Wal-Mart Stores, Inc.
) is an American public corporation
that runs a chain of
large, discount department stores. It is the world's largest public
corporation by revenue, according to the 2008 Fortune Global 500
. The company was
founded by Sam Walton in 1962, incorporated on October 31, 1969,
and listed on the New York Stock Exchange in 1972. Wal-Mart is the largest private employer and
the largest grocery retailer in the United States.
It also owns and operates the Sam's Club retail
in North America
operates in Mexico as Walmex, in the United Kingdom as Asda, in Japan as Seiyu, and in India as Best Price. It has wholly-owned
operations in Argentina, Brazil, Canada, and
Puerto Rico. Wal-Mart's investments
outside North America have had mixed results: its operations in the
Kingdom, South America and
China are highly successful, while it was forced to pull
out of Germany and South Korea when ventures there were unsuccessful.
Walmart has been criticized
some community groups, women's rights
, specifically for its
extensive foreign product sourcing, low rates of employee health
insurance enrollment, resistance to union representation, sexism
, and management efforts to pressure employees
to vote for specific parties during national elections. Conversely,
others point out that Wal-Mart's rapid growth and logistical
efficiency has enabled it to bring lower prices to consumers and
more low paying jobs to the communities in which it operates.
, a businessman from Arkansas,
began his retail career when he started work on June 3, 1940, at a
J.C. Penney store in
Iowa where he remained for 18 months.
he met Butler Brothers, a regional
retailer that owned a chain of variety stores called Ben Franklin and that offered him one in
Walton was extremely successful in running the store in Newport,
far exceeding expectations. However, when the lease came up for
renewal, Walton could neither come to agreement on the existing
store's lease renewal nor find a new location in Newport. Instead,
he opened a new Ben Franklin franchise in Bentonville, Arkansas
, but called it
"Walton's Five and Dime." There, he achieved higher sales volume by
marking up slightly less than most competitors.
On July 2,
1962, Walton opened the first Wal-Mart Discount City store located
at 719 Walnut Ave. in Rogers, Arkansas.
The building is now occupied by a hardware
store and a pawn shop. Within five years, the company expanded to 24
stores across Arkansas and reached $12.6 million in sales.
it opened its first stores outside Arkansas, in Sikeston,
Missouri and Claremore, Oklahoma.
Incorporation and growth
The company was incorporated
on October 31, 1969. In 1970, it opened its home
office and first distribution center in Bentonville, Arkansas
. It had 38
stores operating with 1,500 employees and sales of $44.2 million.
trading stock as a publicly held
company on October 1, 1970, and was soon listed on the New York Stock
The first stock
occurred in May 1971 at a market price of $47. By this
time, Wal-Mart was operating in five states: Arkansas, Kansas,
Louisiana, Missouri, and Oklahoma; it entered Tennessee in 1973 and
Kentucky and Mississippi in 1974. As it moved into Texas in 1975,
there were 125 stores with 7,500 employees and total sales of
In the 1980s, Walmart continued to grow rapidly, and by its 25th
anniversary in 1987 there were 1,198 stores with sales of $15.9
billion and 200,000 associates. This year also marked the
completion of the company's satellite network, a $24 million
investment linking all operating units of the company with its
Bentonville office via two-way voice and data transmission and
one-way video communication. At the time, it was the largest
private satellite network, allowing the corporate office to track
inventory and sales and to instantly communicate to stores. In
1988, Sam Walton stepped down as CEO and was replaced by David Glass
. Walton remained as
Chairman of the Board
, and the
company also rearranged other people in senior positions.
the first Walmart Supercenter opened in Washington,
Thanks to its superstores, it surpassed
Toys "R" Us
in toy sales in the late 1990s.
The company also opened overseas stores, entering South America in
1995 with stores in Argentina and Brazil; and Europe in 1999,
in the UK for $10 billion.
Walmart introduced the "Neighborhood Market" concept
with three stores in Arkansas.
By 2005, estimates indicate that the
company controlled about 20% of the retail grocery and consumables
In 2000, H. Lee
became President and CEO, and Walmart's sales increased
to $165 billion. In 2002, it was listed for the first time as
America's largest corporation on the Fortune
list, with revenues of $219.8 billion and profits of $6.7
billion. It has remained there every year, except for 2006.
In 2005, Walmart had $312.4 billion in sales, more than 6,200
facilities around the world—including 3,800 stores in the United
States and 2,800 elsewhere, employing more than 1.6 million
"associates" worldwide. Its U.S. presence grew so rapidly that only
small pockets of the country remained further than 60 miles
(100 km) from the nearest Wal-Mart.
As Walmart grew rapidly into the world's largest corporation, many
critics worried about the effect of its stores on local
communities, particularly small towns with many "mom and pop
" stores. There have been several
studies on the economic impact of Walmart on small towns and local
businesses, jobs, and taxpayers. In one, Kenneth Stone, a Professor of
Economics at Iowa State University, found that some small towns can lose almost half
of their retail trade within ten years of a Wal-Mart store
However, in another study, he compared the changes
to what small town shops had faced in the past — including the
development of the railroads, the advent of the Sears Roebuck
catalog, as well as the arrival of shopping malls — and concluded
that shop owners who adapt to changes in the retail market can
thrive after Wal-Mart arrives. A later study in collaboration with Mississippi
State University showed that there are "both positive and negative
impacts on existing stores in the area where the new supercenter
In the aftermath of Hurricane
in September 2005, Walmart was able to use its
logistical efficiency in organizing a rapid response to the
disaster, donating $20 million in cash, 1,500 truckloads of free
merchandise, food for 100,000 meals, as well as the promise of a
job for every one of its displaced workers. An independent study
by Steven Horwitz of St. Lawrence University found that Walmart, Home
Depot, and Lowe's, made use of their
local knowledge about supply chains, infrastructure, decision
makers and other resources to provide emergency supplies and reopen
stores well before FEMA began its response.
company was overall lauded for its quick response – amidst the
of the Federal
Emergency Management Agency
– several critics were nonetheless
quick to point out that there still remain issues with the
company's labor relations issues.
In October 2005, Wal-Mart announced it would implement several
environmental measures to increase energy efficiency. The primary
goals included spending $500 million a year to increase fuel
efficiency in Wal-Mart’s truck fleet by 25% over three years and
double it within ten, reduce greenhouse
emissions by 20% in seven years, reduce energy use at
stores by 30%, and cut solid waste from U.S. stores and Sam’s Clubs
by 25% in three years. CEO Lee Scott said that Wal-Mart's goal was
to be a "good steward for the environment" and ultimately use only
produce zero waste. The company also designed three new
experimental stores in McKinney, Texas, Aurora,
Colorado, and Las
Vegas, Nevada. with wind turbines, photovoltaic solar panels,
biofuel-capable boilers, water-cooled refrigerators, and xeriscape gardens.
Despite much criticism
of its environmental record, Wal-Mart took a few steps in what is
viewed as a positive direction, which included becoming the biggest
seller of organic milk and the biggest buyer of organic cotton in
the world, as well as reducing packaging and energy costs. Wal-Mart
also spent nearly a year working with outside consultants to
discover the company's total environmental impact and find where
they could improve. They discovered, for example, that by
eliminating excess packaging on their toy line Kid Connection, they
could not only save $2.4 million a year in shipping costs but also
3,800 trees and a million barrels of oil. Walmart has also recently
created its own electric company
Texas, Texas Retail Energy
, and plans to supply its stores
with cheap power purchased at wholesale prices. Through this new
venture, the company expects to save $15 million annually and also
lays the groundwork and infrastructure to sell electricity to Texas
consumers in the future.
In March 2006, Walmart sought to appeal to a more affluent
demographic. The company launched a new Supercenter
concept in Plano,
Texas, intended to compete against stores seen as more
upscale and appealing, such as Target.
The new store has wood
floors, wider aisles, a sushi
coffee/sandwich shop with free Wi-Fi Internet
access, and more expensive beers, wines,
electronics, and other goods. The exterior has a hunter green
background behind the Wal-Mart letters, similar to Wal-Mart
Neighborhood Markets, instead of the blue previously used at its
On September 12, 2007, Walmart introduced new advertising
with the slogan
, "Save Money Live Better
the "Always Low Prices, Always
" slogan, which it had used
for the previous 19 years. Global
, which conducted the research that supported the ads,
found that Walmart's price level
reduction resulted in savings for consumers of $287 billion in
2006, which equated to $957 per person or $2,500 per household
(up 7.3% from the 2004 savings estimate
On June 30, 2008, Walmart unveiled a new company logo, featuring
the non-hyphenated name "Walmart" followed by a stylized spark, as
it is referred to on store advertisements. The new logo received
mixed reviews from some design critics, who question whether the
new logo is as bold as competitors such as the Target
bullseye or as instantly
recognizable as the former company logo, which was used for 18
years. The new logo made its debut on the company's
website on July 1, 2008. The new logo will
eventually replace store logos at the company's US locations
throughout the year . Wal-Mart Canada started to adopt the logo for
its stores in early 2009.
At the same time that AIG
government bailout funds to awards executives $165 million,
Wal-Mart announced an expansion of its annual bonus program to
employees. On March 20, 2009, Wal-Mart announced that it is paying
a combined $933.6 million in bonuses to every full and part time
hourly worker of the company. An additional $788.8 million in
contributions, and hundreds of millions of
dollars in merchandise discounts and contributions to the
employees' stock purchase plan is also included in this plan. While
the economy at large was in an ongoing recession
, the largest retailer in the U.S.
reported solid financial figures for the most recent fiscal year
(ending January 31, 2009), with $401.2 billion in net sales, a gain
of 7.2% from the prior year. Income from continuing operations
increased 3% to $13.3 billion, and earnings per share rose 6% to
On July 16, 2009, Wal-Mart announced plans to develop a worldwide
sustainable product index.
Wal-Mart's operations are organized into three divisions: Wal-Mart
Stores U.S., Sam's Club
, and Wal-Mart
International. The company does business in nine different retail
, food and drugs
, general merchandise
(small markets), cash and carry stores, membership warehouse clubs
stores, soft discount stores
Wal-Mart Stores U.S.
Wal-Mart Stores U.S. is Wal-Mart's largest division, accounting for
67.2% of net sales for financial year 2006. It consists of three
retail formats that have become commonplace in the United States:
, and Neighborhood Markets
retail department stores sell a variety of mostly non-grocery
products, though emphasis has now shifted towards supercenters,
which include more grocery items. This division also includes
Wal-Mart's online retailer
In September 2006, Wal-Mart announced a new pilot program to sell
at just $4 per
prescription. The pilot program was launched at stores in
Florida area, and expanded to all stores in Florida by January 2007.
While the average price of
generics is $29 per prescription, compared to $102 for name-brand
drugs, Wal-Mart maintains that it is not selling at a loss, or
providing as an act of charity – instead, they are using the same
mechanisms of mass distribution that it uses to bring lower prices
to other products. While it's little known outside of the drug
industry, many of Walmart’s low cost generics are imported from
India and made by drug makers in that country including
Ranbaxy and CIPLA.
On February 6, 2007, the company launched a "beta" version of its
new movie download service, mediadownloads.walmart.com,
which sells 3,000 films and television episodes from all major
studios and television networks. This service was discontinued on
December 21, 2007.
Wal-Mart Discount Stores
Wal-Mart Discount Stores are discount
with size varying from to , with an average
store covering about . They carry general merchandise
and a selection of
. Many of these stores also have a
garden center, a pharmacy
optical center, one-hour photo
branch, a cell phone store and a fast food
outlet. Some also have gasoline
Wal-Mart store opened in Rogers, Arkansas in 1962.
In 1990, Wal-Mart opened its first Bud's Discount City
location in Bentonville. Bud's operated as a closeout store, much
like Big Lots
. Many locations were opened
to fulfill leases in shopping
as Wal-Mart stores left and moved into newly built
Supercenters. All of the Bud's Discount City stores closed or
converted into Wal-Mart Discount Stores by 1997.
As of July 2009, there were 883 Wal-Mart Discount Stores in the
United States. In 2006, the busiest in the world was one in
Wal-Mart Supercenters are hypermarkets
with size varying from to , with an average of about . These stock
everything a Wal-Mart Discount Store does, and also include a
products, garden produce
, and fresh seafood
. Many Wal-Mart Supercenters also have a
garden center, pet shop
, Tire & Lube
Express, optical center, one-hour
photo processing lab, portrait studio, and numerous alcove shops,
such as cellular phone stores, hair and nail salons, video rental
stores, local bank branches, and fast food
outlets — usually Subway
sometimes Dunkin' Donuts
Some also sell gasoline
Murphy Oil Corporation
Wal-Mart stations are branded as "Murphy USA"), Sunoco, Inc.
("Optima"), or Tesoro Corporation
Supercenter opened in 1988 in Washington, Missouri. A similar concept, Hypermart USA, opened in Garland,
Texas a year earlier.
All of the Hypermart USA
stores were later closed or converted into Supercenters.
As of October 2009, there were 2,705 Wal-Mart Supercenters in the
United States. The largest Supercenter in the United
States, covering and two floors, is located in Crossgates Commons in Albany, New
Wal-Mart Neighborhood Market
Wal-Mart Neighborhood Markets are grocery
that average about . They offer a variety of products,
which include full lines of groceries
pharmaceuticals, health and beauty aids, photo developing services,
and a limited selection of general
Neighborhood Markets are used to fill the gap between Discount
Stores and Supercenters.
The first Neighborhood Market opened in 1998 in Bentonville, Arkansas
. As of July
2009, there were 151 of them in the United States.
Wal-Mart Neighborhood Market now has the same logo as Wal-Mart
does. However, this change took place a few months after the new
logo was introduced on June 30, 2008
Marketside is a new chain of grocery stores opened in October 2008,
the stores are said to be less than half the size of a conventional
supermarket, as stated in the backgrounder found on Wal-Mart's
official homepage. Each of their stores is open from 7 a.m. to 10
Sam's Club is a chain of warehouse
which sell groceries
, often in
large quantities. Sam's Club stores are "membership" stores and
most customers buy annual memberships. However, non-members can
make purchases either by buying a one-day membership or paying a
surcharge based on the price of the purchase. Some locations also
. The first Sam's Club
opened in 1983 in Midwest City, Oklahoma under the name "Sam's Wholesale Club".
Sam's has found a niche market in recent years as a supplier to
small businesses. All Sam's Club stores are open early hours
exclusively for business members and their slogan is "We're in
Business for Small Business." In March 2009, the company announced
that it plans to enter the electronic medical records
business by offering a software
physicians in small practices for $25,000. Wal-Mart is partnering
and eClinicalWorks.com in this new
According to Wal-Mart's 2007 Annual Report, Sam's Club's sales
during 2007 were $42 billion, or 12.1% of Wal-Mart's total 2007
sales. As of January 31, 2008, there were 591 Sam's Clubs in the
Wal-Mart's international operations currently comprise 2,980 stores
in 14 countries outside the United States. According to Wal-Mart's
2006 Annual Report, the International division accounted for about
20.1% of sales. There are wholly owned operations in Argentina,
Brazil, Canada, Puerto Rico (although PR is part of the US, the
company's operations there are managed through its international
division), and the UK. With 1.8 million employees worldwide, the
company is the largest private employer in the US and Mexico, and
one of the largest in Canada.
Wal-Mart has operated in Canada since its acquisition of 122 stores
comprising the Woolco
division of Woolworth Canada, Inc
October 31, 2008, it operates 310 locations, employing 77,500
Canadians, with a local home office in Mississauga, Ontario. Wal-Mart
Canada's first three Supercentres (spelled as in Canadian English) opened on November 8,
2006, in Hamilton, London, and
As of October 31, 2008, there are 39 Wal-Mart
Supercentres in Canada,.
Sales in 2006 for Wal-Mart's UK subsidiary, Asda
(which retains the name it had before acquisition
by Wal-Mart), accounted for 42.7% of sales of Wal-Mart's
international division. In contrast to Wal-Mart's US operations,
Asda was originally and still remains primarily a grocery chain,
but with a stronger focus on non-food items than most UK
supermarket chains other than Tesco.
the end of 2007, Asda had 340 stores, some of which are branded
Asda Wal-Mart Supercentres, as well as Asda Supermarkets, Asda
Living, George High Street and Asda Essentials stores.
In addition to its wholly-owned international operations, Wal-Mart
has joint ventures in China and several majority-owned
subsidiaries. Wal-Mart's majority-owned subsidiary in Mexico is
. In Japan, Wal-Mart owns about 53% of
. Additionally, Wal-Mart owns 51%
of the Central American Retail Holding Company (CARHCO), consisting
of more than 360 supermarkets and other stores in Guatemala, El
Salvador, Honduras, Nicaragua, and Costa Rica.
In 2004, Wal-Mart bought the 116 stores in the Bompreço
supermarket chain in northeastern
Brazil. In late 2005, it took control of the
Brazilian operations of Sonae Distribution Group through its new
subsidiary, WMS Supermercados do Brasil, thus acquiring control of
the Nacional and Mercadorama supermarket chains, the leaders in the
Rio Grande do Sul and Paraná states, respectively.
None of these was
rebranded. As of August 2006, Wal-Mart operates 71 Bompreço stores,
27 Hiper-Bompreço stores, 15 Balaio stores, and three
Hiper-Magazines (all originally parts of Bompreço). It also runs 19
Wal-Mart Supercenters, 13 Sam's Club stores, and two Todo Dia
stores. With the acquisition of Bompreço and Sonae, Wal-Mart is
currently the third largest supermarket chain in Brazil, behind
and Pão de Açúcar
In June 2006, Wal-Mart was excluded from the investment portfolio
of The Government
Pension Fund of Norway
, which held stock values of about US$
430 million in the company, due to a social audit into alleged
labor rights violations in the company's operations in the US and
worldwide. Although Wal-Mart did not respond to questions from the
fund's auditors, the company later claimed the decision "don't
appear to be based on complete information".
In July 2006, Wal-Mart announced its withdrawal from Germany due to
sustained losses in a highly competitive market. The stores were
sold to the German company Metro
Wal-Mart's fiscal third quarter.
In November 2006, Wal-Mart announced a joint venture with Bharti Enterprises
to open retail stores
in India. As foreign corporations are not allowed to directly enter
the retail sector in India, Wal-Mart will operate through
franchises and handle the wholesale
The partnership will involve two joint ventures; Bharti will manage
the front end involving opening of retail outlets, while Wal-Mart
will take care of the back end, such as cold
In 2008, Wal-Mart named German retailing veteran Stephan Fanderl as
the president of Wal-Mart Emerging Markets-East in an effort to,
"explore retail business opportunities in Russia and neighboring
markets." The market is estimated to be worth more than $
140 billion per year in food sales
January 2009, the company acquired a controlling interest in the
largest grocer in Chile,
Distribucion y Servicio D&S SA.
Private label brands
About 40% of products sold in Wal-Mart are private label store
, or products offered by Wal-Mart and produced through
contracts with manufacturers. Wal-Mart began offering private label
brands in 1991 with the launch of Sam's
, a brand of drinks produced by Cott Beverages
exclusively for Wal-Mart.
Sam's Choice quickly became popular, and by 1993 was the third
beverage brand in the United States. Other Wal-Mart brands include
Great Value and Equate in the US and Canada, and Smart Price
in Britain. A 2006 study talked of "the
magnitude of mind-share Wal-Mart appears to hold in shoppers' minds
when it comes to awareness of private label brands and
Wal-Mart's business model
is based on
selling a wide variety of general merchandise at "always low
prices." The company refers to its employees as "associates". All
Wal-Mart stores in the US and Canada also have designated
"greeters", who welcome shoppers at the store entrance.
In June, 2007. Wal-Mart announced it was retiring the blue vest its
1.5 million associates wear, and replacing it with khakis and
polos. The replacement was to help Wal-Mart increase sales.
Unlike many other retailers, Wal-Mart does not charge a slotting fee
to suppliers for their products to
appear in the store. Instead, it focuses on selling more popular
products and often pressures store managers to drop unpopular
products, as well as asking manufacturers to supply more popular
On September 14, 2006, the company announced that it would phase
out its layaway
program, citing declining
use and increased costs. Layaway ceased to be offered on November
19, 2006, and required merchandise pickup by December 8, 2006.
Wal-Mart now focuses on other payment options, such as increased
use of six- and twelve-month, zero-interest financing. The layaway
location in most stores is now used for Wal-Mart's Site-To-Store
program, which was introduced in March 2007. This enables
customers to buy goods online with a free
shipping option, and have goods shipped to the nearest store for
In 2006, Wal-Mart was 67th most profitable corporation (profits
divided by total revenue), behind retailers Home Depot
, and ahead of Costco
. For the
ending January 31, 2006,
Wal-Mart reported a net income
billion on $340 billion of sales revenue (3.5% profit margin
). For the fiscal year ending
January 31, 2006, Wal-Mart's international operations accounted for
about 20.1% of total sales.
Wal-Mart is governed by a fifteen-member Board of Directors
, which is elected
annually by shareholders
. Robson Walton
, the eldest son of founder
, serves as Chairman of the Board
serves as Chief Executive Officer
, formerly CEO, serves as
Chairman of the Executive Committee of the Board. Other members of
the board include Aída
, James Breyer, M. Michele Burns, James Cash
, Douglas Daft
, David Glass
, Gregory B. Penner,
Allen Questrom, Arne M. Sorenson, Jim
, Christopher J. Williams, and Linda S. Wolf.
Notable former members of the board include Hillary Clinton
the latter having served as Vice Chairman. Clinton left the board
before the 1992 U.S. Presidential
, and Coughlin left in December 2005 after pleading
guilty to wire fraud and tax evasion for stealing hundreds of
thousands of dollars from Wal-Mart. On August 11, 2006, he was
sentenced to 27 months of home confinement, five years of
probation, and ordered to pay $
411,000 in restitution.
In North America, Wal-Mart's primary competition includes department stores
, The Real Canadian Superstore
and Giant Tiger
, and Mexico's Comercial Mexicana
. Competitors of Wal-Mart's Sam's Club
division are Costco
, and the smaller BJ's Wholesale Club
mainly in the eastern US. Wal-Mart's move into the grocery
business in the late 1990s also set it
against major supermarket
chains in both
the United States and Canada. Several smaller retailers, primarily
, such as Family Dollar
and Dollar General
, have been able to find a
small niche market and compete successfully against Wal-Mart for
home consumer sales. In 2004, Wal-Mart responded by testing its own
dollar store concept, a subsection of some stores called
Wal-Mart also had to face fierce competition in some foreign
markets. For example, in Germany it had captured just 2% of German
food market following its entry into the market in 1997 and
remained "a secondary player" behind Aldi
a 19% share. In July 2006, Wal-Mart announced its withdrawal from
Germany. Its stores were sold to German company Metro
. Wal-Mart continues to do well in the UK, and
its Asda subsidiary is the second largest chain
In May 2006, after entering the South Korean market in 1998,
Wal-Mart withdrew and sold all 16 of its South Korean outlets to
, a local retailer, for $882
million. Shinsegae re-branded the Wal-Marts as E-mart
Wal-Mart struggled to export its brand elsewhere as it rigidly
tried to reproduce its model overseas. In China, Wal-Mart hopes to
succeed by adapting and doing things preferable to Chinese
citizens. For example, it found that Chinese consumers preferred to
select their own live fish and seafood; stores began displaying the
meat uncovered and installed fish tanks, leading to higher
In addition, under heavy pressure from the Chinese government,
Wal-Mart accepted a form of organized labor in China. Chinese labor
unions do not negotiate contracts but simply pay dues to the
government, "to secure the social order." However, Chinese
consumers may be more open to Americana
than shoppers in Europe.
Each week, about 100 million customers, nearly one-third of the
U.S. population, visit Wal-Mart's U.S. stores. Wal-Mart customers
give low prices as the most important reason for shopping there,
reflecting the "Low prices, always"
that Wal-Mart used from 1962 until 2006. The average US Wal-Mart
customer's income is below the national average, and analysts
recently estimated that more than one-fifth of them lack a bank
account, twice the national rate. A Wal-Mart financial report in
2006 also indicated that Wal-Mart customers are sensitive to higher
utility costs and gas prices. A poll indicated that after 2004 US Presidential
76% of voters who shopped at Wal-Mart once a week
voted for George W. Bush
, while only 23% supported senator
. When measured against other
similar retailers in the U.S., frequent Wal-Mart shoppers were
rated the most politically conservative
In 2006, Wal-Mart took steps to expand its US customer base,
announcing a modification in its US stores from a
"one-size-fits-all" merchandising strategy to one designed to
"reflect each of six demographic groups African-Americans, the
affluent, empty-nesters, Hispanics, suburbanites and rural
residents." Around six months later, it unveiled a new slogan:
"Saving people money so they can live better lives"
reflects the three main groups into which Wal-Mart categorizes its
200 million customers: "brand aspirationals" (people with low
incomes who are obsessed with names like KitchenAid
), "price-sensitive affluents"
(wealthier shoppers who love deals), and "value-price shoppers"
(people who like low prices and cannot afford much more). Wal-Mart
has also made steps to appeal to more liberal
example, by rejecting the American Family Association
recommendations and carrying the DVD
love story between two gay cowboys in Wyoming.
Wal-Mart is one of the largest corporations in the world. Studies
have found both positive and negative effects on local businesses,
jobs and taxpayers.
Stone, Professor of Economics at Iowa State University, in a paper published in Farm Foundation
in 1997, found that some small towns can lose almost half of their
retail trade within ten years of a Wal-Mart store opening.
However, he compared the changes to previous competitors small town
shops have faced in the past—from the development of the railroads
and the Sears Roebuck catalog to shopping malls. He concludes that
shop owners who adapt to the ever changing retail market can thrive
after Wal-Mart comes to their community. A subsequent study in
collaboration with Mississippi State University indicated that there are "both positive and
negative impacts on existing stores in the area where the new
A June 2006 article published by the libertarian Ludwig von Mises Institute
suggested that Wal-Mart has a positive impact on small business. It
argued that while Wal-Mart's low prices caused some existing
businesses to close, the chain also created new opportunities for
other small business, and so "the process of creative destruction
Wal-Mart has no statistically significant impact on the overall
size of the small business sector in the United States."
University Chicago study which suggested that impact a Wal-Mart store
has on a local business is correlated to its distance from that
The leader of that study admits that this factor is
stronger in smaller towns and doesn't apply to more urban areas
saying "It'd be so tough to nail down what's up with
For the concern of jobs, a study commissioned by Wal-Mart with
consulting firm Global Insight
that its stores' presence saves working families more than US$
2,500 per year, while creating more than 210,000 jobs
in the U.S. Alternately the Economic Policy Institute
estimates that 196,000 jobs were lost between 2001-2006, and 68% of
jobs lost were manufacturing jobs. Another study by Global Insight
has found that Wal-Mart's growth between 1985 and 2004 resulted in
food-at-home prices that were 9.1% lower and overall prices (as
measured by the Consumer Price
) that were 3.1% lower than they would otherwise have
study at the University of Missouri found that a new store increases net retail
employment in the county by 100 jobs in the short term, half of
which disappear over five years as other retail establishments
Studies of Wal-Mart show consumers benefit from lower costs. A 2005
story reported that "Wal-Mart's
discounting on food alone boosts the welfare of American shoppers
by at least $50 billion per year." A study in 2005 at Massachusetts Institute of
Technology measured the effect on consumer welfare and found that the
poorest segment of the population benefits the most from the
existence of discount retailers. A 2004 paper by two
professors at Pennsylvania State University found that U.S. counties with Wal-Mart stores
suffered increased poverty compared with counties without
They hypothesized, to explain their results: This
could be due to the displacement of workers from higher-paid jobs
in the retailers customers no longer choose to patronize, Wal-Mart
providing less local charity than the replaced businesses, or a
shrinking pool of local leadership and reduced social capital
due to a reduced number of
local independent businesses. Dr Raj Patel,
author of Stuffed and
Starved: Markets, Power and the Hidden Battle for the World
Food System, said in a lecture at the University
of Melbourne on 18 September 2007, that a study in Nebraska
looked at two different Wal-Marts, the first of which had just
arrived and “was in the process of driving everyone else out of
business but, to do that, they cut their prices to the bone, very,
very low prices”.
In the other Wal-Mart, “they had
successfully destroyed the local economy, there was a sort of
economic crater with Wal-Mart in the middle; and, in that
community, the prices were 17 per cent higher”.
Employee and labor relations
, Christian organizations,
and environmental groups have criticized Wal-Mart for its policies
and/or business practices. In particular, several labor unions
blame Wal-Mart workers' unwillingness to join their organizations
on the company's anti-union stance. Others disapprove of the
corporation's extensive foreign product sourcing, treatment of
employees and product suppliers, environmental practices, and
use of public subsidies
, and the
impact of stores on the local economies of towns in which they
In 2005, two labor unions launched campaigns portraying Wal-Mart
negatively. These included Wake Up
Food and Commercial Workers
) and Wal-Mart Watch
). By the end of 2005, Wal-Mart launched
Working Families for
, an operation managed by Wal-Mart to tell the
company's side of the story. Additional efforts to counter
criticism included a PR
2005, managed through its PR website walmartfacts.com, as well as
several television commercials. The company retained the PR firm
to respond to negative media
attention, and started interacting directly with bloggers by
sending them news, suggesting topics for postings, and sometimes
inviting them to visit its corporate headquarters.
In the past, Wal-mart has been accused of locking night-shift
workers in at night, paying employees below minimum wage
, and exposing employees to health
. Wal-Mart's own "Standards for
Suppliers" reports document extensive problems of this kind among
the company's "directly-sourced" factories. Full-time Wal-Mart
employees earn an average of $10.78 per hour, but critics point out
that the starting pay can be far lower placing some employees with
children below the poverty line
that payrates do not rise as quickly as with unionized companies.
Others decry low levels of health coverage or overpriced health
insurance, though the company reports that it offers rates as low
as $5 per month in some areas ($9 per month nationwide) and that
92% of its associates are insured (though not necessarily through
Wal-Mart). Other grievances regard poor working conditions
unfavorable employer-employee relationships, and anti-union
policies. Many suggest that Wal-Mart's
high annual turnover
~70% shows that workers are dissatisfied and maltreated.
In response, Jay Nordlinger
Wal-Mart is attacked simply because it is a leader of the Fortune
500 list or the largest employer in America, and a "free-market
success story". Penn & Teller
devoted an episode of Bullshit!
to an analysis of
Wal-Mart criticism as a social movement. They theorized that
despite the noble rhetoric, the real motivation of "Wal-Mart
haters" was rooted in human psychology. They suggested that hating
Wal-Mart permits a person "to feel better about themselves" for
three main reasons: They "don't run a greedy international
conglomerate", they aren't Wal-Mart workers, widely considered
"low-skilled, minimum wage drones", and they aren't Wal-Mart
customers thought of as "toothless, welfare-getting hillbillies".
Wal-Mart stores are unionized in every country outside of North
Wal-Mart has opposed the Employee Free Choice Act
which would make it easier for workers to unionize by removing the
employer's ability to demand a secret ballot in union elections,
and which would require mandatory arbitration of labor disputes. In
mid-2008, the company required store managers and department heads
to attend meetings at which opposition to the EFCA was used as a
fulcrum for criticism of Democratic
the elections for the United States
and the House of
, as well as of the presumptive Democratic
Presidential nominee, Senator Barack
. At these meetings, Wal-Mart human resources managers
warned that Democratic victories might result in passage of the
EFCA and hence more unionization. At one meeting, a Wal-Mart
customer service supervisor from Missouri stated, "I am not telling
you how to vote, but if the Democrats win, this bill will pass and
you won't have a vote on whether you want a union. A Wal-Mart
spokesman, while acknowledging that the meetings were taking place
nationwide, said, "If anyone representing Wal-Mart gave the
impression we were telling associates how to vote, they were wrong
and acting without approval." Several labor-rights groups including
have asked the Federal Election Commission
investigate whether Wal-Mart broke federal election rules by
advocating against Democratic candidate Barack Obama in meetings
Wal-Mart is currently facing a gender
lawsuit, Dukes v. Wal-Mart Stores, Inc.
which alleges that female employees were discriminated against in
matters regarding pay and promotions. If the class action
is certified, it would be the
largest such lawsuit in history, covering 1.5 million women
according to the plaintiffs. A December 2007 United
States Court of Appeals for the Ninth Circuit
affirming the class certification has been vacated by the court for
review. According to a
consultant hired by plaintiffs in a sex discrimination lawsuit, in
2001, Wal-Mart's EEOC filings showed that female employees made up
65% of Wal-Mart's hourly paid workforce, but only 33% of its
management. Just 35% of its store managers were women, whereas 57%
were at comparable retailers. Wal-Mart says comparisons with other
retailers are unfair, because it classifies employees differently;
if department managers were included in the totals, women would
make up 60% of the managerial ranks. Others have criticized the
lawsuit as without basis in the law and as an abuse of the class
action mechanism. In 2007, Wal-Mart was named by the National
Association for Female Executives as one of the top 35 companies
for Executive Women.
Wal-Mart's rating on the Human
, a measure of how companies treat LGBT
employees and customers, has fluctuated widely
during the past decade, from a low of 14% (2002) to 65% (2006).
They were praised for expanding their antidiscrimination policy
protecting gay and lesbian employees, as well as for a new
definition of "family" that included same-sex partners. However,
they have been criticized in other areas, such as not renewing its
membership in the National Gay and Lesbian Chamber of Commerce,
which is reflected in their 2008 rating of 40% (compared to
at 80% and Kmart
In January 2006, Wal-Mart announced that "diversity efforts include
new groups of minority, female and gay employees that meet at
Wal-Mart headquarters in Bentonville to advise the company on
marketing and internal promotion. There are seven Business Resource
Groups: women, African-Americans, Hispanics, Asians, Native
Americans, Gays and Lesbians, and a disabled group."
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