Walmart Puts on the Pressure

The Lempert Report
March 09, 2015

Will retailers like Target be forced to make changes?

Retail giant, Walmart is raising wages.  The company announced recently it would hike its minimum U.S. wage to $9 an hour this year and $10 in 2016.  They also said they planned to make scheduling of hours more predictable, which begins to address an issue that has long been a source of worker frustration.

Just like when Gap Inc. a year ago set its minimum wage at $9 an hour and pledged to go to $10 in 2015, Walmart’s announcement means that other retailers will now have to step up to keep up.  Particularly a store like Target, which shares similar pay scales for entry-level positions as well as selling similar products.

Walmart, the largest private U.S. employer with a workforce of 1.3 million is making a smart, if somewhat necessary decision, which smaller scale supermarkets can learn from. In an increasingly competitive market of low-skilled workers who easily move between retailers and fast-food chains, investing in your workforce is a good idea. 

Not only do you want appeal to workers initially and have them come and work for you, but you want good workers to stay. Creating an environment where employees will work hard and grow in the company should be a goal for all retailers. And it’s not just the financial improvements; it’s the lifestyle improvements, such as addressing scheduling and hours.  Investing in your workers will ultimately pay off long-term, happy workers who are committed and loyal create a retail environment that appeals to customers. 

But amongst all the positives, here's the big question -  just how will Walmart afford the wage increases? Will they raise prices? Will they eliminate staff through improved technology? The money has to come from somewhere!