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Sam's Club cuts 11,000 jobs

By Ben Rooney, staff reporter

NEW YORK (CNNMoney.com) -- Sam's Club is cutting more than 11,000 jobs as the struggling Wal-Mart unit faces increased competition from rival warehouse retail chains.

The Bentonville, Ark.-based company announced Sunday it will eliminate 10,000 jobs, or about 10% of its workforce, as part of a plan to turn over its product-demonstration program to Shopper Events, an outside marketing firm. The majority of the job cuts will be part-time workers, Sam's Club said.

Shopper Events is expected to hire "roughly the same number of people" and all current Sam's Club workers will have the opportunity to apply, said Brian Cornell, Sam's Club chief executive, in a memo to employees

The announcement comes weeks after the company closed 10 stores nationwide and eliminated 1,500 jobs.

Taken together, the job cuts are the largest in Wal-Mart's history, according to retail consulting firm Customer Growth Partners. "Based on our records, it's the biggest ever," said CGP president Craig Johnson.

But the moves could help Sam's Club, which has been Wal-Mart's (WMT, Fortune 500) weakest performing unit, recover from a years-long slump, Johnson said.

"We think this is a cost savings move, as well as something that could improve customer service," he said.

Cornell, who was named CEO of Sam's Club in March, said Shopper Events will oversee an "enhanced" product demo program called Tastes and Tips. "Our demos can be a competitive advantage and we want to take this member experience to the next level."

Johnson said that product sampling, typically involving free food, has become an important marketing tool for retailers like Sam's Club, where food and consumables can account for half of overall sales.

Sam's Club has struggled to keep up with rival warehouse clubs Costco (COST, Fortune 500) and BJ's Wholesale Club (BJ, Fortune 500), which have gained popularity with families on a budget by offering wider merchandise assortments and smaller packages.

By contrast, Sam's Club typically caters to small-business owners.

Some industry analysts have questioned this focus because small businesses have been disproportionately hurt by the recession.

But Cornell told reporters in June that he doesn't think Sam's Club is too dependent on small-business customers. "Today, the small-business customer needs us more than ever." To top of page

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