Walmart logo, used since June 30, 2008 |
|
| Type | Public |
|---|---|
| Traded as | NYSE: WMT Dow Jones Industrial Average Component S&P 500 Component |
| Industry | Retailing |
| Founded | 1962 |
| Founder(s) | Sam Walton |
| Headquarters | Bentonville, Arkansas, U.S. |
| Number of locations | 8,970 (2011) |
| Area served | Worldwide |
| Key people | Mike Duke (President & CEO) S. Robson Walton (Chairman) |
| Revenue | US$ 421.849 billion (2011) |
| Operating income | US$ 25.542 billion (2011) |
| Net income | US$ 15.355 billion (2011) |
| Total assets | US$ 180.663 billion (2011) |
| Total equity | US$ 68.542 billion (2011) |
| Owner(s) | Walton family |
| Employees | Approx. 2.1 million (2011) |
| Divisions | Walmart Canada |
| Subsidiaries | Asda, Sam's Club, Seiyu Group, Walmex |
| Website | www.walmartstores.com www.walmart.com |
| References: [1] | |
Wal-Mart Stores, Inc. (NYSE: WMT), branded as Walmart since 2008 and Wal-Mart before then, is an American multinational retailer corporation that runs chains of large discount department stores and warehouse stores. The company is the world's 18th largest public corporation, according to the Forbes Global 2000 list, and the largest public corporation when ranked by revenue. It is also the biggest private employer in the world with over 2 million employees, and is the largest retailer in the world.
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% of its US$258 billion sales in the U.S. from grocery business.[2] It also owns and operates the Sam's Club retail warehouses in North America.
Walmart has 8,500 stores in 15 countries, under 55 different names.[3] The company operates under its own 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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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.[4]
Walton was extremely successful in running the store in Newport, far exceeding expectations.[5] 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.[6]
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 an antique mall. Within five years, the company expanded to 24 stores across Arkansas and reached $12.6 million in sales.[7] In 1968, it opened its first stores outside Arkansas, in Sikeston, Missouri and Claremore, Oklahoma.[8]
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, 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.[8] Wal-Mart opened its first Texas store in Mount Pleasant on November 11, 1975.[9]
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.[8] 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 Walmart 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, Walmart 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 Walmart'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, Walmart had $312.4 billion in sales, more than 6,200 facilities around the world—including 3,800 stores in the United States and 2,800 elsewhere, employing more than 1.6 million "associates" worldwide. Its U.S. presence grew so rapidly that only small pockets of the country remained further than 60 miles (100 km) from the nearest Wal-Mart.[20]
As Walmart grew rapidly into the world's largest corporation, many critics worried about the effect of its stores on local communities, particularly small towns with many "mom and pop" stores. There have been several studies on the economic impact of Walmart on small towns and local businesses, jobs, and taxpayers. In one, Kenneth Stone, a Professor of Economics at Iowa State University, found that some small towns can lose almost half of their retail trade within ten years of a Wal-Mart store 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, 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.[23] An independent study by Steven Horwitz of St. Lawrence University found that Walmart, The 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.[25]
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% 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 Walmart'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, Walmart 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] Walmart 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, 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.[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 Walmart letters, similar to Neighborhood Market by Walmarts, instead of the blue previously used at its supercenters.
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% from the 2004 savings estimate of $2,329).[32]
On June 30, 2008, Walmart unveiled a new company logo, featuring the non-hyphenated name "Walmart" and in place of the star, 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.[33] The new logo made its debut on the company's walmart.com website on July 1, 2008. Walmart's U.S. locations were to update store logos in the fall of 2008, as part of an ongoing evolution of its overall brand.[34] Wal-Mart Canada started to adopt the logo for its stores in early 2009.
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(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.[35]
On July 16, 2009, Walmart announced plans to develop a worldwide sustainable product index.[36]
On February 22, 2010, the company confirming it was acquiring video streaming company Vudu, Inc. for an estimated $100 million.[37]
In January 2011, at the urging of Michelle Obama and her staff, Wal-Mart 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. Wal-Mart 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.[38]
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.[39]
Walmart's operations are organized into three divisions: Walmart Stores U.S., Sam's Club, and Walmart International.[40] 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.[40]
Walmart Stores U.S. is the company's largest division, accounting for $258 billion, or 63.8% of total sales for financial year 2010.[40] It consists of three retail formats that have become commonplace in the United States: Discount Stores, Supercenters, and Walmart 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 Walmart's online retailer, walmart.com.
In September 2006, Walmart announced a 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, 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.[41] While it's little known outside of the drug industry, many of Walmart's low cost generics are imported from India and made by drug makers in that country including Ranbaxy and Cipla.[42]
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.[43] The service was discontinued on December 21, 2007, due to low sales.[44]
Walmart 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).[40] They carry general merchandise and a selection of groceries. 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.[45]
The first Walmart store opened in Rogers, Arkansas in 1962.
Inside the discount store the fast food outlets, usually Subway or McDonald's. 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.[7][46]
As of April 2011[update], there were 706 Walmart discount stores in the United States. In 2006, the busiest in the world was one in Rapid City, South Dakota.[47]
Walmart Supercenters are hypermarkets with size varying from 98,000 to 261,000 square feet (9,104.5 to 24,247.7 m2), with an average of about 197,000 square feet (18,301.9 m2).[40] These stock everything a Walmart 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 (newer locations have Woodforest National Bank branches), and fast food outlets — usually Subway, but sometimes Dunkin' Donuts, McDonald's or Blimpie. Some also sell gasoline distributed by Murphy Oil Corporation (whose Walmart stations are branded as "Murphy USA"), Sunoco, Inc. ("Optima"), or Tesoro Corporation ("Mirastar").[45]
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 April 2011[update], there were 2,913 Wal-Mart Supercenters in the United States.[47] The largest Supercenter in the United States, covering 260,000 square feet (24,154.8 m2) and two floors, is located in Crossgates Commons in Albany, New York.[48]
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 is a chain of grocery stores that average about 42,000 square feet (3,901.9 m2).[40] 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.
The first Walmart Market opened in 1998, in Bentonville, Arkansas. As of April 2011[update], there are 184 Walmart Markets in the United States.[47]
Walmart opened "Supermercado de Walmart" locations to appeal to Hispanic communities in the United States.[49] The first one, a 39,000 square feet (3,600 m2) store in the Spring Branch area of Houston, opened on Wednesday April 29, 2009.[50] The store was a conversion of an existing Walmart.[51][52] Walmart also planned to open "Mas Club," a warehouse retail operation patterned after Sam's Club.[53]
Marketside is a chain of four grocery stores, all in the state of Arizona. The stores opened in October 2008 and are said to be less than half the size of a conventional supermarket.[47] The Marketside branding is also used for some groceries found in Walmart.
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 plans 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.
So far, Walmart Express has opened in Gentry, AK, Prairie Grove, AK, and Chicago, IL.[54][55][56][57]
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.[58] Some locations also sell gasoline.[45] The first Sam's Club opened in 1983 in Midwest City, Oklahoma[58] 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 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 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.[59]
Sam's Club's sales during 2010 were $47 billion, or 11.5% of Walmart's total sales.[40] As of April 2011[update], there were 609 Sam's Clubs in the United States. Walmart also operates more than 100 international Sam's Clubs in Brazil, China, Mexico, and Puerto Rico.[60]
Walmart's international operations currently comprise 4,263 stores and 660,000 workers in 15 countries outside the United States.[61] There are wholly owned operations in Argentina, Brazil, Canada,and the UK. With 2.1 million employees worldwide, the company is the largest private employer in the US and Mexico, and one of the largest in Canada.[62] In the financial year 2010, Walmart's international division sales were $100 billion, or 24.7% of total sales.[40]
Walmart has operated in Canada since its acquisition of 122 stores comprising the Woolco division of Woolworth Canada, Inc in 1994. As of July 2010, it operates over 300 locations (including 100 Supercentres) and employs 82,000 Canadians, with a local home office in Mississauga, Ontario.[63] Walmart Canada's first three Supercentres (spelled as in Canadian English) opened on November 8, 2006, in Hamilton, London, and Aurora, Ontario. The 100th Canadian Supercentre opened on July 10, 2010, in Victoria, BC. In 2010, Walmart Canada Bank was introduced in Canada with the launch of the Walmart Rewards MasterCard.[64]
Sales in 2006 for Walmart's UK subsidiary, Asda (which retains the name it had before acquisition by Walmart), accounted for 42.7% 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. As of 2010, Asda had 345 stores, some of which were former Woolco stores operated by the UK division of FW Woolworth. In addition to small suburban Asda stores, larger stores are branded Asda Walmart Supercentres, as well as Asda Superstores and Asda Living.[65][66]
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% of Seiyu since 2008.[67][68] Additionally, Walmart 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.[69]
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. As of April 2010, 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.[70] 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.[71]
In November 2006, the company 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, Walmart will operate through franchises and handle the wholesale end.[72] The partnership will involve two joint ventures; Bharti will manage the front end involving opening of retail outlets, while Walmart will take care of the back end, such as cold chains and logistics.
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 US$140 billion per year in food sales alone.[73]
In January 2009, the company acquired a controlling interest in the largest grocer in Chile, Distribucion y Servicio D&S SA.[74]
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.[3]
In the mid 1990s Wal-mart tried with a large financial investment to get a foothold in the German retail market. In 1997 Wal-mart took over the supermarket chain Wertkauf with its 21 stores for 750,- million DM (375,- mil €)[75] and in 1998 Wal-mart took over 74 Interspar stores for 1.3 billion DM (750,- Mil €).[76][77] Several reasons lead to Wal-mart’s failure in the German market.
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 lead to a public discussion in the media, resulting in a bad reputation for Wal-mart among customers.[78][79] Also Wal-mart’s "Big Box – Low Price" Model, a price strategy that works well in the U.S., was not successful in Germany.
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.[67][80]. Wal-mart did not disclose its losses from its ill fated German investment, but they were estimated around 3 bil €.[81] On the other hand Wal-mart's competitors in Germany were able to increase their market share.
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.[82] It is the third most popular online movie service, with a market share of 5.3 percent.[83]
About 40% of products sold in Walmart are private label store brands, 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.[84] Other Walmart 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."[85]
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.[86][87] A third movie, A Walk in My Shoes, will air later in 2010 and a fourth is in production.[88] Walmart's director of brand marketing also serves as co-chair of the Association of National Advertisers's Alliance for Family Entertainment.[89]
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."[40] 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.[90] 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.[91]
Unlike many other retailers, Wal-Mart does not charge a slotting fee to suppliers for their products to appear in the store.[92] Instead, it focuses on selling more popular products and provides incentives for store managers to drop unpopular products, as well as asking manufacturers to supply more popular products.[92]
On September 14, 2006, the company announced that it would phase out its layaway program, citing declining use and increased costs.[93] 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.[94]
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% gross profit margin). The corporation's international operations accounted for $109.2 billion, or 26.1%, of total sales.[1] It is the world's 18th largest public corporation, according to the Forbes Global 2000 list, and the largest public corporation when ranked by revenue.[95]
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, Jim 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.[1] Sam Walton died in 1992. After Walton's death, Don Soderquist, Chief Operating Officer and Senior Vice Chairman, became known as the "Keeper of the Culture."[96]
Notable former members of the board include Hillary Clinton (1985–1992)[97] 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.[98] On August 11, 2006, he was sentenced to 27 months of home confinement, five years of probation, and ordered to pay US$411,000 in restitution.[99]
In North America, Wal-Mart's primary competition includes department stores like Kmart, Target, ShopKo and Meijer, Canada's Zellers, Hart 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. 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.[100] In 2004, Wal-Mart responded by testing its own dollar store concept, a subsection of some stores called "Pennies-n-Cents."[101]
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.[102] In July 2006, Wal-Mart announced its withdrawal from Germany. Its stores were sold to German company Metro.[80] Wal-Mart continues to do well in the UK, and its Asda subsidiary is the second largest chain after Tesco.[103]
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.[104]
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.[105]
Each week, about 100 million customers, nearly one-third of the U.S. population, visit Walmart's U.S. stores.[106] 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.[107] 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.[108] A Wal-Mart financial report in 2006 also indicated that Wal-Mart customers are sensitive to higher utility costs and gas prices.[109] A poll indicated that after 2004 US Presidential Election 76% of voters who shopped at Wal-Mart once a week voted for George W. Bush, while only 23% supported senator John Kerry.[110] When measured against other similar retailers in the U.S., frequent Wal-Mart shoppers were rated the most politically conservative.[111]
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."[112] 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).[107] 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.[113]
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] 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 small towns are more affected by "discount mass merchandiser stores" than larger towns and that shop owners who adapt to the ever changing retail market can "co-exist and even thrive in this type of environment."[21]
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% at similar high-volume stores, 17% at supermarkets and 6% at drugstores, according to the June 2009 study by researchers at several universities and led by the Tuck School of Business at Dartmouth College.[114] A Loyola University Chicago study suggested that the 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".[115]
A June 2006 article published by the libertarian Ludwig von Mises Institute suggested that Wal-Mart has a positive impact on small business.[116] 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."[117]
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.[118][119] Alternately, 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.[120] 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.[121]
Studies of Wal-Mart show consumers benefit from lower costs. Another study by Global Insight 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.[122] 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."[123] 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.[124] 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.[125] 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.[125] 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".[126]
Labor unions, Christian organizations,[127][128] and environmental groups[129] 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.[130][131][132]
In 2005, two national campaigns to criticize Wal-Mart were launched: the (United Food and Commercial Workers) launched Wake Up Wal-Mart and The Center for Community and Corporate Ethics launched Wal-Mart Watch.[133][134] 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,[135] as well as several television commercials. The company retained the PR firm Edelman to respond to negative media attention,[136] and started interacting directly with bloggers by sending them news, suggesting topics for postings, and sometimes inviting them to visit its corporate headquarters.[137] Similarly, in 2010, several of Wal-Mart's opponents have hired The Saint Consulting Group to support grass-roots campaigns against Wal-Mart. The most notable of these include grocery chains such as Safeway Inc., SuperValu, and Ahold, concerned that the presence of Wal-Mart will add more competition to their operations.[138]
In June 2006, Walmart 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.[139][140] Although Walmart 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".[141]
In the past, Wal-mart has been accused of locking night-shift workers in at night,[142] paying employees below minimum wage, and exposing employees to health hazards.[140] Wal-Mart's own "Standards for Suppliers" reports document extensive problems of this kind among the company's "directly-sourced" factories.[143] 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.[144] 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).[145] 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.[144]
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".[146] Penn & Teller devoted an episode of Bullshit! to an analysis of Wal-Mart criticism as a social movement. They theorized that despite the noble rhetoric, the real motivation of "Wal-Mart haters" was rooted in human psychology. They suggested that hating Wal-Mart permits a person "to feel better about themselves" for three main reasons: They "don't run a greedy international conglomerate", they aren't Wal-Mart workers, widely considered "low-skilled, minimum wage drones", and they aren't Wal-Mart customers thought of as "toothless, welfare-getting hillbillies".[147] Wal-Mart stores are unionized in every country outside of North America.[148]
Wal-Mart has opposed the Employee Free Choice Act (EFCA), which would make it easier for workers to unionize by removing the employer's ability to demand a secret ballot in union elections, and which would require mandatory arbitration of labor disputes. In mid-2008, the company required store managers and department heads to attend meetings at which opposition to the EFCA was used as a fulcrum for criticism of Democratic 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.[149] 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."[149] 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.[150]
According to a Newsweek article, Wal-Mart, after years of fierce fighting, accepted organized labor in China. Labor unions in China do not negotiate contracts, but rather they are an arm of the state "to secure the social order" and provide funding to the Communist Party.[151]
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.[152] On June 20, 2011, the United States Supreme Court ruled in Wal-Mart's favor, stating that the plaintiffs did not have enough in common to constitute a class.[153] The court ruled unanimously that because of the variability of the plaintiffs' circumstances, the class action could not proceed as presented, and furthermore, in a 5-4 decision that it could not proceed as any kind of class action suit.[154] However, several plaintiffs, including Ms. Dukes, still intend to file individual discrimination lawsuits separately.[155]
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.[156][157] Just 35% of its store managers were women, whereas 57% were at comparable retailers.[157] 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.[157] Others have criticized the lawsuit as without basis in the law and as an abuse of the class action mechanism.[158][159][160] In 2007, Wal-Mart was named by the National Association for Female Executives as one of the top 35 companies for Executive Women.[161]
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,[162] as well as for a new definition of "family" that included same-sex partners.[163][164] 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%).[165]
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."[166]
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