Walmart announced on Thursday that it would be shutting down 12 stores across nine states, as well as in Washington, DC, and laying off hundreds of employees at fulfillment centers this year due to falling profits and the implementation of automation.
(Video Credit: Yahoo Finance)
The retailer has been closing a number of stores annually in recent years, citing underperformance as its reasoning for doing so.
This time, Walmart will also close two stores in Illinois and Arkansas that were “pick-up only.” The main locations shutting down are in Washington, DC, Florida, Illinois, Hawaii, Indiana, Minnesota, New Mexico, Oregon, Washington state, and Wisconsin, according to Reuters.
This comes as the retail giant announced hundreds of workers at five facilities that fulfill e-commerce orders are being laid off within 90 days.
Approximately 200 workers located in Pedricktown, New Jersey, and hundreds of others in Fort Worth, Texas; Chino, California; Davenport, Florida; and Bethlehem, Pennsylvania were laid off due to a reduction or elimination in evening and weekend shifts, a spokesperson said according to the Daily Mail.
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The cuts from the company come as mass layoffs are occurring in the US in the tech sector while the economy roils with skyrocketing inflation and bank closures. Many economists are now predicting it is a harbinger of a recession if not a depression by the end of this year.
Fears of an impending recession have already led retailers to implement 17,456 job cuts so far in 2023, compared with 761 in the same period last year, according to a March report by Challenger, Gray, and Christmas.
“We recently adjusted staffing levels to better prepare for the future needs of customers,” Walmart announced in a statement. The company asserts that it will work closely with affected associates to find jobs at other locations.
Impacted workers will be paid for 90 days so they can attempt to find jobs at other facilities, including those in Joliet, Illinois, and Lancaster, Texas, where the company has opened up new high-tech e-commerce distribution centers. But there is no guarantee they will be hired as Walmart employees brace for a tough year.
Walmart has invested heavily in automation over recent years. The company has partnered with automation companies such as Knapp to reduce the number of steps it takes employees to process e-commerce orders from 12 to 5. Increased automation means that fewer workers are needed.
The layoffs at Walmart, a retail bellwether because of its size, could be a harbinger of further turmoil in the U.S. economy, which many economists predict could enter recession this year. pic.twitter.com/gnDbD4SmH5
— Stock Sharks (@stocksharks_) March 24, 2023
The company is far from done installing job-killing automation. For large investments up front, the payoff down the line will be huge as employees won’t have to be paid or insured.
During a post-earnings call in February, Walmart CEO Doug McMillon remarked that he was “most excited about the automation opportunity we have.” Walmart plans to increase investments in automation technology as part of its more than $15 billion capital expenditure budget this year.
Currently, Walmart is the largest private employer in the United States with approximately 1.7 million US workers. But it is not destined to be that way forever as the business landscape is radically changing with automation and artificial intelligence.
A spokesperson for Walmart refused to call the cuts mass layoffs and insisted that warehouses are continuing to operate normally. They also claimed that it was not part of its modernization plans.
Walmart to close a series of stores across 9 states this year due to falling profits – after announcing hundreds of layoffs at fulfilment centers pic.twitter.com/W8EBvFrgZ1
— News News News (@NewsNew97351204) March 24, 2023
“This decision was not made lightly, and we’re working closely with affected associates to help them understand what career options may be available at other Walmart locations,” a statement said.
This news comes after Walmart laid off nearly 1,500 workers at an Atlanta, Georgia, online order fulfillment center, as part of a modernization plan to build warehouses with a more high-tech spin.
Ironically, Walmart bumped its minimum wage by $2 to $14 per hour in January.
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