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Walmart and Amazon Jockey for Domination

Walmart and Amazon are still battling it out for market share, and despite the mass discounter’s latest subscription service to compete against Prime, the two actually have different approaches for growth.

Walmart is introducing a team-based operating model in its Supercenters, one that incentivizes associates with higher pay and flexibility in how they serve customers, it said Thursday. The new pay structure comes after Walmart has already earmarked $1.1 billion in bonus payouts, instituted an emergency leave policy, adjusted store hours and enacted other numerous safety measures in the face of the Covid-19 pandemic. The new team model is similar to what Walmart has initiated at its Sam’s Club business over the past year and in Neighborhood Market stores this year, so it’s a plan that Walmart knows can work.

“We’re investing in new roles and skills training to give us the flexibility to serve customers anytime and anywhere. In turn, associates will have more room for career and pay growth,” Dacona Smith, chief operating officer, Walmart U.S., wrote in a blog post Thursday.

The new structure involves creating small teams of cross-trained associates given ownership of the work and their area from in-stock to visual standards. Walmart says this approach means associates learn more skills, and can support colleagues who want to take time off or need extra help during a busy shift. Roles have shifted to reflect the new structure at the Supercenters, one that is more about leading and developing talent than focusing on completing tasks, Smith noted.

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The co-manager, who was responsible for a large area of the store, is now the store lead, essentially the store manager in training and responsible for the total store when the store manager is out. The former assistant manager role, who had oversight for merchandising plans for a specific area, is now the coach, with oversight for financials, merchandising, staffing and talent for a larger area. And the department manager, who was more focused on completing tasks, is now the team lead, setting priorities and goals for the team.

“These new positions will develop their teams, deliver our strategic priorities and be responsible for empowering our more than 1 million associates as they take bigger roles in the business—something they’ve proven they’re more than capable of doing during this pandemic,” Smith said.

Associates who aren’t selected for the new roles will remain in their current roles or be offered a similar position, while keeping the same pay through October of next year. The new roles will also include higher hourly pay, ranging from $18 to $21, with Supercenter workers earning as much as $30 per hour. The discounter is also raising pay for workers in other roles, a move that will benefit 165,000 hourly associates across all U.S. stores, Smith said.

Earlier this month, Walmart debuted a loyalty membership program and delivery service to compete with Amazon Prime. Touting same-day delivery and free unlimited delivery, the service is also just $98 for the year, less than Amazon’s Prime $119-per-year membership. And for customers who have access to a nearby Walmart, the subscription service leverages the discounter’s 4,700-plus store base, including the 2,700 doors that offer same-day delivery, and the retailer’s online platform.

As Walmart zeroes in on store operations and the customer journey, Amazon appears to be hyper-focused on its distribution strategy.

Following J. C. Penney bankruptcy filing in May, word surfaced that Amazon was lurking around the retailer’s headquarters. Sources at the time told Sourcing Journal that Amazon was interested in the retailer’s distribution centers. And last month, reports indicated that Amazon was in talks with Simon Property Group, the nation’s largest mall owner, to convert some anchor stores once occupied by Sears and Penney’s into fulfillment centers. That’s a move seen by some as a way to fuel Amazon’s last-mile domination, particularly as it wants to grow its grocery business. It’s already converted some failed malls into fulfillment centers.

On Wednesday, a Bloomberg report said Amazon is eyeing plans to open up to 1,500 small delivery hubs in U.S. cities and suburbs to take on Walmart and Target. The latter has shown some muscle of its own, landing a blockbuster second quarter as stores played a key role in fulfilling digital orders, with as much as 90 percent of orders leveraging its same-day service options.

Separately, Amazon said on Monday that it’s bulking up its staff by hiring 100,000 new employees, on top of its August announcement that it was adding 3,500 workers. A look at the site shows the company is offering a $1,000 sign-on bonus in select locations, with part-time and full-time jobs available at its warehouse centers. The site also said part-time jobs are available as personal shoppers either in Whole Foods stores or at a Prime Now Warehouse, suggesting that the company is looking to beef up its workforce ahead of the expected online shopping demand as the retail sector heads into the holiday shopping season, not to mention a possible second wave of Covid-19 infections that could see shoppers once again sheltering in place and shopping for necessities online.

And even though Amazon hired 175,000 temporary workers at the start of the pandemic—eventually making 70 percent permanent—distribution issues have dogged the logistics-savvy firm. Amazon faced complaints over delivery delays and escalating concerns about warehouse conditions, which has drawn government scrutiny.