Walmart raises hourly wages for workers

Walmart raises hourly wages of more than 565,000 employees as it continues to try to retain and attract workers in a difficult labor market. John Furner, Walmart’s President and CEO, stated that associates in the front of the store, food, and general merchandise units would get an average increase of at least one dollar per hour starting Sept. 25. Furner stated in the memo that this was the third such increase in the last 12 months.

Furner stated, “Over the last year, we have raised pay for approximately 1.25 million hourly associates within our U.S. shops, increasing our U.S. hourly wage to $16.40.” Walmart currently pays associates an average $15.25.

Total Retail’s View: Walmart’s recent announcement shows how competitive the labor market this year. Employers in retail, food service, and hospitality have all faced labor shortages during the pandemic. The unemployment rate fell to 5.4 percent in July, down from 5.9 percent. The Labor Department also reported that the weekly U.S. unemployment claims dropped by 14,000 last week to 340,000. This is the lowest level since March 2020.

Walmart’s decision by increasing wages for hourly associates places it ahead of other retailers. Many of these retailers have raised minimum wage to $15 per hourWalgreens Boots Alliance stated that it will increase the hourly starting wage for all employees to $15 by November. CVS recently announced plans to raise pay to $15 starting July 2022. In the past, other retailers like lulumon athletica and Target have increased wages for employees. Target and Walmart launched debt-free degree programmes to help their workers to further their education. This was done in an effort to increase the number of workers at its doors.


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The Rise of Brand Partnerships in Physical Retail

The store-within-astore (SWAS), strategy is nothing new. This includes the traditional department store and cosmetic brand relationships as well as ongoing partnerships between brands such as Best Buy and Sony. While the concept is not new, there has been a lot of activity in this area this year: Target with UltaKohl’s and Sephora; Tonal at Nordstrom, among others.

COVID-19 is expected to continue this trend, as it accelerates consumer preference for digital-first and omnichannel retail experiences. What are the main benefits and considerations to ensure long-term success of this approach?

Discovery, Distribution, and Destination

COVID-19 has changed the role of physical stores in customer experience. Retailers need to capitalize on the strengths of their physical environment. These are the three Ds: distribution, discovery, and destination. A SWAS strategy can be a great way to benefit both of them.

Customers seek inspiration, product interaction and the chance to make informed choices in beauty, electronics, or fresh food categories. To meet these needs, the physical store is still the best medium. For “replenishment” categories, such as paper towels, toilet paper, and the like, online is more convenient. We’ve seen an increase in the use of online shopping. This shift in demand calls for a rebalancing of space allocation towards discovery. This allows new brands to fill this gap.

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These discovery brands have a physical presence which allows them to reach consumers easily. It is expensive and slow to build a network retail stores. Warby Parker opened its first retail store in 2013. It has since expanded to 138 locations by 2021. Compare this to Target’s 1,868 locations. SWAS is a faster and less resource-intensive route to market when it comes to distribution.

Lastly, destination. Last year, a record 12200 stores were closed in America. Your offer can’t be found anywhere else. Survival means being a destination that draws shoppers. Too many retailers relied too heavily on convenience and a generic offer in the past. This weakness has been exposed by online. SWAS brand partnerships provide that destination, and an experience anchored in discovery.

Private Label is on the Rise

Private-label brands have seen a surge in popularity due to the urgent need for destination. The next natural step is private-label experience creation. Ten Below is a specialty discount chain Five Below that introduced higher-cost items in 2019. The concept is now being scaled nationally. As a SWAS concept, Fresh To Table was created for Wakefern, a Northeast grocery store. These partnerships allow retailers to enter new markets, create destination and bring authority that might not be present in a national brand. We expect to see more of this model, much like the SWAS strategy.

Strategies for Long-Term Success

Partnerships can be difficult. It is not common for incentives to fully align and future events could cause problems. Three key questions will help you maximize your chances of success with SWAS.

1. Can you clearly explain the reason for the partnership?

The incoming retailer, for example, is a authority in a discovery category. The distribution is provided by the network retailer with very little overlap from the existing physical footprint. The SWAS concept stands out from all others and creates destination. Customers feel the partnership is both additive and complementing, as there’s alignment between the brand values and shoppers target of the two retail brands.

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2. Is there an equal balance of power?

In the preceding rationale, each partner’s contribution is clearly stated. The partners share equally the risks and upsides. Their stand-alone businesses are in harmony. The two companies are working together for mutual success, not an adversarial one.

3. Do you have clear guidelines that can guide and anticipate exit scenarios?

Partnerships are often short-term and dynamic. It is important to be clear about possible exit scenarios as well as the principles that should govern them. To measure progress and allow for course corrections, create objective milestones and measures. Every retailer should plan and maintain a contingency plan for how they will replace the relationship.

Retailer partnerships are an answer to changing retail landscapes and offer an agile solution for keeping physical retail relevant. These partnerships are a quick solution to a long-term problem that will likely lead to the rise in private-label retail. Retailers need to ask themselves what problems they are solving now and how they can build their internal capabilities for the future.


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