Sam's Club layoff targets product demonstrators

Employees told of plans at Sunday meeting
2010-01-26T00:05:00Z Sam's Club layoff targets product demonstratorsBy Lu Ann Franklin and Wire Reports
January 26, 2010 12:05 am  • 

Loretta Galovich reported to the Sam's Club in Merrillville at 7 a.m. Sunday for a mandatory meeting with managers.

"I thought the meeting was about the renovation they're doing at that store and about our hours," said the 77-year-old Dyer resident and Sam's Club product demonstrator. "But the manager told us that everyone (the product demonstrators) had been dismissed."

The layoff affects 18 part-time workers at the Merrillville Sam's Club and 11,200 employees at the 620 stores around the United States.

"They handed us a 17-page packet with all these legal terms in it," Galovich said. "This decision had to be in the works for a long time for them to write up 17 pages of material."

In-store demonstrators provide samples and information about specific products.

Some, including Galovich, cook the food they demonstrate in the Sam's Club kitchen. A caterer and chef for 30 years, Galovich said she has worked 21.5 hours a week for the Merrillville Sam's Club for nearly 10 years.

"We have a lot of widows who are demonstrators, and some women's husbands have been laid off. They're the ones supporting the family with their wages and insurance," she said.

"There was a lot of crying. These women are devastated," Galovich said. "I'll be all right, because I'm a saver and I have Medicare and a supplemental. But there are a lot of women being laid off who are too young for Medicare and have no insurance."

The employees' last day is Feb. 5. Severance pay based on years of service must be applied for by March 10, she said.

Galovich said the packet indicated that in-store product demonstrators must reapply for their jobs via the Internet with Advantage Sales and Marketing, a firm based in Irvine, Calif. Associated Press reports said the marketing firm taking over the in-store demonstrations is Shopper Events based in Rogers, Ark.

Galovich said she feels betrayed and believes there will be a backlash from customers who have enjoyed their interaction with the product demonstrators over the years.

"People come in, whole families come in to eat the food on Friday, Saturday and Sunday," she said. "It's like a family outing on Sunday."

Walmart Stores Inc. announced the layoffs as an effort to improve sales at Sam's Club and comes on top of a decision to close 10 underperforming warehouse locations, which cost 1,500 jobs.

The cuts represent about 10 percent of the warehouse club operator's 110,000 staffers across its more than 600 stores. That includes 10,000 workers, mostly part-timers, who offer food samples and showcase products to customers. The company also eliminated 1,200 workers who recruit new members.

Employees were told the news at mandatory meetings on Sunday morning.

"In the club channel, demo sampling events are a very important part of the experience," said Sam's Club CEO Brian Cornell.

Sam's Club has underperformed the Walmart chain in the United States and abroad. Cornell said he has been working to improve results since taking the helm in early 2009, introducing new store formats, price cuts and offering more variety and more brands of items from take-home meals to baked goods.

During Wal-Mart Stores' most recent quarter, revenue at the Sam's Club division slipped nearly 1 percent to $11.55 billion while U.S. Walmart stores posted a 1.2 percent sales increase to $61.81 billion.

"Sam's has been the relative laggard, and it has lagged relative to its direct competitors, Costco and the smaller BJ's (Wholesale Club)," said Craig Johnson, president of retail consultancy Customer Growth Partners.

The move to outsource its food sampling efforts is a way for the company to tout its fresh food offerings in a cost-effective manner, Johnson said.

The Associated Press contributed to this report.

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