Since Walmart began a push to raise wages for its legion of store employees last year, leaders at the big box chain have attributed its solid performance to the greater investment they were making in their staff. And because Walmart is such an enormous actor in the US economy, its choices have ripple effects in the retail sector. Over at Quartz, Oliver Staley argues that while some see the company’s size as being a “malign force,” that doesn’t take into account how Walmart’s choices can be also be beneficial:
The company also has used its massive buying power to eliminate waste in packaged goods and to drive down the cost of energy-efficient light bulbs, speeding their widespread adoption. Raising wages can have an even bigger impact. Walmart employs one in 10 US retail workers, and one out of every 100 US private-sector employees. Just as the company forced competitors to hold the line on wages, increasing its pay is now pressuring rivals to match it.
Walmart also raised salaries for entry-level managers in response to the Obama administration’s now-defunct overtime rule last year, but at the bottom of the pay scale, seemingly small increases, say from $10 to $11 an hour, can make a big difference in the lives of the working poor. Walmart is such a huge employer, Staley points out, that its pay practices effectively set a benchmark for the rest of the retail industry, pressuring other retail giants like Target to commit to adopting a $15 minimum wage by 2020:
Target announced on Monday that it would raise the minimum hourly wage for store employees to $11 next month, with an aim to raise its pay floor to $15 an hour by the end of 2020. The move reflects the retail giant’s efforts to turn around its sales performance and compete for talent in a tight market with high turnover, Fortune’s Phil Wahba reports:
“Making this investment in our Target team will allow us to continue to recruit and retain strong team members to serve our guests,” Target CEO Brian Cornell told reporters on a media call last week. Target said the raises would affect “thousands” of workers but remained vague on specifics. The company employs some 323,000 people year round and this year, is ramping up its holiday period hiring with 100,000 seasonal staff for the run up to Christmas, a 43% increase over last year. The higher wages will apply to seasonal workers as well.
In its most recent quarter, Target said comparable sales rose 1.3%, better than expected, and shopper store visits rose 2.1% even as e-commerce grew 32%, suggesting its strategy of blending stores and digital sales is working. Target has invested heavily in new store areas for pickup of online orders, parts of the store that require dedicated staff, as does the section of the store that fills online orders with that store’s inventory. Target has also assigned dedicated staff for its apparel and beauty areas so they can give better informed advice to shoppers, part of its efforts to improve the shopping experience in its stores.
These moves reflect broader trends in the big-box retail market, with industry leader Walmart making similar moves. Walmart has also been investing heavily in online shopping, acquiring the e-tail startup Jet.com last summer and hiring Jet CEO Marc Lore to run its entire e-commerce operation. It likewise aims to leverage its army of store employees to improve efficiency and customer service in its e-commerce business, and has credited its strong performance in recent years to investments it has made in its workforce.
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The New York Times‘ Rachel Abrams summarizes the difficult position Target has put itself in by announcing that its employees and customers can use whichever bathroom or fitting room corresponds to their gender identity—a corporate activist response to the growing debate in the wake of new laws in North Carolina and other states that seek to regulate where transgender individuals go to the bathroom:
The company’s announcement — the most prominent position taken by a national retailer — was greeted by cheers from supporters of transgender rights. It has since also made Target the intense focus of conservative activists, lawmakers and consumers, who oppose the company’s stance, highlighting the potential risks when a company takes a position on a hotly debated social issue.
Some groups have used Target’s announcement as a rallying cry, arguing that Target’s policy threatens the public’s safety. An online petition started by one group, the American Family Association, calling for a boycott of Target stores, has been signed by more than 900,000 people. On Tuesday, the City Council in Oxford, Ala., passed an ordinance forbidding people to use a bathroom that does not match the gender assigned to them at birth. Target has a store in the city. “I will no longer be shopping at your store and neither will any of my family members and friends,” one person commented on Target’s Facebook page. “You have all lost your minds.”
Abrams also notes that Target’s decision could have multiple rationales. The company may be embracing inclusivity and acceptance as a matter of principle, looking to generate good press, or simply trying to avoid violating federal anti-discrimination laws: