Wal-Mart is starting to change the hours on several of their 24-hour stores, supposedly to make it easier for the overnight staff to stock the shelves and improve their store conditions, but as the author of this article theorizes, it’s probably more about saving payroll dollars, especially in light of them having to raise workers at minimum wage recently. Like any other retailer, they have to somehow make up the costs for the payroll increases and by reducing store hours they can reduce the number of cashiers standing there doing nothing at 2 am which will save them money in the long run.
I have already seen this happen with CVS over the last few years. They inherited a number of 24-hour stores from Sav-On and Longs, and each year they have cut a few of them from 24-hours to being open until midnight or the standard 10 pm. In some cases, they closed the pharmacy overnight but left the front store open 24 hours, which might seem odd because the original reason drug stores went 24 hours was so that their customers would feel confident they could pick up a prescription or get help with a sick child in the middle of the night if needed. The reason they’d just close the pharmacy is that the overnight pharmacist makes well over $75/hour while they only need pay a cashier or two $10/hour to stay open on the front end. All about dollars and cents.
If I remember correctly it was Thrifty who started the “Open 24 hours” trend and eventually the other chains reluctantly had to follow the trend to remain competitive. But now, as retailers are struggling to survive, they are finding that it is not financially feasible to remain open overnight as the meager sales they capture are not worth the amount of labor (and additional expenses such as lighting and A/C) that it costs. Theft is also greater overnight as well.
Many grocery stores have also scaled back their hours and I think you will see the trend continue as time goes on. In 5-10 years I think you’ll see VERY few 24-hour stores (if any) and if you really need a bottle of cough syrup at 2 am, you may have to drive a ways to get it.
Walmart ending overnight hours at some locations
Wal-Mart Stores Inc. will start closing some of its 24-hour supercenters for at least a few hours each night, aiming to use the time to better stock shelves and organize stores for the peak shopping rush.
The move will affect about 40 stores, including those in Philadelphia, New Jersey and Maryland, beginning next week, said spokesman Brian Nick. About two dozen 24-hour locations already had their hours reduced this spring, and more stores are slated to go through the process later, he said.
The change is a sign of retreat for a company that helped bring convenience and all-hours shopping to many parts of America. Chief Executive Officer Doug McMillon is taking the step as part of his drive to improve the shopping experience at Wal-Mart’s U.S. stores, where customers have complained about empty shelves, long checkout lines and poor-quality produce. McMillon has already raised starting wages and cut a layer of management in stores to try to improve the situation.
“Based on a recent review of our customers’ shopping patterns, we have made the decision to adjust hours at some of our stores,” Nick said. “This is the kind of decision we make on a store-by-store basis and will allow us the ability to reallocate resources to serve our customers during peak shopping hours.”
Customers were notified about the change with signs at the entrances of the affected stores.
In New Jersey, at least three 24-hour Wal-Mart supercenters near New York City, including one that opened in April, will start closing from midnight to 6 a.m. on July 26. Employees at those stores said they were surprised by the move since they are often busy during those hours.
Most employees who had been working the overnight shift will stay on to help with stocking and prepping the store for the daytime hours, Nick said. Overnight cashiers and other employees whose jobs will no longer be needed will be offered new positions within the store or at other locations. Those who choose not to relocate or take a new job will be offered severance if they have been with the company more than a year and work full-time, he said.
The move could have other benefits, like reducing theft, though that wasn’t the reason Wal-Mart changed the hours, Nick said. The Bentonville, Arkansas-based retailer has more than 4,500 stores in total across the country, along with 650 Sam’s Club locations.
Wal-Mart has been trying to reignite growth at its U.S. stores, which make up more than half of its almost $500 billion in annual revenue. The retailer disappointed investors earlier this year when it lowered its annual sales forecast, citing currency fluctuations and wage increases. After boosting pay to at least $9 an hour in April, Wal-Mart plans to raise wages to $10 an hour by next February.
Wal-Mart shares fell 15 this year through Tuesday’s close. The stock rose less than 1 percent to $73.07 as of 3:19 p.m. on Wednesday in New York.
Brian Yarbrough, an analyst with Edward D. Jones & Co., said he’s skeptical the overnight closures will significantly improve workers’ ability to stock and prep the stores. Rather, he thinks it may be a trial run to see if Wal-Mart can reduce overhead by cutting store hours without losing sales. Since few other retailers are also open 24 hours, customers may just shift their shopping to when the store is open rather than take their business elsewhere.
While the change may frustrate night owls and parents who need to buy diapers at 3 a.m., it’s not clear how much demand there is for 24-hour shopping.
“I question if it is a test and could become a national rollout,” Yarbrough said. “There aren’t that many shoppers there overnight. How many people are going to Wal-Mart at 2 in the morning?”