Walmart fulfillment center employee filling bins
Photo: Walmart

Walmart is laying off hundreds of employees working evening and weekend shifts at five e-commerce fulfillment centers (FCs).

The retailer has given notice to about 200 workers at its facility in Pedricktown, NJ, and is cutting back on personnel in Bethlehem, PA, Chico, CA, Davenport, FL, and Fort Worth, TX.

Walmart has asked the workers to find jobs at other FCs it operates within 90 days, according to Reuters, which first reported the news.

A Walmart spokesperson told the news service and CNBC that the job cuts were “to better prepare for the future needs of customers.”

Walmart, which has forecast sales growth of two to 2.5 percent this year, excluding fuel, expects sales to slow in the second half of the year as consumers continue to limit spending on discretionary purchases in the face of inflation and economic uncertainty.

“There’s still a lot of trepidation and uncertainty with the economic outlook. Balance sheets are continuing to get thinner, savings rate is roughly half of what it was at a pre-pandemic level and we’ve not been in a situation like this where the Fed is raising at the rate that it does,” Walmart CFO John David Rainey told Reuters last month.

The layoffs appear to be a sign of corporate belt-tightening and a byproduct of Walmart’s automation of its fulfillment capabilities. The retailer has opened highly automated FCs in Joliet, IL, and Lancaster, TX, as part of a plan to move goods faster and at a lower cost. Those facilities and ones in McCordsville, IN, and Greencastle, PA, follow the successful implementation of the technology at Pedricktown.

The high-tech FCs feature automated, high-density storage systems that streamline a manual, twelve-step process into five robotics-driven steps: Unload, Receive, Pick, Pack and Ship. In the picking process, warehouse workers only have to wait for a tote to bring the ordered item instead of walking up to nine miles each day across multiple floors to find product.

Combining the high-tech FCs and Walmart’s traditional centers will enable the retailer to offer next- or two-day shipping to 95 percent of the U.S. population.

Walmart’s chief rivals are also looking to cut costs, CNBC reports.

Amazon.com has also laid off workers with 27,000 receiving pink slips in January and March. Target said it plans to cut $3 billion in expenses but has not specified where those savings will come from.

BrainTrust

“Instead of layoffs and right-sizing, retailers should invest in their people.”

Liza Amlani

Principal and Founder, Retail Strategy Group


“Using automation to replace repetitive low value-add functions will continue to occur in all fulfillment centers and warehouses.”

Steve Montgomery

President, b2b Solutions, LLC


“Don’t forget we’re talking about e-commerce fulfillment. People are going back to stores. That’s the reality.”

Paula Rosenblum

Co-founder, RSR Research

Discussion Questions

DISCUSSION QUESTIONS: Do you see layoffs at Walmart FCs as driven more by declining sales or the retailer’s automation efforts?  Do you expect other retailers to reduce staffing levels for workers in e-comm fulfillment? 

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Do you see layoffs at Walmart FCs as driven more by declining sales or the retailer’s automation efforts?

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15 responses to “Walmart Lays Off Fulfillment Center Workers as Sales Slow and Robots Go to Work”

  1. Mark Ryski Avatar
    Mark Ryski

    The leaders are leaders because they take proactive steps to stay ahead — that’s what Walmart is doing here. This is less about sales results and more about productivity and efficiency. Automation will inevitably lead to job losses for workers who were doing the work, and this is how it will happen. Little by little, over time, workers performing certain functions are being replaced. Ultimately, all retailers and businesses in general are trying to drive up productivity and bolster their profitability for the uncertainty ahead.

  2. Neil Saunders Avatar
    Neil Saunders

    Demand, especially in volume terms, has moderated. Retailer costs have risen rapidly, especially for online. Almost all retailers are focused on rebalancing the equation to protect profit, and labor is one of the areas where they can make savings. In the short term this means layoffs, in the medium to longer term it will accelerate the push to automation. However it is important to remember that almost all retailers took on a lot more labor over the pandemic, so this isn’t quite the disaster that some headlines make out.

  3. Lisa Goller Avatar
    Lisa Goller

    These layoffs are driven by an urgent need for efficiency. Slower sales are the threat and automation is the opportunity.

    Other retailers are likely to reduce staffing as consumption declines and automated fulfillment rises.

  4. Liza Amlani Avatar
    Liza Amlani

    During the start of the pandemic, Walmart was leading by example. Upskilling and training employees on new ways of working as they enabled more and more technology to help run the business was a smart move. This practice should be continued across the retail industry.

    Instead of layoffs and right-sizing, retailers should invest in their people. Great retail staff is hard to find and investing in employees that are already part of the organization will build brand loyalty. It’s a win for the retailer. And a win for the community that may only have a Walmart to shop and work at.

  5. Dion Kenney Avatar
    Dion Kenney

    Automation-centric fulfillment centers are the future. The drivers, as always, are increasing productivity while driving down cost. The value of humans in this equation is not trying to compete with robots and AI (a la John Henry) but in the understanding, managing, and achieving by applying the technology more effectively than the competition.

  6. Steve Montgomery Avatar
    Steve Montgomery

    Using automation to replace repetitive low value-add functions will continue to occur in all fulfillment centers and warehouses. The transition is not inexpensive but the long-term benefits produces a strong ROI.

  7. Paula Rosenblum Avatar
    Paula Rosenblum

    Don’t forget we’re talking about e-commerce fulfillment. People are going back to stores. That’s the reality. I might’ve wished Walmart had reassigned the workers instead of laying them off, but reducing ranks is a good idea

    1. Richard Hernandez Avatar
      Richard Hernandez

      100 percent true. People are going back to stores and doing less buying online. I do wish they would have reassigned the workers to other areas of the company.

  8. Nicola Kinsella Avatar
    Nicola Kinsella

    Walmart is in the process of making big changes across their supply chain fulfillment operations. They are bringing in new people to think differently about their challenges and opportunities. So I see this as part of a bigger transformation initiative.

  9. David Spear Avatar
    David Spear

    Retailers are simply reacting to market dynamics and, unfortunately, we’re heading into a turbulent storm that will result in less discretionary spending by consumers and more layoffs. Walmart is trying to get ahead of this. It should be noted that Walmart has tinkered with innovation since Sam founded the company. It’s in their DNA, and so they’ll continue to look for more efficiency in every nook and cranny in their operations.

  10. Jeff Sward Avatar
    Jeff Sward

    This all feels like a very natural, evolutionary process in motion. With maybe a little acceleration driven by market dynamics. Robotics installations in fulfillment jobs is not new news. And yes, it’s unfortunate that the process displaces people, but expense efficiency will drive a lot more of this same kind of action in other retailers. Robots, and now AI, are changing the workplace landscape.

  11. Brandon Rael Avatar
    Brandon Rael

    In the race to drive efficiencies and scale e-commerce fulfillment capabilities at a lower operating cost, automation is the next logical step of the evolution to unlock value and increase profitability. Unfortunately for those Walmart employees that have been impacted, layoffs are an executive strategic lever that could be used to reduce operating costs and rising labor costs and ensure shareholder value.

    As consumer last-mile expectations increase and delivery windows shorten, e-commerce micro-fulfillment capabilities will increasingly shift to an automated operating model powered by predictive analytics, machine learning, and AI. The migration to an automated fulfillment future has been in the cards and is one of the top predictions for 2023. Walmart continues to be a leader in supply chain optimization and e-commerce fulfillment innovation, and the move to a more automated future is underway.

  12. Gene Detroyer Avatar
    Gene Detroyer

    Are there many opportunities where automation will pay off more than in a fulfillment center? We can look at it another way — what jobs in a FC can’t be done by a machine rather than a human?

    Being realistic, the only thing that delays human replacement technology is the development of the technology. Years ago, I often spoke about an auto plant in Canada that cut its workforce by 90 percent, replacing it with robots. It increased output. I can highlight a similar story from China. The factory recently replaced 90 percent of its human workforce with machines, and it led to a staggering 250 percent increase in productivity and a significant 80 percent drop in defects. Imagine the value of cutting errors by 80 percent.

    The move by Walmart (and others) has nothing to do with the economy and everything to do with productivity. Various studies suggest that 47 percent of U.S. jobs are at risk of being replaced by automation. Let’s not wring our hands about job losses. History tells us automation generates the need for other jobs that exceed the ones lost.

  13. Brad Halverson Avatar
    Brad Halverson

    This is more about finding efficiencies in back of house processes they have already invested in. The economy is queasy, so it’s time to put automation and technology to work.

    The best thing the operations, customer service and the retail sales team can do at this stage is focus on running great stores, and taking care of customers. That’s where they can provide high value.

  14. Anil Patel Avatar
    Anil Patel

    In my opinion, the layoffs at Walmart are driven more by the retailer’s automation efforts and we’re going to see this trend happening even more in the future. Retail giants like Walmart are trendsetters who define how businesses should run their operations.

    Like any other company, even Walmart’s goal is to create value for its investors and customers. So, all decisions are carefully planned to align future sales growth and better serve the customers but unfortunately, existing workers might not find a place in the new process where the transition from human efforts to robotics is happening very quickly.

15 Comments
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Mark Ryski
Mark Ryski
Trusted Member
5 months ago

The leaders are leaders because they take proactive steps to stay ahead — that’s what Walmart is doing here. This is less about sales results and more about productivity and efficiency. Automation will inevitably lead to job losses for workers who were doing the work, and this is how it will happen. Little by little, over time, workers performing certain functions are being replaced. Ultimately, all retailers and businesses in general are trying to drive up productivity and bolster their profitability for the uncertainty ahead.

5
Neil Saunders
Neil Saunders
Noble Member
5 months ago

Demand, especially in volume terms, has moderated. Retailer costs have risen rapidly, especially for online. Almost all retailers are focused on rebalancing the equation to protect profit, and labor is one of the areas where they can make savings. In the short term this means layoffs, in the medium to longer term it will accelerate the push to automation. However it is important to remember that almost all retailers took on a lot more labor over the pandemic, so this isn’t quite the disaster that some headlines make out.

6
Lisa Goller
Lisa Goller
Active Member
5 months ago

These layoffs are driven by an urgent need for efficiency. Slower sales are the threat and automation is the opportunity.

Other retailers are likely to reduce staffing as consumption declines and automated fulfillment rises.

2
Liza Amlani
Liza Amlani
Member
5 months ago

During the start of the pandemic, Walmart was leading by example. Upskilling and training employees on new ways of working as they enabled more and more technology to help run the business was a smart move. This practice should be continued across the retail industry.

Instead of layoffs and right-sizing, retailers should invest in their people. Great retail staff is hard to find and investing in employees that are already part of the organization will build brand loyalty. It’s a win for the retailer. And a win for the community that may only have a Walmart to shop and work at.

3
Dion Kenney
Dion Kenney
5 months ago

Automation-centric fulfillment centers are the future. The drivers, as always, are increasing productivity while driving down cost. The value of humans in this equation is not trying to compete with robots and AI (a la John Henry) but in the understanding, managing, and achieving by applying the technology more effectively than the competition.

3
Steve Montgomery
Steve Montgomery
Member
5 months ago

Using automation to replace repetitive low value-add functions will continue to occur in all fulfillment centers and warehouses. The transition is not inexpensive but the long-term benefits produces a strong ROI.

2
Paula Rosenblum
Paula Rosenblum
Active Member
5 months ago

Don’t forget we’re talking about e-commerce fulfillment. People are going back to stores. That’s the reality. I might’ve wished Walmart had reassigned the workers instead of laying them off, but reducing ranks is a good idea

3
Richard Hernandez
Richard Hernandez
Member
Reply to  Paula Rosenblum
5 months ago

100 percent true. People are going back to stores and doing less buying online. I do wish they would have reassigned the workers to other areas of the company.

2
Nicola Kinsella
Nicola Kinsella
Active Member
5 months ago

Walmart is in the process of making big changes across their supply chain fulfillment operations. They are bringing in new people to think differently about their challenges and opportunities. So I see this as part of a bigger transformation initiative.

3
David Spear
David Spear
Member
5 months ago

Retailers are simply reacting to market dynamics and, unfortunately, we’re heading into a turbulent storm that will result in less discretionary spending by consumers and more layoffs. Walmart is trying to get ahead of this. It should be noted that Walmart has tinkered with innovation since Sam founded the company. It’s in their DNA, and so they’ll continue to look for more efficiency in every nook and cranny in their operations.

2
Jeff Sward
Jeff Sward
Active Member
5 months ago

This all feels like a very natural, evolutionary process in motion. With maybe a little acceleration driven by market dynamics. Robotics installations in fulfillment jobs is not new news. And yes, it’s unfortunate that the process displaces people, but expense efficiency will drive a lot more of this same kind of action in other retailers. Robots, and now AI, are changing the workplace landscape.

3
Brandon Rael
Brandon Rael
Active Member
5 months ago

In the race to drive efficiencies and scale e-commerce fulfillment capabilities at a lower operating cost, automation is the next logical step of the evolution to unlock value and increase profitability. Unfortunately for those Walmart employees that have been impacted, layoffs are an executive strategic lever that could be used to reduce operating costs and rising labor costs and ensure shareholder value.

As consumer last-mile expectations increase and delivery windows shorten, e-commerce micro-fulfillment capabilities will increasingly shift to an automated operating model powered by predictive analytics, machine learning, and AI. The migration to an automated fulfillment future has been in the cards and is one of the top predictions for 2023. Walmart continues to be a leader in supply chain optimization and e-commerce fulfillment innovation, and the move to a more automated future is underway.

1
Gene Detroyer
Gene Detroyer
Trusted Member
5 months ago

Are there many opportunities where automation will pay off more than in a fulfillment center? We can look at it another way — what jobs in a FC can’t be done by a machine rather than a human?

Being realistic, the only thing that delays human replacement technology is the development of the technology. Years ago, I often spoke about an auto plant in Canada that cut its workforce by 90 percent, replacing it with robots. It increased output. I can highlight a similar story from China. The factory recently replaced 90 percent of its human workforce with machines, and it led to a staggering 250 percent increase in productivity and a significant 80 percent drop in defects. Imagine the value of cutting errors by 80 percent.

The move by Walmart (and others) has nothing to do with the economy and everything to do with productivity. Various studies suggest that 47 percent of U.S. jobs are at risk of being replaced by automation. Let’s not wring our hands about job losses. History tells us automation generates the need for other jobs that exceed the ones lost.

1
Brad Halverson
Brad Halverson
Member
5 months ago

This is more about finding efficiencies in back of house processes they have already invested in. The economy is queasy, so it’s time to put automation and technology to work.

The best thing the operations, customer service and the retail sales team can do at this stage is focus on running great stores, and taking care of customers. That’s where they can provide high value.

0
Anil Patel
Anil Patel
5 months ago

In my opinion, the layoffs at Walmart are driven more by the retailer’s automation efforts and we’re going to see this trend happening even more in the future. Retail giants like Walmart are trendsetters who define how businesses should run their operations.

Like any other company, even Walmart’s goal is to create value for its investors and customers. So, all decisions are carefully planned to align future sales growth and better serve the customers but unfortunately, existing workers might not find a place in the new process where the transition from human efforts to robotics is happening very quickly.

0