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Wal-Mart Stores, Inc.

Type	Public (NYSE: WMT)
Founded	1962 in Rogers, Arkansas
Founder(s)	Sam Walton
Headquarters	Bentonville, Arkansas
Area served	Worldwide
Key people	Mike Duke (CEO) H. Lee Scott (Chairman of the Executive Committee of the Board) S. Robson Walton (Chairman)
Industry	Retail
Products	Discount Stores Supercenters Neighborhood Markets
Revenue	▲ US$ 404.16 Billion (2009)[1]
Operating income	▲ US$ 30.07 Billion (2009)[2]
Net income	▲ US$ 13.59 Billion (2009)[2]
Total assets	▲ US$ 163.514 Billion (2007)[3]
Total equity	▲ US$ 64.608 Billion (2007)[3]
Employees	approx. 2,100,000 (2008)[2]
Website	www.walmartstores.com www.walmart.com

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.^[4] Founded by Sam Walton in 1962, it was incorporated on October 31, 1969, and listed on the New York Stock Exchange in 1972. It is the largest private employer in the world and the third-largest utility or commercial employer, trailing the British National Health Service, and the Indian Railways. Wal-Mart is the largest grocery retailer in the United States, with an estimated 20% of the retail grocery and consumables business. It also owns and operates the North American company, Sam's Club.

Wal-Mart operates in Mexico as Walmex, in the UK as Asda, and in Japan as Seiyu. 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 South America and China are highly successful, while it was forced to pull out of Germany and South Korea when ventures there were unsuccessful.

Wal-Mart has been criticized by some community groups, women's rights groups, grassroots organizations, and labor unions, specifically for its extensive foreign product sourcing, low rates of employee health insurance enrollment, resistance to union representation, alleged sexism, and even 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 jobs and new small businesses to the communities in which it operates.

Contents 1 History 1.1 Incorporation and growth 1.2 Recent initiatives 2 Subsidiaries 2.1 Wal-Mart Stores Division U.S. 2.1.1 Wal-Mart Discount Stores 2.1.2 Wal-Mart Supercenter 2.1.3 Wal-Mart Neighborhood Market 2.2 Sam's Club 2.3 Marketside 2.4 Wal-Mart International 2.5 Private label brands 3 Corporate affairs 3.1 Financial 3.2 Governance 3.3 Competition 3.4 Customer base 3.5 Economic impact 3.6 Employee and labor relations 3.7 Diversity 4 See also 4.1 Advocacy groups 4.2 Television and film 4.3 Other 5 References 6 External links

History

Sam Walton, a businessman from Arkansas, began his retail career when he started work on June 3, 1940, at a J.C. Penney store in Des Moines, Iowa where he remained for 18 months. In 1945, he met Butler Brothers, a regional retailer that owned a chain of variety stores called Ben Franklin and that offered him one in Newport, Arkansas.^[5]

Walton was extremely successful in running the store in Newport, far exceeding expectations. ^[6] 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.^[7]

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.^[8] In 1968, it opened its first stores outside Arkansas, in Sikeston, Missouri and Claremore, Oklahoma.^[9]

Incorporation and growth

The company was incorporated as Wal-Mart Stores, Inc. 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. It began trading stock as a publicly held company on October 1, 1972, and was soon listed on the New York Stock Exchange. The first stock split 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 $340.3 million.^[9]

In the 1980s, Wal-Mart 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.^[9] 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.^[10] In 1988, Sam Walton stepped down as CEO and was replaced by David Glass.^[11] Walton remained as Chairman of the Board, and the company also rearranged other people in senior positions.

In 1988, the first Wal-Mart Supercenter opened in Washington, Missouri.^[12] Thanks to its superstores, it surpassed Toys "R" Us in toy sales in the late 1990s.^[13] The company also opened overseas stores, entering South America in 1995 with stores in Argentina and Brazil; and Europe in 1999, buying Asda in the UK for $10 billion.^[14]

In 1998, Wal-Mart introduced the "Neighborhood Market" concept with three stores in Arkansas.^[15] By 2005, estimates indicate that the company controlled about 20% of the retail grocery and consumables business.^[16]

In 2000, H. Lee Scott became President and CEO, and Wal-Mart's sales increased to $165 billion.^[17] In 2002, it was listed for the first time as America's largest corporation on the Fortune 500 list, with revenues of $219.8 billion and profits of $6.7 billion. It has remained there every year, except for 2006.^[18][19]

In 2005, Wal-Mart 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.^[20]

As Wal-Mart 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 Wal-Mart 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 opening.^[21] 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.^[21] 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 locates."^[22]

In the aftermath of Hurricane Katrina in September 2005, Wal-Mart 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.^[23] An independent study by Steven Horwitz of St. Lawrence University found that Wal-Mart, 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.^[24] While the company was overall lauded for its quick response – amidst the criticisms 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.^[25]

Recent initiatives

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 gas 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 renewable energy sources and produce zero waste.^[26] 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.^[27] 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.^[28] 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.^[28] Wal-Mart has also recently created its own electric company in 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.^[29]

In March 2006, Wal-Mart 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.^[30][31] The new store has wood floors, wider aisles, a sushi bar, a 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 supercenters.

On September 12, 2007, Wal-Mart introduced new advertising with the slogan, "Save Money Live Better," replacing the "Always Low Prices, Always" slogan, which it had used for the previous 19 years. Global Insight, which conducted the research that supported the ads, found that Wal-Mart'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 of $2,329).^[32]

On June 30, 2008, Wal-Mart 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.^[33] The new logo made its debut on the company's walmart.com website on July 1, 2008, although the old logo still appears on the corporate site, walmartstores.com. The new logo will eventually replace store logos at the company's US locations throughout the year.^[34] Wal-Mart international have not yet adopted the new logo.

At the same time that AIG was criticized for using government bailout funds to awards executives $165 million, Wal-Mart announced an expansion of its annual bonus program to employees.^[35] 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 profit sharing, 401(k) 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 $3.35.^[36]

Subsidiaries

Wal-Mart's operations primarily comprises three retailing subsidiaries: Wal-Mart Stores Division U.S., Sam's Club, and Wal-Mart International.^[37] The company does business in nine different retail formats: supercenters, food and drugs, general merchandise stores, bodegas (small markets), cash and carry stores, membership warehouse clubs, apparel stores, soft discount stores and restaurants.^[37]

Wal-Mart Stores Division U.S.

Wal-Mart Stores Division U.S. is Wal-Mart's largest business subsidiary, accounting for 67.2% of net sales for financial year 2006.^[37] It consists of three retail formats that have become commonplace in the United States: Discount Stores, Supercenters, and Neighborhood Markets. The 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, walmart.com.

In September 2006, Wal-Mart announced a new pilot program to sell generic drugs at just $4 per prescription. The pilot program was launched at stores in the Tampa, 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.^[38]

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.^[39] This service was discontinued on December 21, 2007.^[40]

Wal-Mart Discount Stores

Wal-Mart Discount Stores are discount department stores with size varying from 51,000 square feet (4,738.1 m²) to 224,000 square feet (20,810.3 m²), with an average store covering about 102,000 square feet (9,476.1 m²).^[37] They carry general merchandise and a selection of food. Many of these stores also have a garden center, a pharmacy, Tire & Lube Express, optical center, one-hour photo processing lab, portrait studio, a bank branch, a cell phone store and a fast food outlet. Some also have gasoline stations.^[41]

The first 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 centers 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.^[42][8]

As of January 31, 2008, there were 971 Wal-Mart Discount Stores in the United States. In 2006, the busiest in the world was one in Rapid City, South Dakota.^[43]

Wal-Mart Supercenter

Wal-Mart Supercenters are hypermarkets with size varying from 98,000 square feet (9,104.5 m²) to 261,000 square feet (24,247.7 m²), with an average of about 197,000 square feet (18,301.9 m²).^[37] These stock everything a Wal-Mart Discount Store does, and also include a full-service supermarket, including meat and poultry, baked goods, delicatessen, frozen foods, dairy products, garden produce, and fresh seafood. Many Wal-Mart Supercenters also have a garden center, pet shop, pharmacy, 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; several Supercenter and discount locations have also had McDonald's locations, usually with reduced menus, beginning in the early 1990s). Some Dunkin' Donuts or Blimpie restaurants can be found inside Walmart Supercenters. Some also sell gasoline distributed by Murphy Oil Corporation (whose Wal-Mart stations are branded as "Murphy USA"), Sunoco, Inc. ("Optima"), or Tesoro Corporation ("Mirastar").^[41]

The first 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 January 31, 2008, there were 2,447 Wal-Mart Supercenters in the United States.^[43] The nation's largest Supercenter, covering 260,000 square feet (24,000 m²) and two floors, is located in Crossgates Commons in Albany, New York.^[44]

Wal-Mart Neighborhood Market

Wal-Mart Neighborhood Markets are grocery stores that average about 42,000 square feet (3,901.9 m²).^[37] 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 merchandise.

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 January 31, 2008, there were 132 of them in the United States.^[43]

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

Sam's Club

Sam's Club is a chain of warehouse clubs which sell groceries and general merchandise, 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.^[45] Some locations also sell gasoline.^[41] The first Sam's Club opened in 1983 in Midwest City, Oklahoma ^[45] 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 package to physicians in small practices for $25,000. Wal-Mart is partnering with Dell and eClinicalWorks.com in this new venture.^[46]

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.^[47] As of January 31, 2008, there were 591 Sam's Clubs in the United States.^[43]

Marketside

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 p.m.

Wal-Mart International

Wal-Mart's international operations currently comprise 2,980 stores in 14 countries outside the United States.^[48] According to Wal-Mart's 2006 Annual Report, the International division accounted for about 20.1% of sales.^[37] 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^[48]), 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.^[49]

Wal-Mart has operated in Canada since its acquisition of 122 stores comprising the Woolco division of Woolworth Canada, Inc in 1994.^[50] As of October 31, 2008, it operates 310 locations, employing 77,500 Canadians, with a local home office in Mississauga, Ontario.^[51] Wal-Mart Canada's first three Supercentres (spelled as in Canadian English) opened on November 8, 2006, in Hamilton, London, and Aurora, Ontario. As of October 31, 2008, there are 39 Wal-Mart Supercentres in Canada,^[43].

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. At 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.^[52]

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 Walmex. In Japan, Wal-Mart owns about 53% of Seiyu.^[53] 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.^[54]

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 Carrefour and Pão de Açúcar.^[55]

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.^[56] 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".^[57]

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 during Wal-Mart's fiscal third quarter.^[58][53]

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 end.^[59] 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 chains and logistics.

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 alone.^[60]

In January 2009, the company acquired a controlling interest in the largest grocer in Chile, Distribucion y Servicio D&S SA.^[61]

Private label brands

About 40% of products sold in Wal-Mart are private label store brands, 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 Choice, 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.^[62] 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 retailers."^[63]

Corporate affairs

Wal-Mart's business model is based on selling a wide variety of general merchandise at "always low prices."^[37] 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.^[64]

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.^[65] 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 products.^[65]

On September 14, 2006, the company announced that it would phase out its layaway program, citing declining use and increased costs.^[66] 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 walmart.com customers to buy goods online with a free shipping option, and have goods shipped to the nearest store for pickup.^[67]

Financial

In 2006, Wal-Mart was 67th most profitable corporation (profits divided by total revenue), behind retailers Home Depot, Dell, and Target, and ahead of Costco and Kroger.^[68] For the fiscal year ending January 31, 2006, Wal-Mart reported a net income of $12 billion on $340 billion of sales revenue (3.5% profit margin).^[69] For the fiscal year ending January 31, 2006, Wal-Mart's international operations accounted for about 20.1% of total sales.^[37] As of Jan 8, 2009, net sales for the 48-week period ending Jan 2, 2009 was $370.5 billion, up 6.5% from the previous year's results.^[70]

Governance

Wal-Mart is governed by a fifteen-member Board of Directors, which is elected annually by shareholders. Robson Walton, the eldest son of founder Sam Walton, serves as Chairman of the Board. Michael T. Duke serves as Chief Executive Officer (CEO), and Lee Scott, formerly CEO, serves as Chairman of the Executive Committee of the Board. Other members of the board include Aída Álvarez, James Breyer, M. Michele Burns, James Cash, Roger Corbett, Douglas Daft, David Glass, Gregory B. Penner, Allen Questrom, Arne M. Sorenson, Jim Walton, Christopher J. Williams, and Linda S. Wolf.^[71]

Notable former members of the board include Hillary Clinton (1985–1992)^[72] and Tom Coughlin (2003–2004), the latter having served as Vice Chairman. Clinton left the board before the 1992 U.S. Presidential Election, 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.^[73] 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.^[74]

Competition

In North America, Wal-Mart's primary competition includes department stores like Kmart, Target, ShopKo and Meijer, Canada's Zellers, Winners, and Giant Tiger, and Mexico's Comercial Mexicana and Soriana. Competitors of Wal-Mart's Sam's Club division are Costco, and the smaller BJ's Wholesale Club chain operating 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 dollar stores, 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.^[75] In 2004, Wal-Mart responded by testing its own dollar store concept, a subsection of some stores called "Pennies-n-Cents."^[76]

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 with a 19% share.^[77] In July 2006, Wal-Mart announced its withdrawal from Germany. Its stores were sold to German company Metro.^[58] Wal-Mart continues to do well in the UK, and its Asda subsidiary is the second largest chain after Tesco.^[78]

In May 2006, after entering the South Korean market in 1998, Wal-Mart withdrew and sold all 16 of its South Korean outlets to Shinsegae, a local retailer, for $882 million. Shinsegae re-branded the Wal-Marts as E-mart stores.^[79]

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 sales.^[80]

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.^[81]

Customer base

Each week, about 100 million customers, nearly one-third of the U.S. population, visit Wal-Mart's U.S. stores.^[82] Wal-Mart customers give low prices as the most important reason for shopping there, reflecting the "Low prices, always" advertising slogan that Wal-Mart used from 1962 until 2006.^[83] 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.^[84] A Wal-Mart financial report in 2006 also indicated that Wal-Mart customers are sensitive to higher utility costs and gas prices.^[85] A poll before the 2004 US Presidential Election indicated that 76% of voters who shopped at Wal-Mart once a week planned to vote for George W. Bush, while only 23% planned to vote for John Kerry.^[86] When measured against other similar retailers in the U.S., frequent Wal-Mart shoppers were rated the most politically conservative.^[87]

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."^[88] Around six months later, it unveiled a new slogan: "Saving people money so they can live better lives". This 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).^[83] Wal-Mart has also made steps to appeal to more liberal customers, for example, by rejecting the American Family Association's recommendations and carrying the DVD Brokeback Mountain, a love story between two gay cowboys in Wyoming.^[89]

Economic impact

Wal-Mart is one of the largest corporations in the world.^[18] Critics worry about the presence of Wal-Mart in their local communities. Studies have found both positive and negative effects on local businesses, jobs and taxpayers.

Kenneth 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.^[21] 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.^[21]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 supercenter locates."^[90]

A June 2006 article published by the libertarian Ludwig von Mises Institute suggested that Wal-Mart has a positive impact on small business.^[91] 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 unleashed by Wal-Mart has no statistically significant impact on the overall size of the small business sector in the United States."^[92]

A Loyola University Chicago study which suggested that impact a Wal-Mart store has on a local business is correlated to its distance from that store. 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 Wal-Mart".^[93]

For the concern of jobs, a study commissioned by Wal-Mart with consulting firm Global Insight, found 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.^[94][95] Alternately the Economic Policy Institute estimates that 196,000 jobs were lost between 2001-2006, ^[96] 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 Index) that were 3.1% lower than they would otherwise have been.^[97]

Another 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 close.^[98]

Studies of Wal-Mart show consumers benefit from lower costs. A 2005 Washington Post story reported that "Wal-Mart's discounting on food alone boosts the welfare of American shoppers by at least $50 billion per year."^[99] 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.^[100] 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 Wal-Marts.^[101] 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.^[101] 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”.^[102]

Employee and labor relations

Labor unions, Christian organizations,^[103][104] and environmental groups^[105] 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 operate.^{[106][107][108]}

In 2005, two labor unions launched campaigns portraying Wal-Mart negatively. These included Wake Up Wal-Mart (United Food and Commercial Workers) and Wal-Mart Watch (Service Employees International Union). By the end of 2005, Wal-Mart launched Working Families for Wal-Mart, an operation managed by Wal-Mart to tell the company's side of the story. Additional efforts to counter criticism included a PR campaign in 2005, managed through its PR website walmartfacts.com,^[109] as well as several television commercials. The company retained the PR firm Edelman to respond to negative media attention,^[110] and started interacting directly with bloggers by sending them news, suggesting topics for postings, and sometimes inviting them to visit its corporate headquarters.^[111]

Wal-mart has been accused of locking employees in at night, paying employees below minimum wage, and exposing employees to health hazards.

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 — and that payrates do not rise as quickly as with unionized companies.^[112] 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).^[113] Other grievances regard poor working conditions, unfavorable employer-employee relationships, and anti-union policies. Many suggest that Wal-Mart's high annual turnover-rate of ~70% shows that workers are dissatisfied and maltreated.^[112]

In response, Jay Nordlinger of National Review argues that 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".^[114] Penn & Teller devoted an episode of their show 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".^[115] Wal-Mart stores are unionized in every country outside of North America.^[116]

Wal-Mart has opposed the Employee Free Choice Act (EFCA), which would make it easier for workers to unionize. 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 candidates in the elections for the United States Senate and the House of Representatives, as well as of the presumptive Democratic Presidential nominee, Senator Barack Obama. 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.^[117] 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."^[117] Several labor-rights groups including the AFL-CIO have asked the Federal Election Commission to investigate whether Wal-Mart broke federal election rules by advocating against Democratic candidate Barack Obama in meetings with employees.^[118]

Diversity

Wal-Mart is currently facing a gender discrimination 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.^[119] A December 2007 United States Court of Appeals for the Ninth Circuit 2–1 ruling^[120] affirming the class certification has been vacated by the court for en banc review.^[121][122] 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.^[123][124] Just 35% of its store managers were women, whereas 57% were at comparable retailers.^[124] 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.^[124] Others have criticized the lawsuit as without basis in the law and as an abuse of the class action mechanism.^{[125][126][127]} In 2007, Wal-Mart was named by the National Association for Female Executives as one of the top 35 companies for Executive Women.^[128]

Wal-Mart's rating on the Human Rights Campaign's Corporate Equality Index, 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,^[129] as well as for a new definition of "family" that included same-sex partners.^[130][131] 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 Target at 80% and Kmart at 100%).^[132]

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."^[133]

See also

Advocacy groups

• Wake Up Wal-Mart – a union-backed campaign group
• Wal-Mart Watch – a joint project of The Center for Community and Corporate Ethics studying the impact of large corporations on society
• Working Families for Wal-Mart – an advocacy group run by Wal-Mart and the Edelman public relations firm

Television and film

• Wal-Mart: The High Cost of Low Price – a 2005 documentary film by director Robert Greenwald
• Why Wal-Mart Works; and Why That Drives Some People C-R-A-Z-Y – a 2005 rebuttal to the Greenwald documentary
• Something Wall-Mart This Way Comes – a 2004 episode of Comedy Central's South Park

Other

• Criticism of Wal-Mart
• Wal-Mart camel – a bone fossil of a prehistoric camel found at a future Wal-Mart store in Mesa, Arizona.
• Wal-Mart employees (former and current)
• Wal-Mart First Tee Open at Pebble Beach – a golf tournament
• Walmarting – a neologism.

References

External links

• Official E-Commerce Website
• Official Corporate Website
• Official Public Relations Website
• Watching the Growth of Wal-Mart Across America

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