Retailers Double Down on Investing in People

Walmart is boosting its training for managers and Home Depot is increasing pay for its frontline staff.

May 02, 2023

ALEXANDRIA, Va.—Retailers are investing in a well-paid and well-trained workforce to increase customer satisfaction, which could, in turn, increase sales.

Last year, Walmart launched a training program for its new store managers called Manager Academy—a week-long program for new managers that focuses on Walmart’s values and culture. All new managers go through the training, which takes place in Bentonville, Arkansas. Walmart is expanding the program to ensure all current managers receive the same training.

“The training was so beneficial to our new managers that we decided to bring all of our store managers through the training,” said Lorraine Stomski, Walmart’s senior vice president, learning and leadership, in a statement. “This includes some who have been in the role for decades to brush up on their leadership skills and help mentor the newer managers.”

According to Walmart, the training equips store managers with the leadership skills to manage hundreds of associates, build relationships in their communities and take care of their customers.

Following the week-long training, store managers participate in a six-month mentorship with other managers who have completed the class and have long tenures with strong track records. Walmart says the Manager Academy is part of its $1 billion investment to provide its U.S. associates with career-driven training and development through 2026.

In January, Walmart raised its starting wage for all U.S. store and warehouse employees to at least $14 an hour, up from $12 an hour. Walmart says that on average, entry-level associates are promoted to positions of higher wages and more responsibility in seven months. Seventy-five percent of Walmart’s U.S. salaried management team in stores, clubs and supply chain began their careers as hourly associates, including CEO Doug McMillon.

Home Depot also recently announced that it would invest $1 billion this year to increase hourly wages for its store employees, and CNBC reports that the investment has hit the retailer’s bottom line. However, Home Depot executives are bullish that the investment will pay off.

“We plan to continue to capture market share,” CFO Richard McPhail told analysts during the February earnings call. One reason, he said, is “the unique advantage that our orange-blooded associates give us over our competition,” alluding to Home Depot’s signature color and the term for its frontline employees.

“We harken back to … what our founders said: that if we take care of our associates, they take care of the customer, and everything takes care of itself. That’s what this investment is all about,” said CEO Ted Decker.

Walmart and Home Depot compete with other retailers for the limited U.S. labor pool. Target pays its workers at least $15 an hour and up to $24 an hour depending on the market, and Target employees have access to flexible scheduling, well-being benefits, team member discounts and other perks. Last year, Amazon announced an investment of $450 million in wage increases and other benefits for drivers who are part of its Delivery Service Partners network. Starbucks starts pay at nearly $17 an hour, and Costco workers get at least $17.50 an hour.

Convenience retailer Rutter’s, based in York, Pennsylvania, recently announced another increase to its starting wage, with pay beginning at $17.50 per hour. This is the company’s second increase of the year, and seventh in three years.

Paying employees above minimum wage with the hopes that it increases productivity, retention rates and loyalty, and in turn, customer satisfaction, is called the efficiency wage theory.

“Providing customers a compelling reason to shop at your stores requires giving them real value and good service, and that’s not possible without having motivated and empowered employees,” Zeynep Ton, a professor at MIT Sloan School of Management in Cambridge, Massachusetts, who has studied retail operations for more than 20 years, told CNBC. “Any retailer that wants to win needs to make sure they attract and retain the right employees and design their jobs so they can be productive and serve their customers well. And in a tight labor market, it’s getting increasingly difficult to keep talent [if] you pay unlivable wages and [offer] few opportunities for growth and success.”

Ton founded the Good Jobs Institute, and NACS has partnered with the institute to explore how c-store operators can provide “good jobs,” those that meet people’s basic needs and offer conditions for engagement and motivation. Check out the Good Jobs Calculator, designed exclusively for NACS members.