Walmart CFO: Job cuts aid efficiency, operations

Wal-Mart Stores' move to cut back-office jobs is an efficiency program that will also serve operational goals, a company executive said in a presentation Wednesday.

Speaking at the Goldman Sachs Retailing Conference in New York, Brett Biggs, CFO of the Bentonville, Ark.-based mass merchant, described the reported 7,000 job cuts as an efficient reallocation of labor, transitioning store-based accounting and invoicing jobs to central shared services while potentially providing the company with additional — and lower-paid — workers for jobs on the sales floor. The changes, which were piloted at a group of stores earlier this year, are expected to take place over several months.

Brett Biggs

"We've made some really nice progress around shared services, and that's part of what you're seeing with this," Biggs explained. "It's taking some of those functions and putting them into a shared services center where we're more efficient, versus the set of doing that store-by-store. Now a lot or a great number of those associates will continue to work with Walmart, hopefully in more customer-facing roles within the business."

Walmart in recent years has moved to get more associates on the sales floor in an effort to improve customer service, in part through improved technology, Biggs said, and that has contributed to the retailer's modest sales momentum.

"If you go into Walmart today, you will see more people on the floor than you would've seen two years ago," he said. "You look at some of the technology that we put into our backroom, which has allowed associates to spend much less time in the back rooms, more time on the sales floor. All of that has been from the standpoint of ensuring better customer service."

The improved customer service in stores has made for a better environment to cut prices, Biggs added. He acknowledged that the company was running ahead of schedule on the planned "billions" in price investments officials spoke of enacting a year ago. Some analysts say that has contributed to a frothy competitive environment also sparked by retailers seeking additional volume amid persistent food price deflation.

"I think the consumer generally is okay," Biggs noted however. "There are things that are working in their favor whether it's interest rates, fuel prices, unemployment rate — all that is pretty favorable for the consumer. I think there is still probably a little bit of hesitancy and that stems back from 2009 when people remember a tougher time, and that's why you've seen the savings rate go up, you seen people paying down debt."