History of walmart


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History of walmart

  1. 1. HistorySam Waltons original Waltons Five and Dime store in Bentonville, Arkansas, now serving as the Walmart Visitor CenterMain article: History of WalmartSam 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, Iowawhere he remained for 18 months. In 1945, he met Butler Brothers, a regional retailer thatowned a chain of variety stores called Ben Franklin and that offered him one in Newport, Arkansas.[10]Walton was extremely successful in running the store in Newport, far exceeding expectations. [11] However, when the leasecame up for renewal, Walton could neither come to agreement on the existing stores lease renewal nor find a new location inNewport. Instead, he opened a new Ben Franklin franchise in Bentonville, Arkansas, but called it "Waltons Five and Dime."There, he achieved higher sales volume by marking up slightly less than most competitors.[12]On July 2, 1962, Walton opened the first Walmart Discount City store located at 719 Walnut Ave. in Rogers, Arkansas. Thebuilding is now occupied by a hardware store and an antique mall. Within five years, the company expanded to 24 storesacross Arkansas and reached $12.6 million in sales.[13] In 1968, it opened its first stores outside Arkansas, in Sikeston,Missouri and Claremore, Oklahoma.[14]Incorporation and growthWalmarts first logo used from 1962-1968. No stores have the logo nowadays.Walmart logo used from 1968-1981. There is only one store in existence still with this logo.[citation needed]Walmart logo used from 1981-1992 This was also Walmart Canadas first logo used from 1994-2001. Very few locations still use this logo.Walmarts former logo (1992-2008 in the US, 2001-2009 in Canada, and 1992-2009 in Mexico), though it is still seen on many American locations, though amajority of Canadian locations have this logo instead of the 1994-2001 logo with a hyphen.
  2. 2. The company was incorporated as Wal-Mart Stores, Inc. on October 31, 1969. In 1970, it opened its home office and firstdistribution center in Bentonville, Arkansas. It had 38 stores operating with 1,500 employees and sales of $44.2 million. Itbegan 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 movedinto Texas in 1975, there were 125 stores with 7,500 employees and total sales of $340.3 million.[14] Walmart opened its firstTexas store in Mount Pleasant on November 11, 1975.[15]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.[14] This year also marked the completion of the companys satellite network, a $24 millioninvestment linking all operating units of the company with its Bentonville office via two-way voice and data transmission andone-way video communication. At the time, it was the largest private satellite network, allowing the corporate office to trackinventory and sales and to instantly communicate to stores.[16] In 1988, Sam Walton stepped down as CEO and was replacedby David Glass.[17] Walton remained as Chairman of the Board, and the company also rearranged other people in seniorpositions.Inside a Walmart Supercenter in West Plains, MissouriIn 1988, the first Walmart Supercenter opened in Washington, Missouri.[18] Thanks to its superstores, it surpassed Toys "R"Us in toy sales in the late 1990s.[19] The company also opened overseas stores, entering South America in 1995 with stores inArgentina and Brazil; and Europe in 1999, buyingAsda in the UK for $10 billion.[20]In 1998, Wal-Mart introduced the "Neighborhood Market" concept with three stores in Arkansas.[21] By 2005, estimates indicatethat the company controlled about 20% of the retail grocery and consumables business. [22]In 2000, H. Lee Scott became President and CEO, and Walmarts sales increased to $165 billion.[23] In 2002, it was listed forthe first time as Americas 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 and 2009.[24][25][26][27][28][29]In 2005, Walmart had $312.4 billion in sales, more than 6,200 facilities around the world—including 3,800 stores in the UnitedStates and 2,800 elsewhere, employing more than 1.6 million "associates" worldwide. Its U.S. presence grew so rapidly thatonly small pockets of the country remained further than 60 miles (100 km) from the nearest Walmart.[30]As Walmart grew rapidly into the worlds largest corporation, many critics worried about the effect of its stores on localcommunities, particularly small towns with many "mom and pop" stores. There have been several studies on the economicimpact of Walmart on small towns and local businesses, jobs, and taxpayers. In one, Kenneth Stone, a Professor of Economicsat Iowa State University, found that some small towns can lose almost half of their retail trade within ten years of a Walmartstore opening.[31] 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. [31] A later study incollaboration with Mississippi State University showed that there are "both positive and negative impacts on existing stores inthe area where the new supercenter locates."[32]In the aftermath of Hurricane Katrina in September 2005, Walmart was able to use its logistical efficiency in organizing a rapidresponse to the disaster, donating $20 million in cash, 1,500 truckloads of free merchandise, food for 100,000 meals, as well asthe promise of a job for every one of its displaced workers.[33] An independent study by Steven Horwitz of St. LawrenceUniversity found that Walmart, The Home Depot and Lowes 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 beganits response.[34] While the company was overall lauded for its quick response – amidst the criticisms of the Federal EmergencyManagement Agency – several critics were nonetheless quick to point out that there still remain issues with the companyslabor relations.[35]
  3. 3. InitiativesIn October 2005, Walmart announced it would implement several environmental measures to increase energy efficiency. Theprimary goals included spending $500 million a year to increase fuel efficiency in Walmarts truck fleet by 25% over three yearsand double it within ten, reduce greenhouse gas emissions by 20% in seven years, reduce energy use at stores by 30%, andcut solid waste from U.S. stores and Sams Clubs by 25% in three years. CEO Lee Scott said that Walmarts goal was to be a"good steward for the environment" and ultimately use only renewable energysources and produce zero waste.[36] The companyalso designed three new experimental stores in McKinney, Texas, Aurora, Colorado, and Las Vegas, Nevada. with windturbines, photovoltaicsolar panels, biofuel-capable boilers, water-cooled refrigerators, and xeriscape gardens.[37] Despite muchcriticism of its environmental record, Walmart took a few steps in what is viewed as a positive direction, which includedbecoming the biggest seller of organic milk and the biggest buyer of organic cotton in the world, as well as reducing packagingand energy costs.[38] Walmart also spent nearly a year working with outside consultants to discover the companys totalenvironmental impact and find where they could improve. They discovered, for example, that by eliminating excess packagingon 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 millionbarrels of oil.[38] Walmart has also recently created its own electric company in Texas, Texas Retail Energy, and plans to supplyits stores with cheap power purchased at wholesale prices. Through this new venture, the company expects to save $15 millionannually and also lays the groundwork and infrastructure to sell electricity to Texas consumers in the future. [39]In March 2006, Walmart sought to appeal to a more affluent demographic. The company launched a new Supercenter conceptin Plano, Texas, intended to compete against stores seen as more upscale and appealing, such as Target.[40][41] The new storehas 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 toNeighborhood 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 "AlwaysLow Prices, Always" slogan, which it had used for the previous 19 years. Global Insight, which conducted the research thatsupported the ads, found that Walmarts price level reduction resulted in savings for consumers of $287 billion in 2006, whichequated to $957 per person or $2,500 per household (up 7.3% from the 2004 savings estimate of $2,329).[42]On June 30, 2008, Walmart unveiled a new company logo, featuring the non-hyphenated name "Walmart" and in place of thestar, a symbol that resembles a sunburst or flower. The new logo received mixed reviews from some design critics, whoquestioned whether the new logo was as bold as competitors, such as the Target bullseye or as instantly recognizable as theformer company logo, which was used for 18 years.[43] The new logo made its debut on the companys walmart.com website onJuly 1, 2008. Walmarts U.S. locations were to update store logos in the fall of 2008, as part of an ongoing evolution of itsoverall brand.[44] Walmart Canada started to adopt the logo for its stores in early 2009. [citation needed]On March 20, 2009, Walmart announced that it is paying a combined $933.6 million in bonuses to every full and part timehourly worker of the company. An additional $788.8 million in profit sharing, 401(k) contributions, and hundreds of millions ofdollars in merchandise discounts and contributions to the employees stock purchase plan is also included in this plan. Whilethe economy at large was in an ongoing recession, the largest retailer in the U.S. reported solid financial figures for the mostrecent fiscal year (ending January 31, 2009), with $401.2 billion in net sales, a gain of 7.2% from the prior year. Income fromcontinuing operations increased 3% to $13.3 billion, and earnings per share rose 6% to $3.35.[45]On July 16, 2009, Walmart announced plans to develop a worldwide sustainable product index. [46]On February 22, 2010, the company confirmed it was acquiring video streaming company Vudu, Inc. for an estimated$100 million.[47]In January 2011, at the urging of Michelle Obama and her staff, Walmart announced a program to improve the nutritionalvalues 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 ofwhole foods and vegetables were also promised as well as efforts to open stores in low-income areas, "food deserts", wherethere are no supermarkets.[48]On April 23, 2011, the company announced that it was testing its new "Walmart To Go" home delivery system where customerswill be able to order specific items offered on their website such as groceries, toiletries, and household supplies. The initial testis in San Jose, California, and the company has not said whether it will be rolled out nationwide.[49]Operating divisionsSee also: List of assets owned by WalmartWalmarts operations are organized into three divisions: Walmart Stores U.S., Sams Club, and Walmart International.[7] Thecompany 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.[7]
  4. 4. A panoramic photo of a remodeled Walmart Supercenter in Laurel, Maryland.Walmart Stores U.S.Map of Walmart stores in the U.S., as of August 2010.Walmart Stores U.S. is the companys largest division, accounting for $258 billion, or 63.8% of total sales for financial year2010.[7] 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 nowshifted towards supercenters, which include more grocery items. This division also includes Walmarts onlineretailer, walmart.com.In September 2006, Walmart announced a pilot program to sell generic drugs at just $4 per prescription. The pilot program waslaunched at stores in the Tampa, Florida area, and expanded to all stores in Florida by January 2007. While the average priceof generics is $29 per prescription, compared to $102 for name-brand drugs, Walmart maintains that it is not selling at a loss, orproviding as an act of charity – instead, they are using the same mechanisms of mass distribution that it uses to bring lowerprices to other products.[50] While its little known outside of the drug industry, many of Walmarts low cost generics are importedfrom India and made by drug makers in the country including drug majors Ranbaxy andCipla.[51]On February 6, 2007, the company launched a "beta" version of a movie download service, which sold about 3,000 films andtelevision episodes from all major studios and television networks. [52]The service was discontinued on December 21, 2007, dueto low sales.[53]Walmart Discount StoresA typical Walmart discount department store in Laredo, TexasWalmart discount stores are discount department stores with size varying from 51,000 square feet (4,738.1 m2) to 224,000square feet (20,810.3 m2), with an average store covering about 102,000 square feet (9,476.1 m2).[7] They carry generalmerchandise and a selection of groceries. Many of these stores also have a garden center, a pharmacy, Tire & Lube Express,
  5. 5. optical center, one-hour photo processing lab, portrait studio, a bank branch, a cell phone store and a fast food outlet. Somealso have gasoline stations.[54]The first Walmart store opened in Rogers, Arkansas in 1962.In 1990, Walmart opened its first Buds Discount City location in Bentonville. Buds operated as a closeout store, much like BigLots. Many locations were opened to fulfill leases in shopping centers as Walmart stores left and moved into newly builtSupercenters. All of the Buds Discount City stores closed or converted into Walmart Discount Stores by 1997.[13][55]As of March 2012, there were 629 Walmart discount stores in the United States. In 2006, the busiest in the world was onein Rapid City, South Dakota.[56]Walmart SupercenterA picture of a remodeled Wal-Mart Supercenter in Miami, Florida.Walmart Supercenters are hypermarkets with size varying from 98,000 to 261,000 square feet (9,104.5 to 24,247.7 m 2), with anaverage of about 197,000 square feet (18,301.9 m2).[7] These stock everything a Walmart discount store does, and also includea full-service supermarket, including meatand poultry, baked goods, delicatessen, frozen foods, dairy products, gardenproduce, 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 cellularphone stores, hair and nail salons, video rental stores, local bank branches (newer locations have Woodforest NationalBank branches), and fast food outlets — usually Subway, but sometimes Dunkin Donuts, McDonalds or Blimpie. Some alsosell gasoline distributed by Murphy Oil Corporation (whose Walmart stations are branded as "Murphy USA"), Sunoco,Inc. ("Optima"), or Tesoro Corporation ("Mirastar").[54]The first Supercenter opened in 1988, in Washington, Missouri. A similar concept, Hypermart USA, opened in Garland, Texas ayear earlier. All of the Hypermart USA stores were later closed or converted into Supercenters.As of March 2012, there were 3,029 Wal-Mart Supercenters in the United States.[56] The largest Supercenter in the UnitedStates, covering 260,000 square feet (24,154.8 m 2) and two floors, is located in Crossgates Commons in Albany, New York.[57]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 supercentresin Canada.Walmart Neighborhood MarketWalmart Market is a chain of grocery stores that average about 42,000 square feet (3,901.9 m2).[7] They are used to fill the gapbetween 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 Neighborhood Market opened in 1998, in Bentonville, Arkansas. As of May 2012, there are 199 WalmartNeighborhood Markets.[56][58]Supermercado de Walmart
  6. 6. Supermercado de Walmart in Spring Branch, HoustonWalmart opened "Supermercado de Walmart" locations to appeal to Hispanic communities in the United States. [59] The firstone, a 39,000 square feet (3,600 m2) store in the Spring Branch area of Houston, opened on April 29, 2009.[60] The store was aconversion of an existing Walmart.[61][62] The opening was Wal-Marts first entry in the Hispanic grocery market in Houston.[63] In2009 another Supermercado de Walmart opened in Phoenix, Arizona.[64]Walmart also planned to open "Mas Club," a warehouse retail operation patterned after Sams Club.[65]MarketsideMarketside is a chain of four grocery stores, all in the state of Arizona. The stores opened in October 2008 and are said to beless than half the size of a conventional supermarket.[56] The Marketside branding is also used for some groceries found inWalmart.Walmart ExpressWalmart Express is a smaller discount store, with a range of services, from simple grocery shopping, to check cashing, andeven gasoline service. The concept is focused on small towns that are not able to support a larger store, and in large citieswhere 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 itsfiscal year in January 2012."This is about access to breadth of assortment", says Walmarts Anthony Hucker, vice president of strategy and businessdevelopment.As of December 2011, Walmart Express opened in Gentry, Arkansas,[66] Prairie Grove, Arkansas,[67] Gravette,Arkansas[68] and Chicago, Illinois.[69][70]Sams ClubMain article: Sams ClubA typical Sams Club store in Maplewood, MissouriSams Club is a chain of warehouse clubs which sell groceries and general merchandise, often in large quantities. Sams Clubstores are "membership" stores and most customers buy annual memberships. However, non-members can make purchases
  7. 7. either by buying a one-day membership or paying a surcharge based on the price of the purchase.[71] Some locations alsosell gasoline.[54] The first Sams Club opened in 1983 in Midwest City, Oklahoma[71] under the name "Sams Wholesale Club".Sams Club has found a niche market in recent years as a supplier to small businesses. All Sams Club stores are open earlyhours exclusively for business members and their old slogan was "Were in Business for Small Business." Theircurrent[when?] slogan is "Savings Made Simple" as Sams Club attempts to attract a more diverse member base. In March 2009,the company announced that it plans to enter the electronic medical recordsbusiness by offering a software package tophysicians in small practices for $25,000. Wal-Mart is partnering with Dell and eClinicalWorks.com in this new venture.[72]Sams Clubs sales during 2010 were $47 billion, or 11.5% of Walmarts total sales.[7] As of March 2012, there are 611 SamsClubs in the United States.[8] Walmart also operates more than 100 international Sams Clubs in Brazil, China, Mexico,and Puerto Rico.[8]Walmart InternationalWalmarts international operations currently comprise 4,263 stores and 660,000 workers in 15 countries outside the UnitedStates.[73] 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.[2] In the financial year2010, Walmarts international division sales were $100 billion, or 24.7% of total sales.[7]A pomelo orchard near Xiazhai Town,Pinghe County, Fujian, with a sign that says that this is where Walmart China (沃尔玛) sources its pomelosWalmart 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, witha local home office in Mississauga, Ontario.[74]Walmart Canadas 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 RewardsMasterCard.[75]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 DEM750 million (€375 million)[76] and in 1998 Wal-marttook over 74 Interspar stores for DEM1.3 billion (€750 million).[77][78] Several reasons led to Wal-marts failure in the Germanmarket.The German market at this point was an oligopoly with high competition among the companies which also used a similar lowprice strategy as Wal-mart. Because of this, Wal-marts low price strategy yielded no competitive advantage. Also Wal-marts corporate culture was not viewed positively among employees and customers in Germany, particularly Wal-marts"statement of ethics", which restricted relationships between employees and led to a public discussion in the media, resulting ina bad reputation for Wal-mart among customers.[79][80] Also Wal-marts "Big Box – Low Price" Model, a price strategy that workswell 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 Germancompany Metro during Wal-Marts fiscal third quarter.[81][82] Wal-mart did not disclose its losses from its ill fated Germaninvestment, but they were estimated around €3 billion.[83] At the same time, Wal-marts competitors in Germany were able toincrease their market share.
  8. 8. Bompreço in Natal, Brazil.In 2004, Walmart bought the 116 stores in the Bompreço supermarket chain in northeastern Brazil. In late 2005, it took controlof the Brazilian operations of Sonae Distribution Group through its new subsidiary, WMS Supermercados do Brasil, thusacquiring control of the Nacional and Mercadorama supermarket chains, the leaders in the Rio Grande doSul and Paraná states, respectively. None of these was rebranded. As of April 2010, Wal-Mart operates 64 Super-Bompreçostores, 33 Hyper-Bompreço stores. It also runs 45 Wal-Mart Supercenters, 24 Sams 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 Carrefourand Pão de Açúcar.[84] 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.[85]In November 2006, the company announced a joint venture with Bharti Enterprises to open retail stores in India. As foreigncorporations are not allowed to directly enter the retail sector in India, Walmart will operate through franchises and handlethe wholesale end.[86] The partnership will involve two joint ventures; Bharti will manage the front end involving opening of retailoutlets, while Walmart will take care of the back end, such as cold chains and logistics. Bharti Walmart opened its first Indianstore in May 2009 in Amritsar.Walmarts UK subsidiary, AsdaSales in 2006 for Walmarts UK subsidiary, Asda (which retains the name it had before acquisition by Walmart), accounted for42.7% of sales of Walmarts international division. In contrast to the US operations, Asda was originally and still remainsprimarily a grocery chain, but with a stronger focus on non-food items than most UK supermarket chains other than Tesco. Asof 2010, Asda had 345 stores, some of which were former Woolco stores operated by the UK division of FW Woolworth. Inaddition to small suburban Asda stores, larger stores are branded Asda Walmart Supercentres, as well as Asda Superstoresand Asda Living.[87][88][3]In addition to its wholly owned international operations, Walmart has joint ventures in China and several majority-ownedsubsidiaries. Walmarts majority-owned subsidiary in Mexico is Walmex. In Japan, Walmart owns 100% of Seiyu since2008.[81][89] Additionally, Walmart owns 51% of the Central American Retail Holding Company (CARHCO), consisting of morethan 360 supermarkets and other stores in Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica. [90]In 2008, Walmart named German retailing veteran Stephan Fanderl as the president of Walmart Emerging Markets-East in aneffort to, "explore retail business opportunities in Russia and neighboring markets." The market is estimated to be worth morethan US$140 billion per year in food sales alone.[91]In January 2009, the company acquired a controlling interest in the largest grocer in Chile, Distribucion y Servicio D&S SA.[92]On September 28, 2010, Walmart announced it would buy Massmart Holdings Ltd. of Johannesburg, South Africa in a dealworth over $4 billion, giving the company its first stores in Africa.[9]In February 2012, Walmart announced that the company raises its stake to 51 percent in Chinese Online SupermarketYihaodian to tap rising consumer wealth and help the company offer more product. The stake expansion is subject to Chinesegovernment regulatory approval.[93]Wal-Mart is planning to open its stores in Ahemdabad, Gujrat.[94]VuduIn February 2010, the company agreed to buy Vudu, a Silicon Valley start-up whose three-year-old online movie service isbeing built into an increasing number of televisions and Blu-ray players. Terms of the acquisition were not disclosed, but a
  9. 9. person briefed on the deal said the price for the company, which raised $60 million in capital, was over $100 million.[95] It is thethird most popular online movie service, with a market share of 5.3 percent.[96]Private label brandsMain article: List of Wal-Mart brandsAbout 40% of products sold in Walmart are private label store brands, or products offered by Walmart and produced throughcontracts with manufacturers. Walmart began offering private label brands in 1991 with the launch of Sams Choice, a brand ofdrinks produced by Cott Beverages exclusively for Walmart. Sams Choice quickly became popular, and by 1993 was the thirdmost popular beverage brand in the United States.[97] Other Walmart brands include Great Value and Equate in the US andCanada, and Smart Price in Britain. A 2006 study talked of "the magnitude of mind-share Walmart appears to hold in shoppersminds when it comes to awareness of private label brands and retailers."[98]EntertainmentIn 2010, the company teamed with Procter & Gamble to produce Secrets of the Mountain and The Jensen Project, two-hourfamily movies which featured the characters using Walmart and Procter & Gamble branded products. The Jensen Project alsofeatured a preview of a product to be released in several months in Walmart stores.[99][100] A third movie, A Walk in My Shoes,will air later in 2010 and a fourth is in production.[101] Walmarts director of brand marketing also serves as co-chair ofthe Association of National Advertiserss Alliance for Family Entertainment.[102]Corporate affairsWalmart Home Office in Bentonville, ArkansasWalmart is headquartered in the Wal-Mart Home Office complex in Bentonville, Arkansas. The companys business model isbased on selling a wide variety of general merchandise at "always low prices."[7] 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 byfounder Sam Walton and later copied by other retailers. Greeters are trained to help shoppers find what they want and answertheir questions.[103] For many years, associates were identified in the store by their signature blue vest, but this wasdiscontinued in June 2007 and replaced with more modern and professional khaki pants and polo shirts. The wardrobe changewas part of a larger corporate overhaul for the store in an effort to increase sales and rejuvenate its stock price.[104]Unlike many other retailers, Wal-Mart does not charge a slotting fee to suppliers for their products to appear in thestore.[105] Instead, it focuses on selling more popular products and provides incentives for store managers to drop unpopularproducts, as well as asking manufacturers to supply more popular products. [105]On September 14, 2006, the company announced that it would phase out its layaway program, citing declining use andincreased costs.[106] 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-interestfinancing. The layaway location in most stores is now used for Wal-Marts Site-To-Store program, which was introduced inMarch 2007. This enables walmart.com customers to buy goods online with a free shipping option, and have goods shipped tothe nearest store for pickup.[107]Maggie Sans, representing Walmart, sat on the Private Enterprise Board as Secretary of the American Legislative ExchangeCouncil.[108] On May 31, 2012, Walmart announced they were suspending their membership in the organization. Sans said:"Previously, we expressed our concerns about ALECs decision to weigh in on issues that stray from its core mission toadvance the Jeffersonian principles of free markets. We feel that the divide between these activities and our purpose as abusiness has become too wide. To that end, we are suspending our membership in ALEC."[109]Finance and governance
  10. 10. For the fiscal year ending January 31, 2011, Wal-Mart reported a net income of $15.4 billion on $422 billion of revenue with a24.7% gross profit margin). The corporations international operations accounted for $109.2 billion, or 26.1%, of total sales.[1] Itis the worlds 18th largest public corporation, according to the Forbes Global 2000 list, and the largest public corporation whenranked by revenue.[110]Wal-Mart is governed by a fifteen-member Board of Directors, which is elected annually by shareholders. Robson Walton, theeldest 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 boardinclude 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 in1992. After Waltons death, Don Soderquist, Chief Operating Officer and Senior Vice Chairman, became known as the "Keeperof the Culture."[111]Notable former members of the board include Hillary Clinton (1985–1992)[112] and Tom Coughlin (2003–2004), the latter havingserved as Vice Chairman. Clinton left the board before the 1992 U.S. Presidential Election, and Coughlin left in December 2005after pleading guilty to wire fraud and tax evasion for stealing hundreds of thousands of dollars from Wal-Mart.[113] On August11, 2006, he was sentenced to 27 months of home confinement, five years of probation, and ordered to pay US$411,000 inrestitution.[114]CompetitionIn North America, Wal-Marts primary competition includes department stores like Kmart, Target, ShopKo and Meijer,Canadas Zellers, Hart the Real Canadian Superstore and Giant Tiger, and Mexicos Comercial Mexicana and Soriana.Competitors of Wal-Marts Sams Club division are Costco, and the smaller BJs Wholesale Club chain operating mainly in theeastern US. Wal-Marts move into the grocery business in the late 1990s also set it against major supermarket chains in boththe United States and Canada. Several smaller retailers, primarily dollar stores, such asFamily Dollar and Dollar General, havebeen able to find a small niche market and compete successfully against Wal-Mart for home consumer sales.[115] In 2004, Wal-Mart responded by testing its own dollar store concept, a subsection of some stores called "Pennies-n-Cents."[116]Wal-Mart also had to face fierce competition in some foreign markets. For example, in Germany it had captured just 2% ofGerman food market following its entry into the market in 1997 and remained "a secondary player" behind Aldi with a 19%share.[117] In July 2006, Wal-Mart announced its withdrawal from Germany. Its stores were sold to Germancompany Metro.[82] Wal-Mart continues to do well in the UK, and its Asda subsidiary is the second largest chain after Tesco.[118]In May 2006, after entering the South Korean market in 1998, Wal-Mart withdrew and sold all 16 of its South Korean outletsto Shinsegae, a local retailer, for $882 million. Shinsegae re-branded the Wal-Marts as E-mart stores.[119]Wal-Mart struggled to export its brand elsewhere as it rigidly tried to reproduce its model overseas. In China, Wal-Mart hopes tosucceed by adapting and doing things preferable to Chinese citizens. For example, it found that Chinese consumers preferredto select their own live fish and seafood; stores began displaying the meat uncovered and installed fish tanks, leading to highersales.[120]Customer baseStreet sign for Wal ★ Mart Drive nearGordon, Pennsylvania
  11. 11. A price of 15 cents on folders and notebooksEach week, about 100 million customers, nearly one-third of the U.S. population, visit Walmarts U.S. stores.[121] Walmartcustomers give low prices as the most important reason for shopping there, reflecting the "Low prices, always" advertisingslogan that Wal-Mart used from 1962 until 2006.[122] The average US Wal-Mart customers income is below the nationalaverage, and analysts recently estimated that more than one-fifth of them lack a bank account, twice the national rate. [123] AWal-Mart financial report in 2006 also indicated that Wal-Mart customers are sensitive to higher utility costs and gasprices.[124] A poll indicated that after 2004 US Presidential Election 76% of voters who shopped at Wal-Mart once a week votedfor George W. Bush, while only 23% supported senator John Kerry.[125] When measured against other similar retailers in theU.S., frequent Wal-Mart shoppers were rated the most politically conservative.[126]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."[127] Around six months later, it unveiled a new slogan: "Savingpeople money so they can live better lives". This reflects the three main groups into which Wal-Mart categorizes its 200 millioncustomers: "brand aspirationals" (people with low incomes who are obsessed with names like KitchenAid), "price-sensitiveaffluents" (wealthier shoppers who love deals), and "value-price shoppers" (people who like low prices and cannot afford muchmore).[122] Wal-Mart has also made steps to appeal to more liberal customers, for example, by rejecting the American FamilyAssociations recommendations and carrying the DVD Brokeback Mountain, a love story between two gay cowboys inWyoming.[128]Economic impactSee also: Criticism of WalmartKenneth Stone, Professor of Economics at Iowa State University, in a paper published in Farm Foundation in 1997, found thatsome small towns can lose almost half of their retail trade within ten years of a Wal-Mart store opening.[31] He compared thechanges to previous competitors small town shops have faced in the past—from the development of the railroads and theSears Roebuck catalog to shopping malls. He concludes that small towns are more affected by "discount mass merchandiserstores" than larger towns and that shop owners who adapt to the ever changing retail market can "co-exist and even thrive inthis type of environment."[31]One study found Wal-Marts entry into a new market has a profound impact on its retail competition. When a Wal-Mart opens ina new market, median sales drop 40% at similar high-volume stores, 17% at supermarkets and 6% at drugstores, according tothe June 2009 study by researchers at several universities and led by the Tuck School of Business at DartmouthCollege.[129] ALoyola University Chicago study suggested that the impact a Wal-Mart store has on a local business is correlatedto its distance from that store. The leader of that study admits that this factor is stronger in smaller towns and doesnt apply tomore urban areas saying "Itd be so tough to nail down whats up with Wal-Mart".[130]A June 2006 article published by the libertarian Ludwig von Mises Institute suggested that Wal-Mart has a positive impact onsmall business.[131] It argued that while Wal-Marts low prices caused some existing businesses to close, the chain also creatednew opportunities for other small business, and so "the process of creative destruction unleashed by Wal-Mart has nostatistically significant impact on the overall size of the small business sector in the United States."[132]For the concern of jobs, a study commissioned by Wal-Mart with consulting firm Global Insight, found that its stores presencesaves working families more than US$2,500 per year, while creating more than 210,000 jobs in the U.S. [133][134] Alternately,the Economic Policy Institute estimates that between 2001 and 2006, Wal-Marts trade deficit with China alone eliminatednearly 200,000 U.S. jobs.[135] Another study at the University of Missouri found that a new store increases net retail employmentin the county by 100 jobs in the short term, half of which disappear over five years as other retail establishments close. [136]Studies of Wal-Mart show consumers benefit from lower costs. Another study by Global Insight found that Wal-Marts growthbetween 1985 and 2004 resulted in food-at-home prices that were 9.1% lower and overall prices (as measured bythe Consumer Price Index) that were 3.1% lower than they would otherwise have been.[137] A 2005 story in The WashingtonPost reported that "Wal-Marts discounting on food alone boosts the welfare of American shoppers by at least $50 billion peryear."[138] A study in 2005 at the Massachusetts Institute of Technology (MIT) measured the effect on consumer welfare andfound that the poorest segment of the population benefits the most from the existence of discount retailers. [139] A 2004 paper bytwo professors atPennsylvania State University found that U.S. counties with Wal-Mart stores suffered increased povertycompared with counties without Wal-Marts.[140] They hypothesized, to explain their results: This could be due to thedisplacement of workers from higher-paid jobs in the retailers customers no longer choose to patronize, Wal-Mart providing lesslocal charity than the replaced businesses, or a shrinking pool of local leadership and reduced social capital due to a reducednumber of local independent businesses.[140] Dr Raj Patel, author of "Stuffed and Starved: Markets, Power and the HiddenBattle for the World Food System", said in a lecture at the University of Melbourne on September 18, 2007, that a study in
  12. 12. Nebraska looked at two different Wal-Marts, the first of which had just arrived and "was in the process of driving everyone elseout of business but, to do that, they cut their prices to the bone, very, very low prices". In the other Wal-Mart, "they hadsuccessfully destroyed the local economy, there was a sort of economic crater with Wal-Mart in the middle; and, in thatcommunity, the prices were 17 percent higher".[141]CriticismEmployee and labor relationsSee also: Criticism of WalmartA protest in Utah against Wal-MartLabor unions, Christian organizations,[142][143] and environmental groups[144] have criticized Wal-Mart for its policies and/orbusiness practices. In particular, several labor unions blame Wal-Mart workers unwillingness to join their organizations on thecompanys anti-union stance. Others disapprove of the corporations extensive foreign product sourcing, treatment ofemployees and product suppliers, environmental practices, and use of public subsidies, and the impact of stores on the localeconomies of towns in which they operate.[145][146][147]In 2005, two campaigns were launched: the (United Food and Commercial Workers) launched Wake Up Wal-Mart and TheCenter for Community and Corporate Ethics launched Wal-Mart Watch.[148][149] By the end of 2005, Wal-Mart launched WorkingFamilies for Wal-Mart, an operation managed by Wal-Mart to tell the companys side of the story. Additional efforts to countercriticism included a PR campaign in 2005, managed through its PR website walmartfacts.com,[150] as well as several televisioncommercials. The company retained the PR firm Edelman to respond to negative media attention,[151] and started interactingdirectly with bloggers by sending them news, suggesting topics for postings, and sometimes inviting them to visit its corporateheadquarters.[152] Similarly, in 2010, several of Wal-Marts 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.[153]In June 2006, Walmart was excluded from the investment portfolio of The Government Pension Fund of Norway, which heldstock values of about US$ 430 million in the company, due to a social audit into alleged labor rights violations in the companysoperations in the US and worldwide.[154][155] Although Walmart did not respond to questions from the funds auditors, thecompany later claimed the decision "dont appear to be based on complete information".[156]In the past, Wal-mart has been accused of locking night-shift workers in at night,[157] paying employees below minimum wage,and exposing employees to health hazards.[155] Wal-Marts own "Standards for Suppliers" reports document extensive problemsof this kind among the companys "directly-sourced" factories.[158] Full-time Wal-Mart employees earn an average of $10.78 perhour, but critics point out that the starting pay can be far lower — placing some employees with children below the povertyline — and that payrates do not rise as quickly as with unionized companies. [159] Others decry low levels of health coverage oroverpriced health insurance, though the company reports that it offers rates as low as $5 per month in some areas ($9 permonth nationwide) and that 92% of its associates are insured (though not necessarily through Wal-Mart).[160] Other grievancesregard poor working conditions, unfavorable employer-employee relationships, and anti-union policies. Many suggest that Wal-Marts high annual turnover-rate of ~70% shows that workers are dissatisfied and maltreated. [159]In response, Jay Nordlinger of National Review argues that Wal-Mart is attacked simply because it is a leader of the Fortune500 list or the largest employer in America, and a "free-market success story".[161] Penn & Teller devoted an episodeof Bullshit! to an analysis of Wal-Mart criticism as a social movement. They theorized that despite the noble rhetoric, the realmotivation of "Wal-Mart haters" was rooted in human psychology. They suggested that hating Wal-Mart permits a person "tofeel better about themselves" for three main reasons: They "dont run a greedy international conglomerate", they arent Wal-Mart workers, widely considered "low-skilled, minimum wage drones", and they arent Wal-Mart customers thought of as"toothless, welfare-getting hillbillies".[162] Wal-Mart stores are unionized in every country outside of North America.[163]
  13. 13. Wal-Mart has opposed the Employee Free Choice Act (EFCA), which would make it easier for workers to unionize by removingthe employers ability to demand a secret ballot in union elections, and which would require mandatory arbitration of labordisputes. In mid-2008, the company required store managers and department heads to attend meetings at which opposition tothe EFCA was used as a fulcrum for criticism of Democratic candidates in the elections for the United States Senate andthe House of Representatives, as well as of the presumptive Democratic Presidential nominee, Senator Barack Obama. Atthese meetings, Wal-Mart human resources managers warned that Democratic victories might result in passage of the EFCAand hence more unionization. At one meeting, a Wal-Mart customer service supervisor from Missouri stated, "I am not tellingyou how to vote, but if the Democrats win, this bill will pass and you wont have a vote on whether you want a union. [164] A Wal-Mart spokesman, while acknowledging that the meetings were taking place nationwide, said, "If anyone representing Wal-Martgave the impression we were telling associates how to vote, they were wrong and acting without approval." [164] Several labor-rights groups including the AFL-CIO have asked the Federal Election Commission to investigate whether Wal-Mart brokefederal election rules by advocating against Democratic candidate Barack Obama in meetings with employees. [165]The Wal-Mart store in Quanzhou, Fujian, ChinaAccording to a Newsweek article, Wal-Mart, after years of fierce fighting, accepted organized labor in China. Labor unions inChina do not negotiate contracts, but rather they are an arm of the state "to secure the social order" and provide funding to theCommunist Party.[166]In 2011, Wal-Mart sub-contractors, Impact Logistics and Premiere Warehousing Ventures, which were employed throughSchneider Logistics warehouses in Mira Loma, California were fined by the California State Labor Department for disregardingfederal and state wage laws.[167] "California Labor Commissioner Julie Su said in an interview that the Schneider facility onSouth Hamner Avenue is actually two buildings, and that most of the goods that move through the distribution center go to areaWal- Mart stores.".[168] Warehouse Workers United (WWU) filed a complaint with Wal-Mart CEO Mike Duke (October, 2011) andwith the Wal-Mart Ethics Office (January, 2012) noting that the conditions in this warehouse violate Wal-Marts own Statementof Ethics. "The complaint details widespread wage-theft resulting from a piece-rate system for unloading containers, failure topay employees for the time they actually worked and other violations of state and federal wage and hour law." In response,WWU received a Dear Customer letter from Wal-Mart."[169]Gender and sexual orientationIn 2007, a gender discrimination lawsuit, Dukes v. Wal-Mart Stores, Inc., was filed against Walmart, alleging that femaleemployees were discriminated against in matters regarding pay and promotions. A class action suit was sought, which wouldhave been the nations largest in history, covering 1.5 million past and current employees of Wal-Mart.[170] On June 20, 2011,the United States Supreme Court ruled in Wal-Marts favor, stating that the plaintiffs did not have enough in common toconstitute a class.[171] The court ruled unanimously that because of the variability of the plaintiffs circumstances, the classaction could not proceed as presented, and furthermore, in a 5-4 decision that it could not proceed as any kind of class actionsuit.[172] However, several plaintiffs, including Ms. Dukes, still intend to file individual discrimination lawsuits separately. [173]According to a consultant hired by plaintiffs in a sex discrimination lawsuit, in 2001, Wal-Marts EEOC filings showed thatfemale employees made up 65% of Wal-Marts hourly paid workforce, but only 33% of its management.[174][175] Just 35% of itsstore managers were women, whereas 57% were at comparable retailers.[175] Wal-Mart says comparisons with other retailersare unfair, because it classifies employees differently; if department managers were included in the totals, women would makeup 60% of the managerial ranks.[175] Others have criticized the lawsuit as without basis in the law and as an abuse of the classaction mechanism.[176][177][178] In 2007, Wal-Mart was named by the National Association for Female Executives as one of the top35 companies for Executive Women.[179]Wal-Marts rating on the Human Rights Campaigns Corporate Equality Index, a measure of how companiestreat 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, [180] as well as for a newdefinition of "family" that included same-sex partners.[181][182] However, they have been criticized in other areas, such as notrenewing its membership in the National Gay and Lesbian Chamber of Commerce, which is reflected in their 2008 rating of40% (compared to Target at 80% and Kmart at 100%).[183]
  14. 14. In January 2006, Wal-Mart announced that "diversity efforts include new groups of minority, female and gay employees thatmeet at Wal-Mart headquarters in Bentonville to advise the company on marketing and internal promotion. There are sevenBusiness Resource Groups: women, African-Americans, Hispanics, Asians, Native Americans, Gays and Lesbians, and adisabled group."[184]Alleged bribery in MexicoAn April 2012 article in The New York Times reported that a former executive of Wal-Mart de Mexico alleged in September2005 that Wal-Mart de Mexico had paid bribes to officials throughout Mexico in order to obtain construction permits, thatWalmart investigators found credible evidence that Mexican and American laws had been broken, and that Walmart executivesin the United States "hushed up" the allegations.[185][186] According to an article in Bloomberg, Walmarts "probe of possiblebribery in Mexico may prompt executive departures and steep U.S. government fines if it reveals senior managers knew aboutthe payments and didnt take strong enough action, corporate governance experts said."[187] After the story broke, Wal-Martsstock price dropped 5 percent and commentators are talking about possible jail terms for company executives and major finesunder the Foreign Corrupt Practices Act (FCPA).[188] Eduardo Bohorquez, the director of Transparencia Mexicana, a "watchdog"group in Mexico, urged the Mexican government to investigate the allegations.[189]