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Encyclopedia > Wal mart
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Wal-Mart Stores, Inc.
Image:walmartlogo.png
Type Public
Slogan Wal-Mart. Always Low Prices. Always.
Founded Rogers, Arkansas, 1962
Location Bentonville, Arkansas
Key people Sam Walton 1918-1992, Founder
H. Lee Scott, CEO
S. Robson Walton, Chairman
Employees 1.4 million
Products Wal-Mart Discount Stores
Wal-Mart Supercenter
Sam's Club
Neighborhood Markets
Web site www.walmartstores.com


Wal-Mart Stores, Inc. (NYSE: WMT (http://www.nyse.com/about/listed/lcddata.html?ticker=WMT)) is the world's largest retailer and the largest company in the world based on revenue. Wal-Mart was founded by Sam Walton in 1962. In the fiscal year ending January 31, 2004, Wal-Mart had $256.3 billion in sales and net income of $8.9 billion (a 3.5% profit margin). Forbes magazine points out that if Wal-Mart were its own economy, it would rank 30th in the world, with a GDP (consumption + investment + exports - imports) right behind Saudi Arabia's GDP. It's the largest private employer in the United States. It holds a 8.9% retail store market share; in other words, $8.90 out of every $100 spent in American stores is spent at Wal-Mart.

Contents

History

Sam Walton, the founder of Wal-Mart, opened the first Wal-Mart store in Rogers, Arkansas in 1962.


Business

Wal-Mart operates discount retail department stores selling a broad range of products such as clothing, consumer electronics, drugs, sporting goods, toys, hardware, CDs and books. It typically stocks basic rather than premium products. Wal-Mart also operates "Supercenters" which include a full line of grocery items. Wal-Mart also operates Sam's Club; these are "warehouse clubs" which, like Costco, require membership dues and sell merchandise in wholesale quantities at wholesale prices.


As of October 2004, US stores and clubs along with Wal-Mart's Home Office in Bentonville, Arkansas employed over 1.2 million people. Apart from the stores it operated 110 Distribution Centers/Transportation Offices. Internationally Wal-Mart employs over 330,000 people (excluding Japan) for a company-wide total of 1.4 million employees. Wal-Mart is also the largest real estate company in the United States, with an entire division devoted entirely to building new stores, selling old stores, and developing shopping centers around its new and existing stores. In addition to its wholly-owned international operations, Wal-Mart owns a 37.8% stake in The Seiyu Co., Ltd. in Japan, with an option to purchase over 60% in the future.


In the past Wal-Mart has operated dot Discount Drugs, Bud's Discount City, Hypermart*USA, and a home improvement store. In 1990 Wal-Mart acquired the McLane Company, a foodservice distributor. In 2003 McLane Company was sold to Berkshire Hathaway.


Wal-Mart stock is publicly traded at the New York Stock Exchange under the symbol WMT. As of March 31, 2004, there were 333,604 shareholders of Wal-Mart's common stock.


Operations

Main article: List of assets owned by Wal-Mart Stores, Inc.



Wal-Mart operates 5 major retail formats under 3 retail divisions:

  • Wal-Mart Stores USA
    Wal-Mart Retail Formats
    • Wal-Mart Discount Stores - Average 98,000 square feet (9,100 mē) and include a selection of general merchandise, including apparel, electronics, health and beauty aids, toys, sporting goods, and household products.
    • Wal-Mart Supercenter - Average 187,000 square feet (17,400 mē) and combine the product selection of a traditional grocery store with the products of a standard discount store.
    • Wal-Mart Neighborhood Market - Average 43,000 square feet (4,000 mē) and include grocery, pharmacy, and limited general merchandise products.
    • Walmart.com - Online shopping site that offers merchandise different from that in stores. The walmart.com site also offers digital music downloads, online photo processing, and DVD rental by mail.
  • SAM'S CLUB - a membership-only wholesale warehouse club focused mainly on serving small business owners.
  • Wal-Mart International - operates various formats internationally, including SAM'S, Discount Stores, Supercenters, Supermarkets, and restaurants.
Enlarge
Exterior of a typical Wal-Mart store.

Current store counts (as of January 2005) and revenue (in US Dollars for Fiscal Year Ending January 31, 2004):

Competitors

Wal-Mart's chief competitors as discount retailers include the Kmart Corporation, the Target Corporation, and Meijer, an up and coming regional discount store that could threaten Wal-Mart in the years to come.


Employees

Wal-Mart refers to its employees as "associates", and encourages managers to think of themselves as "servant leaders". Each shift at every store, club, and distribution center starts with a store-wide meeting where managers discuss with hourly associates sales figures, company news, and goals for the day.


Each store has an employee at each entrance, known as a "People Greeter", whose primary responsibility is to welcome people into the store and assist with general information questions about the store.


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 any 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. Sam Walton's family's holdings in Wal-Mart if combined would comprise the nation's largest fortune; at $100 billion combined they are significantly ahead of Bill Gates.


Different explanations have been offered for this success:

  • Sam Walton's vision was simple: he sought to bring great value through aggressive discounting to customers, he sought to ensure great service by ensuring that staff or 'associates' were empowered to make decisions, and he thought strategically about store location. Using his own small plane, he flew over much of middle America looking for towns which were of sufficient size to host "one and a half Wal-Marts."
  • 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] (http://www.epcglobalinc.org/about/about_epcglobal.html) to use RFID-based Electronic Product Codes to lower the costs of supply chain management. As of June 2004, they have announced plans [2] (http://www.walmartstores.com/wmstore/wmstores/Mainnews.jsp?pagetype=news&template=NewsArticle.jsp&categoryOID=-8300&contentOID=13926&catID=null&prevPage=NewsShelf.jsp&year=2004) to require the use of the technology among their 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] (http://www.bea.gov/bea/newsrel/tradannnewsrelease.htm)). Mainland Chinese media place Wal-Mart as their 8th largest trading partner in front of Russia and the UK on the top-10 list.
  • Heavy handed control of store payroll, sometimes using such tactics as understaffing, cutting hours, and requesting that workers clock in late on the last day of the work week to "clear" any unauthorized overtime. In addition, workers eligible for benefits such as health insurance must pay more than 35% of the premiums if they elect to take them.

Criticism of Wal-Mart

Main article: Criticism of Wal-Mart


Wal-Mart has been accused of displacing locally-owned small businesses, mistreating its employees, and selling sweatshop-made products. Wal-Mart has also been accused of using "strong-arm" tactics to pressure companies to reduce prices and extracting subsidies from taxpayers. Wal-Mart has come under strong fire by liberal groups for enforcing traditional values through product restrictions and censorship. Wal-Mart is also often accused of not providing employees with affordable access to health care. Critics charge that in response to these accusations, Wal-Mart found several employees and family members of employees with health problems, and sent them to the Mayo Clinic in order to generate positive publicity.


Wal-Mart is the most often sued corporate entity in the United States and has become a symbol of globalization to anti-globalists.


Wal-Mart has a strong anti-labor union policy, and allegations of firing workers sympathetic to labor organization have been made. The company shows anti-union videos to employees in an effort to dissuade them from unionizing. Wal-Mart has recently allowed unionization in their stores in China, where unionization is mandatory, but provides little power for workers as the unions are controlled by the state.


Dates

Enlarge
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.
Enlarge
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 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 In fiscal year ending 2004, Wal-Mart spent over $137.5 billon with suppliers in the U.S., totaling over 53% of total sales.
  • 2004 Wal-Mart builds an inventory of $18 billion worth of Chinese products, equaling 7% of total sales.
  • 2004 Wal-Mart opens a US Global Procurement office to export US-made goods to Wal-Mart stores internationally

See also

Wal-Mart

  • List of assets owned by Wal-Mart Stores, Inc.
  • Code Adam, the Wal-Mart child-safety program
  • Criticism of Wal-Mart
  • Sam's Club

Other

External links

Wal-Mart's websites

Articles

  • Huge index of articles, reports and websites on Wal-Mart (http://reclaimdemocracy.org/walmart/) The original articles published here are weighted against Wal-Mart, but the stories linked cover much of the best reporting and studies from multiple perpectives.
  • "A distorted lens on Wal-Mart" (http://www.washtimes.com/commentary/20041121-105707-5851r.htm), Bruce Bartlett, Washington Times, November 22, 2004
  • UC Berkeley report on the community impact of Wal-Mart's lower wages (http://laborcenter.berkeley.edu/lowwage/walmart.pdf)(pdf)
  • Attacking Wal-Mart's Supply Chain (http://montages.blogspot.com/2004/12/attacking-wal-marts-supply-chain.html)
  • Wal-Mart's China inventory to hit US$18b this year (http://www.chinadaily.com.cn/english/doc/2004-11/29/content_395728.htm) China Daily, November 29, 2004.

Documentaries

  • Store Wars (http://www.pbs.org/itvs/storewars/index.html) is a PBS special taking a close look at one community's battle over Wal-Mart.
  • Frontline: Is Walmart Good for America? (http://www.pbs.org/wgbh/pages/frontline/shows/walmart/) (PBS Frontline documentary on the impact of Walmart in the US and China)

Critics

  • Wal-Mart Watch (http://www.walmartwatch.com/)
  • Sprawl Busters (http://www.sprawl-busters.com/), from an activist who helped prevent Wal-Mart from locating in Greenfield, Massachusetts
  • This page (http://amiba.net/recommended.html#studies) from The American Independent Business Alliance indexes numerous studies on Wal-Mart's economic and social impacts.

Data

Other resources

  • Ortega, Bob. In Sam We Trust. ISBN 0812963776. An exhaustive biography of Sam Walton by a Wall Street Journal writer.

 
 

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