- Walmart ended the last quarter with a 32% increase in inventory, which forced stores to need more space.
- Employees describe nearly impassable back rooms filled with pallets and outdoor storage trailers.
- Industry analysts say the retailer will have to scour inventory for months until 2023.
After ending the last quarter with a 32% increase in inventory due to inflation and supply chain issues, Doug McMillon, the CEO of Walmart, promised that the company would “work on” surplus goods. “over the next two quarters”.
Much like many other big-box retailers, the pandemic has created a stocking whirlwind for Walmart. What started as products like toilet paper – leaving Walmart’s shelves empty of many items – has morphed into the world’s largest retailer commanding a surplus of goods in excess of its customers’ overall demand.
On the ground floor, Walmart store employees are grappling with the consequences of this overstock, and analysts say it could be another year before Walmart gets the situation under control.
Insider spoke with six current employees who work in the backrooms of Walmart stores across the country. They described a myriad of pallets making floors nearly impassable, towering boxes that blocked access to places like nursing rooms and private bathrooms, and outdoor trailers crammed with excess inventory. All spoke on condition of anonymity for fear of reprisals. Their identities are known to Insider.
A Walmart spokesperson told Insider that “nothing is more important to us than the health and safety of our associates and customers.”
“As inventory has become an issue for all retailers, we have focused more on creating a safe working environment,” the spokesperson said.
“Getting Slammed With Nonstop Freight”
While inflation, supply chain issues and changing consumer behavior have caused many overstock issues at Walmart, the retailer’s new inventory system appears to have exacerbated the problem.
Walmart’s new inventory system automatically ordered supplies that stores already have, according to several Walmart employees and posts on employee message boards.
“Right now in my store we’re being bombarded with nonstop cargo,” said an employee who works at a Walmart store in Minnesota. “We’ve reached a terrible point where the system automatically orders more stuff than we already have.”
According to the Minnesota employee, the new system doesn’t account for items that employees don’t label or place in bins when they arrive at the store. The employee said that given the overabundance of packages, associates don’t have time to process packages in a timely manner, leading to the system automatically ordering multiple identical items.
A Walmart spokesperson said the company began rolling out the new RFID technology widely in 2020 to track goods. RFID technology serves as a data point to know if an item needs to be restocked, but the spokesperson disputed its characterization as an automatic ordering system. In a press release 2006the company said “the benefits of RFID, particularly in reducing stock-outs, as well as reducing excess inventory,” were documented in a University of Arkansas study published by school in 2005.
Meanwhile, employees say they’re paying the price for excess inventory. According to an employee who has worked at a Walmart store in Ohio for about a year, the back room is so full that the store “has people standing on the pallets they’re putting freight on because there’s no no room – it’s crazy”.
“I can’t even get near the pallets I need,” said another employee who works at a Walmart store in Indiana. “Our store has never been worse. It’s just overwhelming at this point.”
Freight deliveries also remained unpredictable, according to several employees who said they wanted the company to briefly suspend shipments of GM trucks, or general cargo, so they could process their current inventory.
A night shift worker who worked at a Walmart store in Arizona for about six years said their managers “would give us ‘truck nights’ to help relieve some of the pressure, but after two days of having a truck, they would hit us for five days in a row with two truckloads of GM products as well as clothes.”
“Honestly, if they stopped sending GM trucks for a week, maybe we could manage,” the Minnesota employee said.
The overstock conundrum has forced Walmart to find additional storage space. Four employees Insider spoke to said their stores had to use trailers to store excess supply. An employee who has worked at a Walmart store in Mississippi for more than a decade said his store currently uses five trailers for storage. The Arizona employee also said his store uses five trailers, mostly to store clothes.
“My store and a few other stores in the area had to rent shipping containers to store all of this extra stuff until we could get some sort of check on it,” the Minnesota employee said.
Another employee who has worked at a Walmart store in Georgia for about two years said inventory has been an issue since he started working at the store.
But now, according to the email, the overstock is “at its worst” and they “have no solutions.”
“I’m about to quit,” the Ohio employee said. “Moral is at rock bottom.”
How long will Walmart have excess inventory?
As excess inventory plagues Walmart store associates, analysts are giving the retail giant some slack.
Michael Rofman, a Mazars partner, told Insider that supply chain disruptions have forced Walmart and other retailers to shift their inventory mindset from “just in time” to “just in case.” where”.
And for companies like Walmart, he said, “I don’t think it’s possible not to have enough inventory – that’s how they came to be.”
“It’s very difficult to anticipate change forward-looking because you see the growth and you want it to continue,” Rofman said. “Everyone was a little drunk from the stimulus, and we got into a situation of imbalance, and the pendulum swung.”
To combat overstock, Walmart executives said they use rollbacks or discounts on products for a certain period, hoping to sell more items at a faster rate.
This approach has been more favorable to analysts than that of Target, which announced that it would cancel some orders from suppliers and reduce prices in June, three weeks after the company fell short of its earnings expectations at the end of the year. end of the first trimester.
John Zolidis, the chairman of Quo Vadis Capital, blasted the move at the time, writing in an analyst note that “almost all of the hard-earned goodwill with investors over the past three years may have evaporated in just three weeks” for Target.
As for when Walmart might resolve this overstock issue, Rofman thinks it will take until March 2023 — longer than Walmart had anticipated.
“Things will change,” he said. “Usually they order excess inventory between January and February, in order to get it on the ship in time. That way, between the holidays, it could potentially fix itself.”
“But then we enter our next summer and back-to-school ordering cycle.”
Do you work at walmart or do you have any ideas to share? Contact journalist Ben Tobin via encrypted messaging app Signal +1 (703) 498-9171 or by e-mail at [email protected]. Check Insider’s Guide to Sources for more tips on sharing information securely.