Learning & Development, Recruiting

Walmart’s Embrace of Greater Automation Contributes to Employee Layoffs

Two of the biggest companies in the world dominate what have traditionally been very different segments of the retail market. Walmart is the archetypal big box retailer with thousands of stores covering tens of thousands or even hundreds of thousands of square feet. On the other side of the retail coin is Amazon, the archetypal online retailer where consumers can shop millions of items without leaving their beds.

Automation and Demand for Workers

The online retail model revolutionized and dominated by Amazon inherently requires fewer workers than operating thousands of physical brick-and-mortar stores, and less labor means greater labor costs. (As a side note, Amazon is by no means a small-scale employer, with over 1 million employees worldwide, but that’s still only a little more than half of Walmart’s 2.3 million global workforce.)

But Walmart—known as a master in cutting costs—is blurring the lines between big box retailers and online retailers as it increasingly expands its online presence. Walmart’s business model has long been one of vertical integration, particularly in its supply chain, so it’s no wonder Walmart has invested heavily in fulfillment centers to support that online retail activity, with 31 fulfillment centers in the United States dedicated to its e-commerce business.

Where it gets interesting from an HR perspective is how Walmart’s e-commerce business is impacting its hiring and retention decisions.

Automation, Hiring, and Retention

As Brianna Wellen writes for The Takeout, “Over the past year, Walmart has made several changes to support its growing online business. According to Walmart, part of that plan was achieved last week when the company bought Alert Innovations, a robotics company that has created bots specifically for Walmart that retrieve and dispense orders across three different temperature zones more efficiently.” This shift is highlighted by a recent Worker Adjustment and Retraining Notification (WARN) filing by Walmart in which the retailer reported it would be laying off nearly 1,500 employees in an Atlanta fulfillment center.

Greater automation at Walmart doesn’t just threaten the jobs of warehouse workers. “This new focus on ecommerce also threatens employees at in-store shopping locations, a branch of Walmart’s business that has been on the decline for a while,” Wellen says. “Back in 2016, CNBC reported that the brand closed 269 stores as part of another stage of ‘retooling’ that eliminated mostly express stores and locations that were within 10 miles of another Walmart.”

Increased automation does not always mean the loss of human jobs. However, in many cases, large numbers of human roles can quickly become obsolete, as illustrated by Walmart’s shift to e-commerce.

Lin Grensing-Pophal is a Contributing Editor at HR Daily Advisor.