Walmart to Cut 11,200 Sam’s Club Jobs, Cornell Says

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Jan. 24 (Bloomberg) -- Wal-Mart Stores Inc., the world’s largest retailer, will eliminate about 11,200 jobs at its Sam’s Club membership warehouse clubs in the U.S. as it hires an outside company to demonstrate products.

About 10,000 demonstration employees, most part-time, will lose their jobs in the next 30 days after marketing company Shopper Events LLC takes over sampling, Sam’s Club Chief Executive Officer Brian Cornell said today in an interview. The company also is cutting about 1,200 membership recruiting jobs, or about two in each of the club’s U.S. stores.

Hiring a third party is part of an effort to improve demonstrations and lure customers from rival clubs, Cornell, 50, said. Sam’s, which trails Costco Wholesale Corp. in sales, will use savings from labor costs to improve the sampling of food, beverages, health items and electronics, according to the CEO.

“This was not a cost-cutting move,” he said. “The steps we are taking are about differentiation and jumping ahead.”

Cornell, who became CEO in April, told employees about the changes in a memo today. Sam’s Club has about 110,000 workers, according to David Tovar, a spokesman for Bentonville, Arkansas- based Walmart.

These cuts are separate from Walmart’s announcement on Jan. 11 that it will close 10 Sam’s Club locations and eliminate about 1,500 jobs, Tovar said.

New Hiring

Shopper Events, based in Rogers, Arkansas, next to Bentonville, plans to hire about the same number of workers that Sam’s Club is firing, Cornell said in the memo. Employees can apply for Shopper Events jobs, he said.

Shopper Events already handles food sampling and demonstrations of cosmetics, lawn equipment and other products inside Walmart’s U.S. stores, Brian Pear, vice president and general manager, said today in a telephone interview. The company will seek to improve Sam’s Club’s demo stations, signs and uniforms, according to the memo to employees.

“We view it as an investment in building membership loyalty and attracting new members and ultimately fueling growth for Sam’s Club,” Cornell said in the interview. “We expect our members to buy more products and visit us more frequently.”

The move likely will provide a “slight” boost to sales, said Richard Hastings, a Charlotte, North Carolina-based consumer strategist for Global Hunter Securities LLC.

‘Logical’ Step

“It seems to be a logical way to drive better shopper response to new products that could help with comparable-store sales about nine to 12 months after implementation,” Hastings said today by e-mail. “It needs high-quality execution.”

Each Sam’s store will eliminate about two jobs in which employees recruited new members, according to the memo. Instead, stores will hold special events for prospective members and increase efforts by which companies and organizations would provide memberships to their workers at special rates.

Walmart rose 2 cents to $52.94 on Jan. 21 in New York Stock Exchange composite trading. The shares dropped 4.7 percent last year, compared with a 23 percent advance in the Standard & Poor’s 500 Index.

To contact the reporter on this story: Chris Burritt in Greensboro, North Carolina, at 1348 or cburritt@bloomberg.net