Inflation pressures and a move towards increased technology are causing retail giant Walmart to slow its hiring, according to a Reuters report.
Walmart CFO John David Rainey told investors during an annual meeting that the slower employee growth factors into the company’s move to turn to more automation and technology. Rainey also told investors he sees inflation easing down to as little as 3% by the end of the year, but that the company is still feeling the effects of higher prices.
Inflation has hit the grocery sector the hardest, and more than 56% of Walmart sales are credited to food. According to a report from the Labor Department, food prices in the U.S. were up 9.5% in February compared to a year ago. Walmart’s private-labeled brand has excelled over the last year or so, accounting for more than 20% (over $600 billion) in total sales.
During the same investor meeting earlier this week, Walmart announced that by 2026 approximately 65% of stores will be automated. The news comes not long after Walmart dismissed hundreds of employees at online fulfillment facilities.
The company’s $15 billion capital spending budget this year has an automated technology theme. In addition to the move on the store floor, Walmart said more than half of all packages will be moved through automated fulfillment centers by 2026, improving unit cost averages by about 20%.
There was no indication that more layoffs will occur in the coming months. Walmart is the largest private employer in the U.S. behind a workforce that is about 1.7 million strong. Officials are saying the automation will replace roles where the pay is lower. The shift appears to be leaning toward paying employees more to do less physical work.
About 200 workers at Pedricktown, N.J., and hundreds of others at Fort Worth, Texas; Chino, Calif.; Davenport, Fla.; and Bethlehem, Pa. were let go in late March due to a reduction or elimination in evening and weekend shifts, according to Reuters.
“Customer expectations are changing, and we are moving quickly to meet and exceed their needs,” Walmart said in a statement. “As demand grows, we are maximizing our network of stores and fulfillment centers, to deliver items for online customers, when and how they want them. We recently adjusted staffing levels at our FC in select markets to better prepare for the future needs of customers. This decision was not made lightly, and we’re working closely with affected associates to help them understand what career options may be available at other Walmart locations.”