Downward Spiral

11.29.13

Walmart’s Black Thanksgiving Woes

Employees forced to work on ‘Black Thursday’ for low wages aren’t the only ones having a grim holiday—Walmart’s miserly ways are part of the downward spiral of its business model.

“We don’t call it Black Friday, we call it Black Thanksgiving,” said Michael Ahlef, 22, a Walmart cashier who said he was willing to risk arrest at a protest in Minneapolis because he was so desperate for the company to introduce a living wage. “They’re going to have to start listening to us soon,” he told The Daily Beast.

The action was one of many protests and events that organizers were planning in more than a dozen cities, including Los Angeles, Chicago, the Bay Area, Seattle, Dallas, Sacramento, Miami, Minneapolis, and Washington, D.C., meant to call attention to Walmart’s low wages and the continuing demands it places on employees, including working through holidays. For many Walmart employees, working through the holiday season is both an economic necessity and an edict from management.

Ahlef said there simply were no other employment opportunities where he lived in the town of Sauk Centre, Minnesota. “If you don’t want to work in manufacturing, it’s either Walmart or fast food, and fast food pays even worse,” he said. Ahlef, who works late shifts five days a week, earned $17,000 before tax last year.

The coordinated actions produced few fireworks by mid-day. A few protesters were arrested outside a Walmart in Alexandria, Virginia, and at events in Texas and Chicago. In Southern California, a man in a Santa suit was arrested. And the protesters were generally dwarfed by legions of shoppers rushing in and tussling for bargains on Thanksgiving Day and Black Friday.

These twin phenomena—labor actions by low-wage service workers and the continuing encroachment of the Christmas shopping season into November—are actually two sides of the same coin of economic desperation. Four years into an economic expansion, and at a time of record profits and cash holdings for companies, service workers are still not getting meaningful wage increases. And the labor movement, which represents only about seven percent of private-sector employees, can’t be of help much. This year, adding insult to injury, retailers are forcing their low-paid employees—many of whom are unable to afford the necessities of life—to work on a national holiday to accommodate and prepare for frenzied shopping activity by consumers who are themselves desperate for bargains.

But Walmart and its peers are desperate, too. The only type of strike that puts fears into the hearts of retailing executives, that would make them think they need to change the way they do business is, a buyers’ strike. Nothing concentrates the mind of a Walmart executive so much as the prospect that shoppers may indicate their displeasure with the status quo by not showing up, or by turning to alternatives.

And there are signs this is happening. In fact, more stores are opening on Thanksgiving precisely because shoppers simply haven’t been showing up at Walmart and its competitors the way they used to. Despite the brave face and eager smiles of bricks-and-mortar CEOs, this may not be a particularly good year for malls and big box stores. As the Wall Street Journal reported. “About 140 million people are expected to shop over this holiday weekend, a decline from the 147 million who planned to do so last year, according to the National Retail Federation.” Should that forecast materialize, that would represent a pretty significant decline: seven million fewer people!

Now, on the margins, some consumers who are angry at the encroachment of retailers onto previously sacred space are surely boycotting the whole scene. But something larger is at work. Simply put, retailers that sell traditional merchandise out of physical locations are losing market share. This year, as CNBC reports, technology could overtake apparel as the go-to gift. The proliferation of tables and mobile devices, combined with the fear of bodily harm and traffic jams associated with the Christmas shopping season, are pushing shoppers to buy early and to buy online.

Overall, retail sales are rising at a healthy clip. Through the first ten months of 2013, retail sales were up 4.3 percent (PDF) from the first ten months of 2012. But e-commerce and online sales were up 10.4 percent in the first 10 months of 2013. Which means that even before the onset of the holiday shopping season physical retailers were getting a smaller piece of the retail pie. And the e-commerce share rises with every passing month.

Walmart is already suffering the effects of this shift. The most remarkable data point in the company’s third quarter earnings release was this: “During the 13-week period, Walmart U.S. comp traffic decreased 0.4 percent, while average ticket increased 0.1 percent.” That is to say, in the typical Walmart store, the number of shoppers coming through the doors in the third quarter of 2013 was lower than it was in the third quarter of 2012. And this, in a time of rising employment and rising population.

It wouldn’t surprise me to see foot traffic fall again in the fourth quarter, despite the earlier Thanksgiving store openings and doorbuster specials. Thanks in part to the low wages that Walmart and other service companies pay, the people who work and shop at Walmart don’t have sufficient firepower to make a big impact on Christmas. And thanks to the continuing technology revolution that challenges Walmart’s business model and pushes it to control labor costs ever more relentlessly, fewer shoppers feel they need to enter a Walmart to get their holiday business done. Ironically, this year’s large crop of protests might be witnessed by a smaller proportion of the shopping public.