Welcome to DU! The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards. Join the community: Create a free account Support DU (and get rid of ads!): Become a Star Member All Forums Issue Forums Culture Forums Alliance Forums Region Forums Support Forums Help & Search

xchrom

(108,903 posts)
Thu Jun 12, 2014, 08:20 AM Jun 2014

Former Managers Allege Pervasive Inventory Fraud at Walmart. How Deep Does the Rot Go?

http://www.thenation.com/article/180190/former-managers-allege-pervasive-inventory-fraud-walmart-how-deep-does-rot-go



In 2012, Erica Davidson, a Walmart veteran and store manager, took on the daunting task of turning around a struggling store on the outskirts of Greensboro, North Carolina. The store had run through its share of managers, Davidson said, and she viewed it as the sort of challenge that could make or break a person’s career.

Davidson said that one of her primary tasks was to reduce the troubled store’s high rate of “shrinkage”—defined as the value of goods that are stolen or otherwise lost—to levels deemed acceptable by the company’s senior managers for the region. As a result of fierce competition, profit margins in retail can be razor thin, making shrinkage a potent—sometimes critical—factor in profitability.

Prior to her arrival, Davidson said, the Greensboro store could see annual shrinkage losses as high as $2 million or more—a sizable hit to its bottom line. There had even been talk of closing the store altogether, she recalled.

For years, Walmart’s senior management in North Carolina had been waging a war on shrinkage, Davidson said; it had become a central priority of the company’s local leadership and a source of constant strain for store managers. Though the unrelenting pressure weighed on her, Davidson said she became an asset in Walmart’s battle against shrinkage—so much so that, in 2011, the North Carolina regional team named her a “subject matter expert” on reducing shrinkage and would send her to meetings in the Walmart regional office in Charlotte. There, she recalled, she would train district managers on her practices in the presence of the company’s most senior officers for the state.
4 replies = new reply since forum marked as read
Highlight: NoneDon't highlight anything 5 newestHighlight 5 most recent replies
Former Managers Allege Pervasive Inventory Fraud at Walmart. How Deep Does the Rot Go? (Original Post) xchrom Jun 2014 OP
Gee, unethical business practices at, of all places, Walmart. mnhtnbb Jun 2014 #1
Happens not just at Walmart -- article cites others retailers too Auggie Jun 2014 #3
Holy shit, reading that article was like pulling teeth NightWatcher Jun 2014 #2
Was going to post this Omaha Steve Jul 2014 #4

NightWatcher

(39,343 posts)
2. Holy shit, reading that article was like pulling teeth
Thu Jun 12, 2014, 08:46 AM
Jun 2014

I've worked retail and loss prevention and OF COURSE individual managers massage the numbers and use other practices to make it look like they don't have the shrinkage they do. Some managers discount the price of shrinkable products so that the overall money lost looks less. (which looks worse for the bottom line, having three radios that cost $10 each go missing {$30}, or having 3 radios that cost $5 go missing {$15 loss}?).

Other managers report shrinking items as damaged when they know that people aren't going to check piles of broken crap to do another actual count, especially as there are fewer employees to do said counts. Instead of reporting the one broken radio that is in your returned department, they might say that there are 3, knowing that no one will check or if they did that missing damaged items are not as scrutinized as much as missing items that should be on the floor.

Store managers have such a high turnover that often times their mistakes or impropriety are not found until the next manager, or annual inventory catches it. At that time, the new manager doesn't want to report bad numbers too so he massages where he can.

It is relatively easy to hide legitimate loss in retail. I have worked with people who stole from where they worked then made the numbers go away, or who would massage the numbers so that they could then steal only after reporting great numbers.

The main office doesn't want to hear about shrinkage, so they allow the susceptible reporting to go on without correction as long as it stays near an acceptable level.

Latest Discussions»General Discussion»Former Managers Allege Pe...