Wal-Mart Stores, Inc., branded as
Walmart , is an American
multinational retail corporation that runs chains of large discount department stores and warehouse stores. The company is the
world's second largest public corporation, according to the
Fortune Global 500 list in 2013, the
biggest private employer in the world with over two million employees, and is the
largest retailer in the world. Walmart remains a
family-owned business, as the company is controlled by the
Walton family, who own over 50 percent of Walmart.
It is also one of the
world's most valuable companies.
The company was founded by Sam Walton in 1962, incorporated on October 31, 1969, and publicly traded on the New York Stock Exchange in 1972. It is headquartered in Bentonville, Arkansas. Walmart is also the largest grocery retailer in the United States. In 2009, it generated 51 percent of its US$258 billion sales in the U.S. from grocery business.[
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In the late 1980s and early 1990s the company rose from a regional to national giant. By 1988, Wal-Mart was the most profitable retailer in the US[ 1990 Sales Lift Wal-mart Into Top Spot - Sun Sentinel. Articles.sun-sentinel.com (1991-02-15). Retrieved on 2013-12-06.] Geographically limited to the South and Lower Midwest up to the mid 1980s, by the early 1990s Walmart's presence spanned coast to coast - Sam's Club opened in New Jersey in November 1989 and the first California outlet opened in Lancaster on July 28, 1990. A Walmart in York, Pennsylvania was opened in October 1990 bringing the main store into the Northeast.[ Huntingdon Daily News, Monday, January 20, 1992 : Front Page. Newspaperarchive.com. Retrieved on 2013-12-06.]
Walmart has 8,500 stores in 15 countries, under 55 different names.[ The company operates under the Walmart name in the United States, including the 50 states and Puerto Rico. It 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, and Canada. Walmart's investments outside North America have had mixed results: its operations in the United Kingdom, South America, and China are highly successful, whereas ventures in Germany and South Korea were unsuccessful.
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History
Early years (1945–1969)
, Arkansas now serving as the Walmart Visitor Center]]In 1945 a businessman and former J. C. Penney employee, Sam Walton, purchased a branch of the Ben Franklin Stores from the Butler Brothers.[ ξ1 ] Sam's focus was on selling products at low prices to get higher-volume sales at a lower-profit margin. He portrayed it as a crusade for the consumer. He experienced setbacks, because the lease price and branch purchase were unusually high, but he was able to find lower-cost suppliers than the ones used by other stores. He passed on the savings in the product pricing.
On July 2, 1962, Walton opened the first Walmart Discount City store located at 719 W. Walnut Street in Rogers, Arkansas. The building is now occupied by a hardware store and an antique mall, while the company's "Store #1" — since converted to a Supercenter concept — is located several blocks west down Walnut Street as of 2013. Within its first five years, the company expanded to 24 stores across Arkansas and reached $12.6 million in sales.["]
Incorporation and growth as a regional power (1969–1990)
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, 1970, 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, Walmart 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.[ Walmart opened its first Texas store in Mount Pleasant on November 11, 1975.]
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 that 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, the first Wal-Mart Supercenter opened in Washington, Missouri.
Retail hegemony and rise to multinational status (1990-present)
By 1988 Walmart was more profitable than its rivals Kmart and Sears and was the dominant retailer in the Bible Belt; by 1990 it outsold both in terms of revenue and became the largest US retailer in sales revenue.
Prior to the summer of 1990 Walmart had no foothold on the West Coast or Northeast (aside from a single Sam's Club in New Jersey opened in November 1989), but in July and October that year it opened its first stores in California and Pennsylvania respectively, making the corporation present from coast to coast. By the mid-1990s it was far and away the most powerful retailer in the US and spread to Mexico in 1991 and Canada in 1994.[Jacques, Peter. (1970-01-01) Wal-Mart or World-Mart? A Teaching Case Study | Peter Jacques. Academia.edu. Retrieved on 2013-12-06.] It spread to New England, Maryland, Delaware, Hawaii, Alaska and the Pacific Northwest last, Vermont being the last state to get a store in 1996.
In 1998, Walmart introduced the "Neighborhood Market" concept, now known as "Walmart Market", with three stores in Arkansas.
In 2000, H. Lee Scott became President and CEO, and Walmart's sales increased to $165 billion.
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 Walmart.
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 Walmart store opening.[Stone, Kenneth E. (1997). " Impact of the Wal-Mart Phenomenon on Rural Communities". (Published in Proceedings: Increased Understanding of Public Problems and Policies 1997. Chicago, Illinois: Farm Foundation). Iowa State University. Retrieved August 4, 2006.] 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 Walmart 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 locates."]
In the aftermath of Hurricane Katrina 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.
Initiatives (2005–present)
In October 2005, Walmart 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 Walmart's truck fleet by 25 percent over three years and double it within ten, reduce greenhouse gas emissions by 20 percent in seven years, reduce energy use at stores by 30 percent, and cut solid waste from U.S. stores and Sam's Clubs by 25 percent in three years. CEO Lee Scott said that Walmart's goal was to be a "good steward for the environment" and ultimately use only renewable energy sources and produce zero waste.
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.
On September 12, 2007, Walmart 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 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 percent from the 2004 savings estimate of $2,329).
On June 30, 2008, Walmart removed the hyphen from its logo and replaced the star with a symbol that resembles a sunburst or flower. The new logo received mixed reviews from some design critics, who questioned whether the new logo was as bold as competitors, such as the Target bullseye or as instantly recognizable as the former company logo, which was used for 18 years.
On March 20, 2009, Walmart 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 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 percent from the prior year. Income from continuing operations increased 3 percent to $13.3 billion, and earnings per share rose 6 percent to $3.35.[Bailey, Lynn. (April–June 2004). " The Extra Costs Behind "Everyday Low Prices!" The South Carolina Nurse. Retrieved on August 4, 2006.][Arindrajit, Dube; Ken Jacobs. (August 2, 2004). " Hidden Cost of Walmart Jobs". University of California, Berkeley. Retrieved on August 4, 2006. ][Raine, George. (August 3, 2004). " Walmarts Cost State, Study Says". San Francisco Chronicle. Retrieved on November 30, 2006.]
On July 16, 2009, Walmart announced plans to develop a worldwide sustainable product index.
On February 22, 2010, the company confirmed it was acquiring video streaming company Vudu, Inc. for an estimated $100 million.
In January 2011, at the urging of Michelle Obama and her staff, Walmart announced a program to improve the nutritional values of its store brands over the next five years, gradually reducing the amount of salt and sugar, and eliminating trans fat. Walmart also promised to negotiate with suppliers such as Kraft with respect to nutritional issues. Reductions in the prices of whole foods and vegetables were also promised as well as efforts to open stores in low-income areas, "food deserts", where there are no supermarkets.
On April 23, 2011, the company announced that it was testing its new "Walmart To Go" home delivery system where customers will be able to order specific items offered on their website such as groceries, toiletries, and household supplies. The initial test is in San Jose, California, and the company has not said whether it will be rolled out nationwide.
In August 2013, the firm announced it was in talks to acquire a majority stake in the Kenya-based supermarket chain, Naivas.
Operating divisions
Walmart's operations are organized into three divisions: Walmart Stores U.S., Sam's Club, and Walmart International.["." Walmart. 2010. Retrieved October 22, 2010.] 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 and restaurants.
Walmart Stores U.S.
Walmart Stores U.S. is the company's largest division, accounting for $258 billion, or 63.8 percent of total sales for financial year 2010.[ It consists of three retail formats that have become commonplace in the United States: Discount Stores, Supercenters, and . 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 Walmart's online retailer, walmart.com.
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In September 2006, Walmart announced a pilot program to sell 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, Walmart 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.
On February 6, 2007, the company launched a "beta" version of a movie download service, which sold about 3,000 films and television episodes from all major studios and television networks.
From 2008 through 2011, Walmart operated a pilot program in the small grocery store concept called Marketside in the metropolitan Phoenix, Arizona area. They plan to take what they have learned from this concept and incorporate that into their newer Walmart Express stores which they are developing.
Walmart Discount Stores
Walmart discount stores are discount department stores with size varying from to , with an average store covering about .
In 1990, Walmart 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 Walmart stores left and moved into newly built Supercenters. All of the Bud's Discount City stores closed or converted into Walmart Discount Stores by 1997.
, there were 629 Walmart discount stores in the United States. In 2006, the busiest in the world was one in Rapid City, South Dakota.
Walmart Supercenter
Walmart Supercenters are with size varying from , with an average of about .[ These stock everything a Walmart discount store does, and also include a full-service supermarket, including meat and poultry, baked goods, delicatessen, , 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 (newer locations have Woodforest National Bank branches), and fast food outlets. Many often featured McDonald's stores, but starting in 2007, Walmart began replacing most in-store McDonald's with Subway.]
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, such as the first ones located in Garland TX and Bannister TX, which were both reopened as Walmarts.
, there were 3,029 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 York.]
The "Supercenter" portion of the name on these stores has been phased out, simply referring to these stores as "Walmart", since the company introduced the new Walmart logo in 2008. The Supercentre portion of the name is still used on supercentres in Canada.
Walmart Market
Walmart Market is a chain of that average about .[ They are used to fill the gap between discount store and supercenters, offering 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.
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Previously branded as "Wal-Mart Neighborhood Market", the first store opened in 1998, in Bentonville, Arkansas. , there are 199 Walmart Markets.
Supermercado de Walmart
Walmart opened "Supermercado de Walmart" locations to appeal to Hispanic communities in the United States.
Walmart also planned to open "Mas Club" a warehouse retail operation patterned after Sam's Club.
Walmart Express
Walmart Express is a smaller discount store, with a range of services, from simple grocery shopping, to check cashing, and even gasoline service. The concept is focused on small towns that are not able to support a larger store, and in large cities where physical space is at a premium.
Wal-Mart planned to build 15 to 20 Walmart Express stores, focusing on Arkansas, North Carolina and Chicago, by the end of its fiscal year in January 2012.
"This is about access to breadth of assortment", says Walmart's Anthony Hucker, vice president of strategy and business development.
, Walmart Express opened in Richfield, North Carolina, Snow Hill, North Carolina,[ Wal-Mart Unveils Tiny Walmart Express in Arkansas ABC News] Prairie Grove, Arkansas,[http://www.walmart.com/storeLocator/ca_storefinder_results.do?sfsearch_city=prairie grove&sfsearch_state=AR] Gravette, Arkansas
Sam's Club
Sam's Club is a chain of 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.[ under the name "Sam's Wholesale Club".
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Sam's Club 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 old slogan was "We're in Business for Small Business." Their current slogan is "Savings Made Simple" as Sam's Club attempts to attract a more diverse member base. In March 2009, the company announced that it plans to enter the 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.
Sam's Club's sales during 2010 were $47 billion, or 11.5 percent of Walmart's total sales.[ , there are 611 Sam's Clubs in the United States.][ Walmart also operates more than 100 international Sam's Clubs in Brazil, China, Mexico, and Puerto Rico.]
Walmart International
Walmart's international operations currently comprise 4,263 stores and 660,000 workers in 15 countries outside the United States.[." Wal-Mart Stores, Inc. Retrieved June 6, 2010.] In the financial year 2010, Walmart's international division sales were $100 billion, or 24.7 percent of total sales.[
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Walmart has operated in Canada since its acquisition of 122 stores comprising the Woolco division of Woolworth Canada, Inc in 1994. , it operates over 300 locations (including 100 Supercentres) and employs 82,000 Canadians, with a local home office in Mississauga, Ontario.[ "Metro übernimmt Wal-Mart". (in German). ka-news. August 3, 2006] and in 1998 Wal-Mart took over 74 Interspar stores for DEM1.3 billion (€750 million).[ "Schnitte". (in German). Die Zeit.][ "In Deutschland ein Zwerg". (in German). Stern. February 18, 2005.]
The German market at this point was an oligopoly with high competition among the companies which also used a similar low price strategy as Wal-Mart. Because of this, Wal-Mart's low price strategy yielded no competitive advantage. Also Wal-Mart's corporate culture was not viewed positively among employees and customers in Germany, particularly Wal-Mart's "statement of ethics", which restricted relationships between employees and led to a public discussion in the media, resulting in a bad reputation for Wal-Mart among customers.
In July 2006, Wal-Mart announced its withdrawal from Germany due to sustained losses. The stores were sold to the German company Metro during Wal-Mart's fiscal third quarter.
In 2004, Walmart 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. , Wal-Mart operates 64 Super-Bompreço stores, 33 Hyper-Bompreço stores. It also runs 45 Wal-Mart Supercenters, 24 Sam's Club stores, and 101 Todo Dia stores. With the acquisition of Bompreço and Sonae, Walmart was in 2010 the third largest supermarket chain in Brazil, behind Carrefour and Pão de Açúcar.[" Brazil Operations." Wal-Mart Stores, Inc. June 2010. Retrieved June 6, 2010.] Wal-Mart Brasil, the operating company, has its head office in Barueri, São Paulo State, and regional offices in Curitiba, Paraná; Porto Alegre, Rio Grande do Sul; Recife, Pernambuco; and Salvador, Bahia.[" No Brasil." Wal-Mart Brasil. Retrieved November 7, 2011.]
In November 2006, the company announced a joint venture with Bharti Enterprises to open retail stores in India. As foreign corporations were not allowed to directly enter the retail sector in India, Walmart operated through franchises and handled the wholesale end.[Giridharadas A., Rai S. "Wal-Mart to Open Hundreds of Stores in India". The New York Times. November 27, 2006. Retrieved November 27, 2006.] The partnership involves two joint ventures; Bharti manages the front end involving opening of retail outlets, while Walmart takes care of the back end, such as and logistics. Bharti Walmart operates stores in India under the brand name "Best Price Modern Wholesale".[ ]
Sales in 2006 for Walmart's UK subsidiary, Asda (which retains the name it had before acquisition by Walmart), accounted for 42.7 percent of sales of Walmart's international division. In contrast to the 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. , Asda had 523 stores, including 147 from the 2010 Netto acquisition. In addition to small suburban Asda stores, larger stores are branded Asda Walmart Supercentres, as well as Asda Superstores and Asda Living.[ "UK Fact Sheet". Wal-Mart Stores, Inc. August 2011. Retrieved April 23, 2012.][ ASDA Careers: All about ASDA Stores. Retrieved August 7, 2011][" Wal-mart United Kingdom. Wal-Mart Stores, Inc. Retrieved June 8, 2010.]
In addition to its wholly owned international operations, Walmart has joint ventures in China and several majority-owned subsidiaries. Walmart's majority-owned subsidiary in Mexico is Walmex. In Japan, Walmart owns 100 percent of Seiyu as of 2008.[" Wal-Mart Reports Third Quarter Sales and Earnings." Wal-Mart. November 14, 2006. Retrieved November 14, 2006.][" Wal-Mart SEC Form 10-K." U.S. Securities and Exchange Commission. January 31, 2006. Retrieved July 26, 2006.]
In 2008, Walmart named German retailing veteran Stephan Fanderl as the president of Walmart 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 billion per year in food sales alone.
In January 2009, the company acquired a controlling interest in the largest grocer in Chile, Distribución y Servicio D&S SA.
On September 28, 2010, Walmart announced it would buy Massmart Holdings Ltd. of Johannesburg, South Africa in a deal worth over $4 billion, giving the company its first stores in Africa.
In December 2011, Walmart neither confirmed nor denied speculation that it was eyeing opportunities in Pakistan. "We have not made any announcements concerning Pakistan," said Megan Murphy, Walmart's international corporate affairs manager in an e-mail. Walmart does not comment on market entry speculation, she added. Murphy, however, said their priorities are to "concentrate on the markets where we already have operations and look for growth opportunities in markets where customers want to see us and where it makes sense for our long-term growth."
In February 2012, Walmart announced that the company raises its stake to 51 percent in Chinese Online Supermarket Yihaodian to tap rising consumer wealth and help the company offer more product. The stake expansion is subject to Chinese government regulatory approval.
An April 2012 investigative report in The New York Times reported that a former executive of Walmart de Mexico alleged that, in September 2005, Walmart de Mexico had paid bribes via local fixers called to officials throughout Mexico in order to obtain construction permits, information, and other favors. Walmart investigators found credible evidence that Mexican and American laws had been broken. Concerns were raised that Walmart executives in the United States "hushed up" the allegations. Reportedly, bribes were given to rapidly obtain construction permits, which gave Walmart a substantial advantage over its business competitors.
As of December 2012, internal investigations are ongoing into possible violations of the Federal Corrupt Practices Act.
Vudu
In February 2010, the company agreed to buy Vudu, a Silicon Valley start-up whose three-year-old online movie service is being built into an increasing number of televisions and Blu-ray players. Terms of the acquisition were not disclosed, but a person briefed on the deal said the price for the company, which raised $60 million in capital, was over $100 million.
Private label brands
About 40 percent of products sold in Walmart are private label , or products offered by Walmart and produced through contracts with manufacturers. Walmart began offering private label brands in 1991 with the launch of Sam's Choice, a brand of drinks produced by Cott Beverages exclusively for Walmart. Sam's Choice quickly became popular, and by 1993 was the third most popular beverage brand in the United States.
Entertainment
In 2010, the company teamed with Procter & Gamble to produce Secrets of the Mountain and The Jensen Project, two-hour family movies which featured the characters using Walmart and Procter & Gamble branded products. The Jensen Project also featured a preview of a product to be released in several months in Walmart stores.
Corporate affairs
Walmart is headquartered in the Wal-Mart Home Office complex in Bentonville, Arkansas. The company's business model is based on selling a wide variety of general merchandise at "always low prices."[ They refer to their employees as "associates". All Wal-Mart stores in the US and Canada also have designated "greeters" at the store entrance, a practice pioneered by founder Sam Walton and later copied by other retailers. Greeters are trained to help shoppers find what they want and answer their questions.][ ξ2 ] For many years, associates were identified in the store by their signature blue vest, but this was discontinued in June 2007 and replaced with more modern and professional khaki pants and polo shirts. The wardrobe change was part of a larger corporate overhaul for the store in an effort to increase sales and rejuvenate its stock price.
Unlike many other retailers, Wal-Mart does not charge a slotting fee to suppliers for their products to appear in the store.
On September 14, 2006, the company announced that it would phase out its layaway program, citing declining use and increased costs.[Staff Writer. " Wal-Mart Will Phase Out Layaway Program." Wal-Mart. September 14, 2006. Retrieved October 8, 2006.] 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.
Maggie Sans, representing Walmart, sat on the Private Enterprise Board as Secretary of the American Legislative Exchange Council.
Finance and governance
For the fiscal year ending January 31, 2011, Wal-Mart reported a net income of $15.4 billion on $422 billion of revenue with a 24.7 percent gross profit margin. The corporation's international operations accounted for $109.2 billion, or 26.1 percent of total sales.
Wal-Mart is governed by a fifteen-member Board of Directors, which is elected annually by . 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, Jim Breyer, M. Michele Burns, James Cash, Roger Corbett, Douglas Daft, David Glass, Marissa Mayer, Gregory B. Penner, Allen Questrom, Arne M. Sorenson, Jim Walton, Christopher J. Williams, and Linda S. Wolf.[ ξ3 ]
Notable former members of the board include Hillary Clinton (1985–1992)
Competition
In North America, Wal-Mart's primary competition includes like Kmart, Target, ShopKo and Meijer, Canada's The Real Canadian Superstore 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. Some retail analysts see regional grocery store chain WinCo Foods as serious competition for Walmart.
Wal-Mart also had to face fierce competition in some foreign markets. For example, in Germany it had captured just 2 percent of the German food market following its entry into the market in 1997 and remained "a secondary player" behind Aldi with a 19 percent share.[ Wal-Mart continues to do well in the UK, and its Asda subsidiary is the second largest chain after Tesco.]
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.
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.
Customer base
Walmart 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.
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 groupsAfrican-Americans, the affluent, empty-nesters, Hispanics, suburbanites and rural residents."[" Wal-Mart to Drop One-Size-Fits-All Approach." CNBC. 2006. Retrieved April 3, 2007.] 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).[ 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.]
Economic impact
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.[
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One study found Wal-Mart's entry into a new market has a profound impact on its retail competition. When a Wal-Mart opens in a new market, median sales drop 40 percent at similar high-volume stores, 17 percent at supermarkets and 6 percent at drugstores, according to the June 2009 study by researchers at several universities and led by the Tuck School of Business at Dartmouth College.
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.
A June 2006 article published by the libertarian Ludwig von Mises Institute suggested that Wal-Mart has a positive impact on small business.[Kirklin, Paul. (June 28, 2006). " The Ultimate pro-WalMart Article". Ludwig von Mises Institute. Retrieved August 17, 2006.] 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."[Sobel, Russell S.; Andrea M. Dean. " Has Wal-Mart Buried Mom and Pop?: The Impact of Wal-Mart on Self Employment and Small Establishments in the United States." West Virginia University. Retrieved August 4, 2006. ]
The Economic Policy Institute estimates that between 2001 and 2006, Wal-Mart's trade deficit with China alone eliminated nearly 200,000 U.S. jobs.
A 2005 story in The Washington Post reported that "Wal-Mart's discounting on food alone boosts the welfare of American shoppers by at least $50 billion per year."
American newspaper columnist George Will named Wal-Mart "the most prodigious job-creator in the history of the private sector in this galaxy" and that "by lowering consumer prices, Wal-Mart costs about 50 retail jobs among competitors for every 100 jobs Wal-Mart creates". In terms of economic effects, Will states that "Wal-Mart and its effects save shoppers more than $200 billion a year, dwarfing such government programs as food stamps ($28.6 billion) and the earned income tax credit ($34.6 billion)".
A 2001 McKinsey Global Institute study of U.S. labor productivity growth between 1995 and 2000 concluded that "Wal-Mart directly and indirectly caused the bulk of the productivity acceleration" in the retail sector.
Big data analytics
As the largest retailer in the US, Walmart collects and analyzes an enormous amount of data on consumer's shopping habits. The big data sets are mined for use in predictive analytics which allow the company to optimize operations by predicting customer's habits.
In April 2011, Walmart acquired Kosmix to develop software for analyzing real-time data streams. In August 2012, Walmart announced its Polaris search engine.
The amount of data gathered by Walmart has raised privacy concerns.
Employee and labor relations
.]]With close to 2.2 million employees worldwide, Walmart has faced a torrent of lawsuits and issues with regards to its workforce. These issues involve low wages, poor working conditions, inadequate health care, as well as issues involving the company's strong anti-union policies. In November 2013 the National Labor Relations Board announced that it had found that in 13 U.S. states Wal-Mart had pressured employees not to engage in strikes on Black Friday, had illegally disciplined workers who had engaged in strikes.[" Store Wars: When Walmart Comes to Town." PBS. Retrieved on February 24, 2007.] Despite the turnover rate the company still is able to affect unemployment rates. This was found in a study by Oklahoma State University which states, "Walmart is found to have substantially lowered the relative unemployment rates of blacks in those counties where it is present, but to have had only a limited impact on relative incomes after the influences of other socio-economic variables were taken into account."[Keil, Stanley R., Spector, Lee C. The Impact of Walmart on Income and Unemployment Differentials in Alabama. Review of Regional Studies; Winter 2005, Vol. 35 Issue 3, p336-355, 20p.]
Wal-Mart is the largest employer in the United States, employing almost five times as many people as IBM, the second largest employer in the U.S.[ U.S. Largest Employers. Retrieved: 5 August 2013.]
Gender and sexual orientation
In 2007, a gender discrimination lawsuit, Dukes v. Wal-Mart Stores, Inc., was filed against Walmart, alleging that female employees were discriminated against in matters regarding pay and promotions. A class action suit was sought, which would have been the nation's largest in history, covering 1.5 million past and current employees of Wal-Mart.
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 percent of Wal-Mart's hourly paid workforce, but only 33 percent of its management.[ 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 percent of the managerial ranks.][ Others have criticized the lawsuit as without basis in the law and as an abuse of the class action mechanism.]
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 percent (2002) to 65 percent (2006). They were praised for expanding their antidiscrimination policy protecting gay and lesbian employees,
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."
Charity
Founder Sam Walton held the belief that the company's contribution to society was the fact that it operated efficiently, thereby lowering the cost of living for its customers, and therefore in that sense was a "powerful force for good", despite his refusal to contribute cash to philanthropic causes.
In 2008, Forbes ranked Wal-Mart Stores at 6th place when evaluating donations by corporations as a percentage of income.[Matthew Kirdahy. 10/16/2008. In Pictures: Most Generous Corporations (Percent Of Income). Retrieved: 5 August 2013.]
Criticism
Wal-Mart has been subject to criticism by numerous groups and individuals. Among these are , community groups, grassroots organizations, religious organizations, environmental groups and Wal-Mart customers. They have protested against Wal-Mart, the company's policies and business practices, including charges of racial and gender discrimination.[Kabel, Marcus. " Wal-Mart, Critics Slam Each Other on Web." The Washington Post. July 18, 2006. Retrieved on July 31, 2006.][Sellers, Jeff M. (April 22, 2005). " Women Against Wal-Mart." Christianity Today. Retrieved July 31, 2006.][Sellers, Jeff M. (April 22, 2005). " Deliver Us from Wal-Mart?." Christianity Today.. Retrieved on July 31, 2006.] Other areas of criticism include the corporation's foreign product sourcing, treatment of product suppliers, employee compensation and working conditions, environmental practices, the use of public subsidies, and the company's security policies.[Norman, Al (2004). "The Case Against Wal-Mart". Raphel Marketing, p. 7. .] Wal-Mart denies doing anything wrong and maintains that low prices are the result of efficiency.[Copeland, Larry. (March 13, 2006). " Wal-Mart's hired advocate takes flak." USA Today. Retrieved on July 31, 2006.][Rodino Associates. (October 28, 2003). " Final Report on Research for Big Box Retail/Superstore Ordinance." Los Angeles City Council. Retrieved on July 31, 2006.][Smith, Hedrick. " Who Calls the Shots in the Global Economy?" PBS. Retrieved on July 31, 2006.]
Logos
Image:Walmartlogo1.png|1962–1968
File:Walmartlogo2.png|1968–1981
Image:Walmart logo 1980s 1990s.png|1981–1992
Image:Wal-Mart logo.svg|1992–2008
File:New Walmart Logo.svg|2008–present
See also
Further reading
External links
References
