Wal-Marts in Wealthier Neighborhoods Are Better, Study Claims

If you shop at Wal-Mart, you probably go there because you can get some items cheaper than you can elsewhere, not necessarily because you receive outstanding customer service.

According to one new study, however, just how good or bad your customer experience is at Wal-Mart likely has more to do with the racial and economic makeup of the neighborhood in which you’re shopping than anything else, a new paper.

Per the paper, “Wal-Mart’s Consumer Redlining,” written by Columbia University Professor Adam Reich, “poor customer service is unevenly distributed across Wal-Mart stores in ways that reproduce racial and socioeconomic disadvantage. The racial composition and average income of the neighborhood in which a Wal-Mart is located is strongly associated with the kind of service customers can expect to receive there.”

Reich, an assistant professor of sociology, conducted an analysis of Yelp reviews about Wal-Mart (approximately 35,000 reviews across 2,840 stores). What he reportedly found was that Wal-Mart stores situated in low-income communities of color “consistently get lower Yelp scores than those situated in wealthier, whiter communities.

“Moreover, when I conduct a similar analysis but work to untangle race from [socioeconomic status], I find that race is more strongly related to low ratings than class.”

Erica Jones, senior manager of corporate communications for Wal-Mart, called Reich’s analysis “flawed and without merit.”

“In fact, our customer traffic and overall customer satisfaction scores have been improving and we’re focused on continuing to do better,” Jones said in an email. “Our associates play a critical role in the company’s success and that’s why we’ve invested $2.7 billion on associate education, training and wages. We’re also proud to provide communities across the country, regardless of social or economic background, access to affordable goods and career opportunities to help them better provide for their families.”

While the majority of retailers alter their stores to best serve the neighborhood in which they are located – in everything from the items stocked to the size of the store and even hours of operation – Reich’s paper argues staffing is the key factor for the service woes he noted in underserved communities.

“Wal-Mart workers understand perhaps better than anyone the obstacles to providing good customer service at the company,” Reich wrote. “In the summer of 2014 I led a team of undergraduate students that conducted interviews with 89 Walmart workers in five different regions of the country (Los Angeles, Dallas, Chicago, Cincinnati and Central Florida). In these interviews workers expressed how difficult it was to take care of their customers in the face of short staffing and poor working conditions. This was true across sites, although the difficulty seemed particularly acute for those who worked at stores in low-income communities of color.”

David Livingston, managing partner at DJL Research, who provides market analysis and competitive intelligence for retail supermarkets, said it’s important to keep in mind that Wal-Mart enters neighborhoods that other retailers won’t. He quickly notes that the store also gets tax credits and infrastructure funding to enter these low-income communities, and does so on a larger scale than most other retailers.

“All retailers redline, whether it’s pizza delivery or whatever business, there are some places you’re just not going to go because of personal safety reasons, theft, crime and it can be real and perceived,” Livingston said. “If an area is just perceived as being high crime even though it might not be, that can be reflected in the redline…One of the problems is, you have a hard time finding people that want to work in those areas.”

That means these stores end up hiring people who may be less qualified but are willing to work in that location.

“This happens from the store manager all the way down to the bottom,” Livingston continued. “You get the least qualified people into these stores, therefore the conditions end up looking much worse than a store in a more affluent area.”

For shoppers, that can mean a less enjoyable shopping experience.

Remember, no matter where you shop, it’s important not to overspend as high levels of debt can bust your budget and damage your credit score. (You can see how your spending may be affecting your credit by viewing two of your credit scores, updated every 30 days, for free on Credit.com.)

Image: snyferok