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Wal-Mart Stores, Inc. is the world's largest retailer and the
largest company in the world based on revenue. In the fiscal year ending January 31, 2004, Wal-Mart had $256.3 billion in sales and $8.9 billion in income. Forbes magazine points out that if Wal-Mart were its own economy, it would rank 30th in the world, right behind
Saudi Arabia.
As of May 31, 2004, the company had
- 1,412 Wal-Mart stores,
- 1,559 Supercenters,
- 539 SAM’S CLUBS, and
- 68 Neighborhood Markets in the United States.
As of December 2002, these stores employed 1,383,000 people.
Outside of the U.S., the company operates stores in Mexico (626 stores), the
United Kingdom (269, mostly ASDA
supermarkets), Canada (236),
Brazil (144), Germany (92), and Puerto Rico (54). Wal-mart also has between ten and fifty stores in Argentina, China, and South Korea.
Sam Walton, the founder of Wal-Mart, opened the first Wal-Mart store in
Rogers, Arkansas in 1962.
The company is publicly traded at the New York Stock
Exchange under the symbol WMT and has its headquarters in Bentonville, Arkansas. As of March 31, 2004, there were 333,604 shareholders of Wal-Mart's common
stock.
Exterior of a typical Wal-Mart store.
Wal-Mart operates large discount retail stores selling a broad range of products such as clothing, consumer electronics, drugs, outdoor equipment, guns, toys, hardware, CDs
and books. It typically stocks basic rather than premium products. Wal-Mart also operates
"Supercenters" which include grocery supermarkets. SAM'S CLUB stores are also owned by Wal-Mart; these are "warehouse clubs"
which, like Costco, require membership dues.
Wal-Mart's chief competitors as discount retailers include the Kmart Corporation and the Target
Corporation.
Each Wal-Mart store has an employee, often an older person, known as a "greeter", whose primary responsibility is to welcome
people to the store. One Wal-Mart training video encourages employees to think of themselves not as employees but as "associates"
and their superiors as "servant leaders." The training video You've Picked a Great Place to Work promotes the "essential
feeling of family for which Wal-Mart is so well-known." (Ehrenreich pp. 143-4) Employees start the work day with a gathering and
the "Wal-Mart cheer".
Former First Lady Hillary Clinton formerly worked as a lawyer for Wal-Mart and also served on its Board of
Directors.
In late 2003, the company undertook an unusual step after failing to gain the support of
the Inglewood, California City Council for a proposed
development of a supercenter. The council had cited a wide range of concerns, including traffic, the environment, labor
practices, and public safety. In response, Wal-Mart obtained the signatures of thousands of voters, forcing the council to call a
special election. The resulting 71-page measure, Initiative 04-A, asked voters to allow the company to create its supercenter and
a collection of chain shops and restaurants on a sixty-acre parcel near Hollywood Park
Racetrack. The proposal exempted the company from all of Inglewood's planning, zoning and environmental regulations. The
special election was held April 7, 2004; by a
60-40 margin the Wal-Mart proposal was defeated.
Reasons for financial success
Wal-Mart is financially successful by a number of measures. For example, Wal-Mart is now the #1 grocery chain in the United
States, with 14 percent of all grocery sales in the country, with nearly twice the sales of Kroger ($95 billion vs. $51 billion). Wal-Mart also does 20 percent of the retail toy business.
Different explanations have been offered for this success:
- Some stress the economies of scale Wal-Mart brings to
manufacturing and logistics; the purchase of massive quantities of items from its
suppliers combined with a very efficient stock control system help make Wal-Mart's operating costs lower than those of its
competitors. They are leaders in the field of vendor managed inventory -- asking large suppliers to oversee stock control for a category
and make recommendations to Wal-Mart buyers. This reduces the overhead of having a large inventory control and buying department.
Wal-Mart's vast purchasing power also gives it the leverage to force manufacturers to change their production (usually by
creating cheaper products) to suit its wishes: a single Wal-Mart order can easily comprise a double-digit percentage of a
supplier's annual output.
- Some allege that Wal-Mart accepts short-term losses predatory
pricing in order to drive competitors out of business and increase market power. However, no predatory practices have been
proven at this time. Wal-Mart also has translated its economic power into political favoritism and garnered millions of dollars
in direct public subsidies and indirect subsidies through such means as confiscation of private property via eminent domain takeovers.
Wal-Mart's focus on cost reduction has led to their involvement in a standards effort [1] to use RFID-based Electronic Product Codes to
lower the costs of supply chain management. As of June 2004, they have announced plans
[2]
to require the use of the technology among its top 300 suppliers by January 2006.
Milestones
- 1962 First Wal-Mart store opens.
- 1969 The company incorporates as Wal-Mart Stores, Inc. on Oct. 31.
- 1970 Wal-Mart opens first distribution center and home office in Bentonville, Arkansas.
- 1972 Wal-Mart listed on the New York Stock Exchange.
- 1975 Sam Walton introduces the "Wal-Mart Cheer" to associates.
- 1983 First SAM'S CLUB opens in Midwest City,
Oklahoma.
- 1987 Wal-Mart completes its satellite network, the largest private satellite communication system in the U.S.
- 1988 First supercenter opens in Washington,
Missouri.
- 1990 Wal-Mart becomes nation's No. 1 retailer.
- 1991 The first store outside of the U.S. opens, in Mexico City.
- 1992 Sam Walton receives the Medal of Freedom from George H. W. Bush, before Walton's death in April.
- 1992 Wal-Mart enters Puerto Rico.
- 1993 The company has its first billion-dollar sales week, in December.
- 1994 Wal-mart acquires 122 Woolco stores in Canada.
- 1995 Wal-Mart builds three units in Argentina and five in Brazil.
- 1996 Wal-Mart enters China through a joint-venture agreement.
- 1997 Wal-Mart becomes the No. 1 employer in the United States, with 680,000 associates worldwide. It replaces Woolworth on the Dow Jones Industrial Average.
- 1997 Wal-Mart has its first $100 billion sales year.
- 1998 Wal-Mart opens its first Neighborhood Market stores in Arkansas and enters Korea through a joint venture agreement. It
also exceeds $100 million in annual charitable contributions for the first time.
- 1999 Wal-Mart has 1,140,000 associates, making it the largest private employer in the world. It acquires he ASDA Group with
229 stores in the United Kingdom.
- 2001 Wal-Mart has its biggest single day sales in history: US$1.25 billion on the day after Thanksgiving.
- 2002 Wal-Mart directly and indirectly buys $12 billion worth of Chinese products; in Wal-Mart China, it advertises a "Local
Buying" approach, with 95% of the merchandise sold also being manufactured in China.
Criticism of Wal-Mart
Communities often organize campaigns opposing proposed new Wal-Mart stores. Critics and academic studies note that Wal-Mart
displaces locally owned stores and results in the community losing potential assets to the corporate headquarters. This is the same sort of economic issue
which leads to tariffs at the international level. In short, Wal-Mart is viewed as an absentee landlord.
None of Wal-Mart's stores are unionized (as of 2003). Like many US retailers, a high proportion of the employees are temporary (around 33% as of 2002). The company is the target of persistent unionizing efforts, but has aggressively (and sometimes
illegally) fought off all attempts. In 2000, the meat-cutting department of the Wal-Mart
superstore in Jacksonville, Texas voted to unionize; two
weeks later, Wal-Mart shut down all its meat-cutting operations. Employee Kathleen Baker submitted a petition
from 80 Wal-Mart employees which requested wage increases; she was then fired for "theft"
of the company typewriter. Wages at Wal-Mart are about 20% less than at comparable companies. Walton once argued that
his company should be exempt from the minimum wage. (Palast -- pp.
121)
Wal-Mart is the most often sued corporate entity in the United States.
Its legal department has a reputation among personal injury lawyers for extremely aggressive legal tactics, and the corporation
has been sanctioned by several courts for failing to respond properly to plaintiff discovery motions.
Wal-Mart managers have sometimes pressured employees to work "off-the-clock" after they have worked 40 hours in order that
overtime pay may be avoided.
As of 2000, Wal-Mart, like many large American corporations with low-wage employees,
screens potential hires through a drug test, in addition to a multiple choice personality test, which asks applicants to express
their level of agreement with statements such as "rules have to be followed to the letter at all times." (Ehrenreich, p.
124)
Wal-Mart is also criticized for maintaining an atmosphere in which it might appear that they predominantly carry products
"Made in America", whereas in reality, the vast majority of Wal-Mart
products are not made within the United States. Indeed, critics charge that its relentless pressure on suppliers to cut costs
have forced suppliers to move production overseas. Greg Palast reports that
Chinese dissident Hongda Wu discovered, in 1995, that Wal-Mart was contracting prison "slave labor" in Guangdong Province. Wu and Palast argue that numerous items at Wal-Mart
are made by the Chinese People's Liberation Army.
It should be noted that Hongda Wu is a convicted felon who served 19 years in China. The "slave labor" are hard labor prison in
China, it should also be noted that American prisons also produce products and hence slave labor. Michael Moore's recent documentary showed American prisoners making jeans and providing travel advices
for several states. In Bangladesh, Palast reported that in 1992 teenagers were working in "sweatshops" approximately 80
hours per week, at $0.14 per hour, for Wal-Mart contractor Beximco. In 1994, Guatemalan Wendy Diaz
reported that, at the age of 13, she had been working for Wal-Mart at $0.30 per hour. (Palast pp. 119-120)
In 2004, a class-action suit affecting as many as 1.6 millin current and former female employees was brought against Wal-Mart.
This makes it the largest private-employer civil-rights case in U.S. history. The case is based on statistics that show that
women working at Wal-Mart are paid less than man in every region and in most job occupations and take longer to enter management
positions.
Product controversy
In 1999, Wal-Mart announced that it would not stock the morning-after pill in its 2,400 pharmacies.
In 2002 and 2003, Wal-Mart decided not to carry
certain products, because of racy content, such as Maxim, FHM and Stuff (magazine)
magazines. However, men's magazines were not singled out, as they also strategically "covered up" certain fronts of Redbook, Cosmopolitan and Marie Claire due to alleged customer complaints. Some music sold in Wal-Mart had obscenities
overdubbed with less offensive lyrics, such as albums from Lauryn Hill and
The Fugees or are removed from the shelves for lyrics critical of Wal-Mart,
such as those by Sheryl Crow. While some see it as a troubling case of
censorship, others view it as Wal-Mart sticking to the sensibilities of middle America.
On 26 April 2004, the UK's BBC Three aired
a television programme called Outrageous Fortunes, about the workings of Wal-Mart.
References
- Barbara Ehrenreich, Nickel and Dimed: On (Not) Getting
By in America (2001, ISBN 0805063889)
- Bob Ortega, In Sam We Trust:
The Untold Story of Sam Walton and Wal-Mart, the World's Most Powerful Retailer, (1998, ISBN 0812963776)
- Greg Palast, The Best Democracy Money Can Buy (2002 ISBN
0745318460)
- Robert Slater, The
Wal-Mart Decade: How a New Generation of Leaders Turned Sam Walton's Legacy into the World's #1 Company, (2003 ISBN
1591840066)
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