instead of having people recruit new members, they are choosing to use direct marketing and price comparison. Sam's Club will be able to do this easily because other chain stores can not compete with the prices at which they sell their products. This situation is extremely unfortunate for the employees being laid off, but could definitely help the company reduce labor hours and the cost of operation in the long run.
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