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Walmart

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Wal-Mart Stores, Inc. (NYSE: WMT) 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. It is also the largest private employer in the United States. It holds 8.9% retail store market share; in other words, $8.90 out of every $100 spent in American stores is spent at Wal-Mart.

Wal-Mart logo
Wal-Mart logo

Overview of stores

 
Exterior of a typical Wal-Mart store.
File:Supercenter.jpg
Exterior of a Wal-Mart Supercenter.

As of October 2004, in the United States, the company operated a large number of stores:

As of October 2004, these operations along with Wal-Mart's Home Office in Bentonville, Arkansas employed over 1.2 million people. Internationally Wal-Mart employs over 330,000 people (excluding Japan).

Internationally, Wal-Mart operates stores in Argentina (12 units), Brazil (145), Canada (241), China (39), Germany (92), South Korea (16), Mexico (671), Puerto Rico (54), and the United Kingdom (272) in various formats from the familiar Supercenters and Sam's Clubs, to specialty clothing stores and stand-alone restaurants. Wal-Mart also owns a 37.8% stake in The Seiyu Co., Ltd. in Japan, with an option to purchase over 60% in the future.

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.

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 at each entrance, known as a "greeter", whose primary responsibility is to welcome people to the store. Wal-Mart refers to its employees as Associates, and encourages management to think of themselves 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 store-wide meeting and the "Wal-Mart cheer".

U.S. Senator Hillary Clinton (Democrat, New York) formerly worked as a lawyer for Wal-Mart and also served on its Board of Directors.

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.
  • One particular aspect of the economy of scale is the aggregation effect, used in other business such as Home Depot and Wells Fargo whereby Wal-Mart sells as many different items as possible. This allows the company to grow revenue over its fixed cost base (more sales out of the same store). This is why Wal-Mart began to sell low margin groceries.
  • Systems. 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.
  • Suppliers. A spokesperson for the company told the Wall Street Journal of Nov. 18 2004 that it imported $15 billion worth of goods from China in the year that ended Jan. 31, 2004. About $7.5 billion were directly imported by Wal-Mart, the other $7.5 came indirectly through suppliers. In the same period net sales reached $256 billlion, with $209 billion coming from US operations. US current account imports from China was reported as 152.4 billion during 2003 ([3]). Mainland Chinese media place Wal-Mart as their 8th largest trading partner in front of Russia and the UK on the top-10 list.

Criticism of Wal-Mart

Main article: Criticism of Wal-Mart

Wal-Mart has been criticised for displacing locally owned stores; it has also been accused of mistreating its employees, selling sweatshop-made products, using strong-arm tactics to pressure companies to reduce prices, and enforcing conservative values through product restrictions and censorship. Wal-Mart is the most often sued corporate entity in the United States and has become a symbol of Globalization to anti-globalists.


Dates

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File:Walmart rollback 1.jpg
A Wal-Mart advertisement
  • 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 employees.
  • 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 Presidential 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 employees 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.
File:Walmart rollback 2.jpg
Another Wal-Mart advertisement
  • 1999 Wal-Mart has 1,140,000 employees, making it the largest private employer in the world. It acquires the ASDA Group with 229 stores in the United Kingdom.
  • 2000 The Walmart.com web site opens, to provide products online.
  • 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.
  • 2003 Wal-Mart lauches online DVD rental service to compete with Netflix.
  • 2004 Wal-Mart buys the Amigo supermarket chain in Puerto Rico for $17 million.
  • 2004 Wal-Mart opens new Superstore within one half-mile of Teotihuacan pyramids.
  • 2004 Wal-Mart builds an inventory of $18 billion worth of Chinese products.
  • 2004 Wal-Mart opens a US Global Procurement office to export US-made goods to Wal-Mart stores internationally

See also

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