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Wal-Mart Retooling, Streamlining Operations

Wal-Mart is redefining regional management by decentralizing into nine regions, allowing it to be more nimble and respond faster to market shifts.

BOSTON — Wal-Mart has started decentralizing and streamlining its $191 billion U.S. store division as the discounter seeks to improve the shopping experience with more consistent merchandise presentation, better service and cleaner stores.

The company has reoriented its regional divisions, grouping stores into nine operating units. Previously, divisions were defined by store count and sales volume “without much rhyme or reason,” Pat Curran, executive vice president, operations for Wal-Mart U.S., said during presentations to analysts at the retailer’s annual conference in Rogers, Ark.

Regional general managers, replacing an old regional vice president position, will gain more autonomy and leave the Bentonville, Ark., headquarters to move into their markets. They will be joined by a team that includes operations support and financial mangers, both new roles, as well as staffers from real estate, finance, loss prevention, human resources and legal compliance, positions that have been traditionally based in Bentonville.

“Our people are spending way too much time on nonproductive work, plain and simple,” Curran said. “Too little ownership on the regional management level side of it, not being able to function outside of their silo to make decisions that impact the business.”

John Menzer, vice chairman in charge of Wal-Mart U.S., said the changes will have a net result of requiring fewer people and reducing expenses. The company did not specify which positions were to be eliminated.

“We will have a more nimble organization, one that’s very focused with high accountability,” he said. “For the first time, we’re now in the process of building from our business plan from store level up.”

Traffic has been down in U.S. stores over the last nine months. Aftertax operating profits have declined as expenses related to fuel prices and labor costs have risen. The retailer has said it stumbled scheduling shifts, adding more associates to its sales floor than sales required.

Menzer, who established country-based operating groups while running Wal-Mart International, described the regional general manager as “becoming almost country-like presidents … with a lot of autonomy.”

The district manager position has been renamed market manager, who reports to the regional general manager and has wage management and compliance with state employment laws as primary responsibilities.

Market managers also will have a field-based support team consisting of an operations manager, a new position; a food merchandiser; an asset protection manager; a human resources manager, and a fashion merchandiser. There are about 300 of the latter positions, responsible for overseeing the apparel departments. Store managers report to market managers.

“We’ve relocated teams to live in markets where we know we have to become much closer to the communities, much closer to government affairs, much closer to the customers,” Curran said.

Wal-Mart has alienated some communities with what critics see as strong-arm tactics to gain building permits for controversial sites. In 2004, the company lost a publicized battle to build in Inglewood, Calif. Earlier this year, the retailer retreated from a site in Queens, N.Y., after meeting community resistance.

Criticized for lack of operational rigor in its stores, Wal-Mart is focused on cleaner floors and bathrooms, tidy apparel racks and faster customer checkouts.

In addition, executives said Wednesday they are actively looking for other New York metro area sites.

“One of our biggest mistakes last year was specifying we’re going to open in Queens before getting the proper support,” said Eric Zorn, president of Wal-Mart Realty, the company’s real estate division. “We will open in one of the boroughs within a reasonable amount of time.”

Zorn said the company has 1,400 approved building projects in its pipeline, about 1,000 of which are Supercenters. Next year, it plans 270 to 280 new Supercenters, 160 of which will be expansions or relocations of existing stores.