New Report Finds Seemingly Neighborhood-Specific Differences at Walmart

September 6th 2016

If you visit multiple Walmarts across varying neighborhoods, you might notice some startling differences, according to a recent study published in the American Sociological Association's quarterly publication Contexts.

Adam Reich, an assistant professor of sociology at Columbia University, who led the study concluded that:

"Poor customer service is unevenly distributed across Walmart stores in ways that reproduce racial and socioeconomic disadvantage. The racial composition and average income of the neighborhood in which a Walmart is located is strongly associated with the kind of service customers can expect to receive there."

Reich analyzed roughly 35,000 reviews across 2,840 Walmart stores and examined each reviewer's race, zipcode, and the average income of the zipcode.

Customer reviews in black and Latino neighborhoods were more likely to be negative than those in white neighborhoods. Reviews were also worse in lower-income neighborhoods than in affluent zip codes.

Reich found race to be more influential in the quality of a Walmart over any other factor. "The higher the percentage of Black or Latino residents in a zip code, the worse Walmart service becomes, regardless of whether this zip code is poor or wealthy," Reich wrote.

Reich notes that though Walmart provides low prices, customer interaction is also an important aspect of the service sector:

"But low prices, while important, are not the only consideration for consumers. The ever-expanding service sector is distinct from manufacturing in that workers and customers interact directly on the shop floor. When companies in the service sector underinvest in their workers, whether in the form of understaffing, irregular scheduling, or low-pay and poor benefits, this has consequences for consumers in the form of wait times and lower-quality interactions with staff. The monetary costs of these things are difficult to measure, but an extra fifteen minutes in line for a customer may translate into more spending on a babysitter; empty shelves or rotting produce may mean that an entire shopping trip is wasted time. In the aggregate, the price of waiting certainly adds up: some estimate that Americans spend 37 billion hours waiting in line every year, or 115 hours per person."

A Walmart spokesperson issued a statement to Business Insider that the company found the study to be "flawed and without merit."

While the study's reliance on Yelp reviews could be problematic, since reviews are self-selecting and aren't submitted or examined in a controlled setting, the analysis points to a real problem with Walmart's business strategy. Reich asserts that Walmart's neglect of communities of color is a direct result of "consumer redlining," or the systematic understaffing of its stores.

The New York Times released a report about Walmart's understaffing back in 2014 noting the following:

"In an investment analysts’ report last month, Wolfe Research said 'if its employees’ growth had kept up with square footage growth in the U.S. over a number of years,' Walmart would have 200,000 more employees. Walmart has 1.3 million American workers."

"In the early 2000s, Walmart implemented cost-cutting policies that reduced the number of necessary employees per store and resulted in a drop in stores' quality," Business Insider reported. "This study provides evidence that a decrease in store quality was not consistent across the board, but instead affected some customers more than others."

Reich writes that "stores in predominantly African American zip codes, reviewers are likely to use words like 'worst,' 'unorganized,' and 'nasty' to describe their experiences. In contrast, in stores located in white communities, reviewers were likely to use words like 'typical,' 'friendly,' and 'smaller.'"

In a response to Walmart's comment, Reich said, “Walmart is in the business of making money so when it goes into a wealthier, whiter neighborhood, where it does have to compete with more retailers, it's forced to make more investments in staffing."

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