Several former Walmart managers have come forward to allege recurring inventory fraud at the world’s largest retailer, according to The Nation.
In an effort to improve their store’s apparent profitability on paper, several managers claim they were encouraged by higher-ups to manipulate inventory records to reduce “shrinkage,” or the cost of inventory gone missing due to theft or other reasons. Such loss of product inventory can affect a retailer’s bottom line, and for a company the size of Walmart, a shrinkage rate as low as one percent can cost billions of dollars each year.
Walmart sets stringent goals to define acceptable levels of shrinkage, which some managers say are unrealistic. One former manager, Vikki K. Gill, claimed her superiors expected shrinkage rates so low that they were “impossible to achieve without manipulation.” By doctoring inventory numbers to reduce the shrinkage rate at a store, managers can make a store appear more profitable than it really is. If the practice were widespread enough throughout the company, Walmart’s entire profit margin and stock value could be inflated.
Erica Davidson, another former Walmart store manager, told The Nation that her superiors would not question suspicious inventory numbers, and in fact, openly lauded her efforts:
“It was like, oh, great job. There was never any accountability or any investigation that went into why – not just in my store but in any store throughout the region.”
She went on to explain that a high shrinkage rate could even affect a manager’s annual salary and year-end bonus, adding greater pressure to consider falsifying inventory numbers.
Beyond pressure from above, managers also claimed a simpler reason for the common practice of cooking the books: chronic understaffing. As The Nation reports,
“One former assistant manager spoke of the irregular accounting that resulted simply from low staffing levels, causing overstretched employees to fabricate inventory numbers because they didn’t have time to perform a proper count of physical merchandise.”
Walmart has faced public scrutiny for empty shelves and poor customer service in recent years. In 2013, Bloomberg News reported “the company has forfeited some sales because it doesn’t have enough workers in stores to keep shelves adequately stocked.” In an interview with Salon, an assistant store manager echoed the claim, saying understaffing and inadequate hours were to blame.
The revelations in The Nation this week affirm the claims of OUR Walmart, the association of current and former Walmart employees who have pointed to inadequate hours as one cause of Walmart’s declining sales. For years, members of OUR Walmart have demanded more hours and a minimum annual salary of $25,000 from the highly profitable company. Many Walmart associates are advocating for increased hours in order to have a job that allows them to simply make basic ends meet. Walmart defines “full-time” work as just 34 hours per week and has been accused of systematically slashing hours over the last decade. Last year, Rochelle Jackson, a Walmart employee from Springfield, Missouri, told Bloomberg the scheduling policies originate from Walmart’s headquarters:
“We’re not getting as many sales because there’s simply no one to help the customers throughout the stores.… I asked, ‘Why can’t we have enough hours to make the store work?’ They said, ‘It’s orders from Home Office.’”
For their part, Walmart claims they have launched a “thorough review” and will take “appropriate action” if any wrongdoing is uncovered. We’ll see about that.