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====Treatment of employees====
====Treatment of employees====
As with many US retailers, Wal-Mart experiences a high rate of employee turnover (approximately 50% of employees leave every year, according to the company). Wages at Wal-Mart are about 20% less than at other retail stores. Founder [[Sam Walton]] once argued that his company should be exempt from the [[minimum wage]]. (Palast, 121).
As with many US retailers, Wal-Mart experiences a high rate of employee turnover (approximately 50% of employees leave every year, according to the company). The average wage at Wal-Mart is almost double the federal minimum wage (Wal-Mart). However, founder [[Sam Walton]] once argued that his company should be exempt from the [[minimum wage]]. (Palast, 121).


It is alleged that Wal-Mart managers have sometimes pressured employees to work "[[off-the-clock]]" after they have worked 40 hours in order that [[overtime]] pay may be avoided. It remains to be determined whether this is misconduct by individual managers (something that might be inevitable, given the number of managers employed by Wal-Mart), or directed from higher up.
It is alleged that Wal-Mart managers have sometimes pressured employees to work "[[off-the-clock]]" after they have worked 40 hours in order that [[overtime]] pay may be avoided. It remains to be determined whether this is misconduct by individual managers (something that might be inevitable, given the number of managers employed by Wal-Mart), or directed from higher up.

Revision as of 22:25, 5 May 2005

Wal-Mart Stores, Inc.
Company type Public
Industry Retail
Founded Rogers, Arkansas, 1962
Headquarters Bentonville, Arkansas
Key people
Sam Walton 1918-1992, Founder
H. Lee Scott, CEO
S. Robson Walton, Chairman
Products Wal-Mart Discount Stores
Wal-Mart Supercenter
Sam's Club
Neighborhood Markets
Revenue US$285.2 Billion (FYE Jan 31, 2005)
20,428,000,000 United States dollar (2022) Edit this on Wikidata
11,680,000,000 United States dollar (2022) Edit this on Wikidata
Total assets 252,496,000,000 United States dollar (2021) Edit this on Wikidata
Number of employees
1.7 million
Website www.walmartstores.com

Wal-Mart Stores, Inc. NYSEWMT is the 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, 2005, Wal-Mart had US$285.2 billion in sales and net income of $10.3 billion (a 3.6% profit margin). Forbes magazine points out that if Wal-Mart were its own economy, it would rank 23rd in the world, with a GDP between Austria and Saudi Arabia. It is the largest private employer in the United States, Mexico, and Canada. It holds a 8.9 percent retail store market share; in other words, $8.90 out of every $100 spent in American stores is spent at Wal-Mart.

History

File:Walmart rollback 1.jpg
A Wal-Mart advertisement, showing a Wal-Mart greeter.
  • 1962 First Wal-Mart store opens in Rogers, Arkansas
  • 1969 The company incorporates as Wal-Mart Stores, Inc. on Oct. 31.
  • 1970 Wal-Mart opens first distribution center and home office in Bentonville, Arkansas.
  • 1972 Wal-Mart listed on the New York Stock Exchange.
  • 1975 Sam Walton introduces the "Wal-Mart Cheer" to employees.
  • 1983 First Sam's Club opens in Midwest City, Oklahoma.
  • 1987 Wal-Mart completes its satellite network, the largest private satellite communication system in the U.S.
  • 1988 First Supercenter opens in Washington, Missouri.
  • 1990 Wal-Mart becomes nation's No. 1 retailer.
  • 1991 The first store outside of the U.S. opens, in Mexico City.
  • 1992 Sam Walton receives the Presidential Medal of Freedom from George H. W. Bush, before Walton's death in April.
  • 1992 Wal-Mart enters Puerto Rico.
  • 1993 The company has its first billion-dollar sales week, in December.
  • 1994 Wal-Mart acquires 122 Woolco stores in Canada.
  • 1995 Wal-Mart builds three units in Argentina and five in Brazil.
  • 1996 Wal-Mart enters China through a joint-venture agreement.
  • 1997 Wal-Mart becomes the No. 1 employer in the United States, with 680,000 employees worldwide. It replaces Woolworth on the Dow Jones Industrial Average.
  • 1997 Wal-Mart has its first $100 billion sales year.
  • 1998 Wal-Mart opens its first Neighborhood Market stores in Arkansas and enters Korea through a joint venture agreement. It also exceeds $100 million in annual charitable contributions for the first time.
File:Walmart rollback 2.jpg
Another Wal-Mart advertisement
  • 1999 Wal-Mart has 1,140,000 employees, making it the largest private employer in the world. It acquires the ASDA Group with 229 stores in the United Kingdom.
  • 2000 The Walmart.com web site opens, to provide products online.
  • 2001 Wal-Mart has its biggest single day sales in history: US$1.25 billion on the day after Thanksgiving.
  • 2003 Wal-Mart launches online DVD rental service to compete with Netflix.
  • 2004 Wal-Mart buys the Amigo supermarket chain in Puerto Rico for $17 million.
  • 2004 In fiscal year ending 2004, Wal-Mart spent over $137.5 billion with suppliers in the U.S.
  • 2004 Wal-Mart opens a US Global Procurement office to export U.S.-made goods to Wal-Mart stores internationally.
  • 2004 Total charitable contributions total over $170 million.
  • 2004 Wal-Mart employees in Jonquière, Quebec, Canada vote in favor of becoming the first unionized Wal-Mart in North America. Five months later, Wal-Mart announces that it would close the store.
  • 2005 Wal-Mart launches http://www.walmartfacts.com to set the record straight regarding inaccurate information being spread by critics.

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 January 2005 Wal-Mart employed 1.3 million people in the United States. Wal-Mart's Home Office is located in Bentonville, Arkansas. Apart from stores and clubs, it also operated 99 Distribution Centers/Transportation Offices in the United States. Internationally Wal-Mart employs over 410,000 people (excluding Japan) for a company-wide total of 1.7 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 a majority stake in the future.

In the past Wal-Mart has operated dot Discount Drugs, Bud's Discount City, Hypermart*USA, OneSource Nutrition Centers, and Save-Co Home Improvement stores. 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.

Retail Operations

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

Wal-Mart Retail Formats
Wal-Mart Retail Formats

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

  • Wal-Mart Stores USA
    • Wal-Mart Discount Stores — Average 100,000 square feet (9,290 m²) 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 m²) and combine a standard Wal-Mart Discount Store with a full-line supermarket.
    • Wal-Mart Neighborhood Market — Average 43,000 square feet (4,000 m²) 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. Clubs average 128,000 square feet (11,891 m²).
  • Wal-Mart International — operates various formats internationally, including (but not limited to) SAM'S CLUB, Discount Stores, Supercenters, Supermarkets, and restaurants.
Exterior of a typical Wal-Mart store.

Store Counts & Revenue

Current store counts and revenue for Fiscal Year Ending January 31, 2005 (revenue amounts in U.S. Dollars):

ASDA in the United Kingdom is the largest of the international businesses by sales.

Competition

Wal-Mart's chief competitors in the discount retail space nationally include the Kmart Corporation and the Target Corporation, along with many smaller regional chains. Wal-Mart's move into grocery has also positioned it against major grocery chains such as Kroger, Publix, and local grocery chains. In the Sam's Club warehouse business, Wal-Mart's chief competitor is Costco, which is slightly larger than Sam's in terms of sales.

Wal-Mart TV Network

Wal-Mart TV Network is an in-store network in Wal-Mart stores showing soon to be released movies, clips of concerts and news, as well as commercials for products found in the stores. According to a New York Times story, Wal-Mart TV Network is seen by 130 million people a month, making it the fifth largest network in America, behind NBC, CBS, ABC and Fox.

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 (theoretically) starts with a store-wide meeting where managers discuss with hourly associates daily sales figures, company news, and goals for the day.

All Wal-Mart stores have employees referred to as "People Greeters." They welcome people to the store and prevent shoplifting. At Sam's Club these employees inspect the contents of the shopping carts of every exiting customer and check them off item by item against the printed receipt.

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

Financial Success

Wal-Mart is financially successful by any measure. For example, Wal-Mart is now the top 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.
  • Information Systems: Wal-Mart helped push the retail industry to adopt UPC codes and bar-code scanning equipment. Also, Wal-Mart's focus on cost reduction has led to its involvement in a standards effort [1] to use RFID-based Electronic Product Codes to lower the costs of supply chain management. As of June 2004, it has announced plans [2] to require the use of the technology among its top 300 suppliers by January 2006.
  • Suppliers: A spokesperson for the company told the Wall Street Journal on 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 U.S. operations. U.S. current account imports from China was reported as $152.4 billion during 2003 ([3]). Mainland Chinese media place Wal-Mart as their 8th largest trading partner in front of Russia and the UK on the top-10 list.
  • Cost Control: Wal-Mart watches very closely controllable expenses. Hourly associates are asked to keep overtime to a minimum. Wal-Mart also squeezes out any inefficencies in the business such as reducing paper used through computerization.

Sam's Rules

The very Foundation of Wal-Mart is Sam Waltons 10 Basic Rules. People often ask, "What is Wal-Mart's secret to success?" In response to this ever-present question, in his 1992 book Made in America, Sam Walton compiled a list of ten key factors that unlock the mystery. These factors are known as "Sam's Rules for Building a Business." (Visa Canada website)

Rule #1 Commit to your business. Believe in it more than anything else. If you love your work, you’ll be out there every day trying to do the best you can, and pretty soon everybody around will catch the passion from you - like a fever.

Rule #2 Share your profits with all your associates, and treat them as partners. In turn, they will treat you as a partner, and together you will all perform beyond your wildest expectations.

Rule #3 Motivate your partners. Money and ownership aren’t enough. Set high goals, encourage competition and then keep score. Make bets with outrageous payoffs.

Rule #4 Communicate everything you possibly can to your partners. The more they know, the more they’ll understand. The more they understand, the more they’ll care. Once they care, there’s no stopping them. Information is power, and the gain you get from empowering your associates more than offsets the risk of informing your competitors.

Rule #5 Appreciate everything your associates do for the business. Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise. They’re absolutely free and worth a fortune.

Rule #6 Celebrate your success and find humour in your failures. Don’t take yourself so seriously. Loosen up and everyone around you will loosen up. Have fun and always show enthusiasm. When all else fails put on a costume and sing a silly song.

Rule #7 Listen to everyone in your company, and figure out ways to get them talking. The folks on the front line - the ones who actually talk to customers - are the only ones who really know what’s going on out there. You’d better find out what they know.

Rule #8 Exceed your customer’s expectations. If you do they’ll come back over and over. Give them what they want - and a little more. Let them know you appreciate them. Make good on all your mistakes, and don't make excuses - apologize. Stand behind everything you do. ‘Satisfaction guaranteed’ will make all the difference.

Rule #9 Control your expenses better than your competition. This is where you can always find the competitive advantage. You can make a lot of mistakes and still recover if you run an efficient operation. Or you can be brilliant and still go out of business if you’re too inefficient.

Rule #10 Swim upstream. Go the other way. Ignore the conventional wisdom. If everybody is doing it one way, there’s a good chance you can find your niche by going exactly in the opposite direction.

Wal-mart Benefits

Wal-Mart offers the following Benefits to its associates:

  • Health (80/20 Co-pay Cost Varies By plan and health Wal-Mart pays average of 90% of insurance cost)
  • Dental (80/20 Co-pay)
  • Stock Options (1.5% Return Default)
  • 401k(50% Company paid)
  • Life Insurance (up to 200,000)
  • Company Paid Life Insurance (up to 50,000)
  • Accidental Death and dismemberment (100% Company Paid)
  • Short Term Disability (100% Company paid)
  • Long Term Disability
  • Premium Pay (Sundays)
  • Prescription Drug Benefit
  • 10% Discount
  • Stake Holders Bonus (Varies per Store Based on sale Threshold)
  • Holiday Pay (All Major holidays)
  • Sick Pay
  • Vacation pay
  • Personal time pay
  • Bereavement Pay (Immediate Family members)
  • Cancer Treatment and support

Criticism

Overview

From a financial standpoint, Wal-Mart is one of the most successful companies ever. Due to the scope of its operations, the company has lowered retail price levels and increased real income levels in the communities where it is located. Critics state that the company's success derives from business practices harmful to employees, local communities, the economy or the environment. Any organization on the scale of Wal-Mart will have problems at the level of individual stores; this article concentrates chiefly on systemic issues instead of single incidents.

Wal-Mart is the most-frequently sued corporate entity in the United States. As the largest company and largest retailer in the world, this is not surprising. Its legal department has a reputation for aggressive legal tactics, and the corporation has been sanctioned by several courts for improper courtroom behavior. Details of specific, major lawsuits are included in article sections below based on each lawsuit's primary subject.

Product Controversy

Wal-Mart is accused of allowing right-wing conservative values to influence its product selection:

  • In 1999, Wal-Mart announced that it would not stock the morning-after pill in its pharmacies.
  • In 2002, Wal-Mart announced that it would not carry magazines it deemed inappropriate. At the time of the announcement, Maxim, FHM and Stuff were removed from stores. Other titles were moved to displays that obscured magazine covers which were deemed offensive by the company. Redbook, Cosmopolitan and Marie Claire were among those magazines relocated. Editors and publishers of titles that received this treatment complained that the action abriged their editorial freedom.
  • Wal-Mart does not carry music albums marked with RIAA's Parental Advisory Label. The store does carry edited versions of those albums. These versions have obscenities completely removed or overdubbed with less offensive lyrics. Such versions, sometimes referred to as radio edits, are produced by music publishers to increase retail sales. Notably, albums critical of Wal-Mart itself have been removed from the shelves.
  • In 2004 Wal-Mart sold the notoriously anti-Semitic The Protocols of the Elders of Zion on its website. Most scholars consider the text to be a forgery, but Wal-Mart's product description suggested the text was genuine. The company ceased selling the book in September 2004, citing "a business decision".

Supplier Relations

(for more coverage of imports/outsourcing/globalization, refer to that section)

As the single largest customer to most of its suppliers, Wal-Mart openly uses its bargaining power to negotiate lower prices from suppliers. Some suppliers say Wal-Mart has demanded access to their financial statements in order to look for "excessive profit margins." This information can be used as leverage in pricing negotiatons, leading to reduced profit margins for suppliers.

Economic analysis suggests that suppliers will never supply products to Wal-Mart at loss-making prices over the long term. According to this analysis, Wal-Mart is a force for reducing waste and inefficiency from the supply chain while maintaining economically feasible levels of supplier profitability. Wal-Mart's gross margin has been consistent over time, fluctuating between 20.8% and 22.9% over the last ten years. By comparison, the entire department and discount retail industry has an average gross margin of 34.9%. The company's consistent margins indicate that most cost savings negotiated from suppliers are passed on to customers through lower retail prices.

Former suppliers have stated that Wal-Mart threatens to cease carrying a supplier's entire product line unless the prices of specific products are lowered. This is analogous, but not identical, to the illegal practice of product tying practiced by manufacturers and suppliers. As a purchaser rather than a seller, Wal-Mart is not bound by regulations in this regard, so the practice is not illegal in the United States.

Wal-Mart is praised by suppliers for paying bills on time. There have been few reported instances where Wal-Mart cheated its suppliers.

Competitive Practices

Wal-Mart has been prosecuted for predatory pricing behavior, temporarily lowering prices in order to drive competitors out of business and develop local monopolies. The chain has been found guilty of predatory pricing in lower courts, but those convictions have been overturned on appeal. There are also several ongoing cases alleging predatory pricing. There have been no successful federal or state actions to sanction Wal-Mart for practicing predatory pricing.

The company admits to using certain products as loss leaders to increase business, but this practice is not illegal in most cases.

Political/Lobbying Activities

Wal-Mart sometimes garners subsidies from local municipalities in exchange for building new stores or disribution centers. Municipalities typically grant these subsidies with the goal of expanding tax or employment bases. In some cases, Wal-Mart has purchased land after successful eminent domain actions by municipalities. Such support from local governments is often extended to Wal-Mart and not to exisiting, local businesses.

Local Community Impacts

Community activists often organize campaigns against proposed new store locations. Critics and academic studies note that Wal-Mart displaces locally owned stores and results in the reduction of locally-owned corporate assets and real estate. Critics compare this sort of practice to that of an absentee landlord.

Wal-Mart asserts that the absentee landlord analogy is inaccurate. The transfer of local assets from local owners to Wal-Mart has no impact on local property tax revenues. Unlike an absentee landlord, Wal-Mart has full financial interest in maintaining and enhancing the property value of its stores. This often leads to an increase in appraised values used to assess local property taxes. Additionally, Wal-Mart stores often result in increased sales tax revenues to local municipalities.

A 2002 study[4] by Emek Basker examined the impact of Wal-Mart on local employment. Basker found that Wal-Mart's entry into a county increased net retail employment in that county by 100 jobs in the short term. Half of this increase disappeared as other retail establishments closed over a five-year period. Basker found an average decrease of 30 retail jobs in neighbouring counties and 25 wholesale jobs in the entered county. Basker concluded that the net change in the number of jobs was not significant. Basker's study did not distinguish between low-paying and high-paying jobs.

In 2004, the University of California at Berkeley published a study which asserted that Wal-Mart's low wages and benefits resulted in an increased burden on the social safety net, costing California taxpayers $86 million.

A study by the state of Georgia, cited (see below) by California State Assembly member Sally Lieber, points out that a survey of children in the state's subsidized health care system, PeachCare, found that Wal-Mart employed more of the parents of these children than any other employer. More than 10,000 children who qualified for the program had parents working at Wal-Mart. The next largest employer employed the parents of less than 800 children in the program.

The quantity and demographic characteristics of Wal-Mart employees may explain some of this discrepancy. Wal-Mart is one of the largest employers in most states, so it follows that its employees' children will be relatively numerous. Wal-Mart's employees are more likely to have children than most other large employers, a fact that also helps explain the Georgia study.

The company responds to all critiques of store openings by explaining that it extensively studies potential locations before deciding to build a store. The company's rule-of-thumb is that a location must have the economic base to support one-and-a-half Wal-Mart stores. In other words, there is more than sufficient customer demand for a Wal-Mart to be built in the locations it ultimately selects.

The "Bland and Boxy" architecture of it's buildings has also created problems with members of city planning and architetural community, though it should be noted that most major retailers follow the same inexpensive style (such as Home Depot, Target, Bed Bath and Beyond, etc).

Specific Instances of Community Protests

Wal-Mart has sought to open new stores in Chicago and failed due to community pressure. Despite multiple well-funded attempts to develop Supercenters in at least two wards, unions and community groups such as ACORN focused effective community opposition. In September of 2004, Mayor Daley said this of the debate, "Wal-Mart has a PR problem. I feel sorry for them. They've got a big problem."

In late 2003, the company undertook an unusual step after failing to gain the support of the Inglewood, California City Council for a proposed development of a supercenter. The council had cited a wide range of concerns, including traffic, the environment, labor practices, and public safety. In response, Wal-Mart obtained the signatures of thousands of voters, forcing the council to call a special election. The resulting 71-page measure, Initiative 04-A, asked voters to allow the company to create its supercenter and a collection of chain shops and restaurants on a sixty acre (243,000 m²) parcel near Hollywood Park Racetrack. The proposal exempted the company from all of Inglewood's planning, zoning and environmental regulations. The special election was held April 7, 2004; by a 60-40 margin the Wal-Mart proposal was defeated.

Complaints about International Locations

Wal-Mart has been accused of "insensitive placement of stores" abroad. In 2004, amid local community resistance and protests, both from environmentalists and anti-globalists, Wal-Mart opened a new Superstore in Teotihuacan, Mexico, near ancient Pre-Columbian pyramids. Local opposition characterised the opening as being "extremely symbolic" and "...like planting the staff of globalization in the heart of ancient Mexico". (Quote is from Homero Ardijis, one of the store's lead opponents in the community.)[5]

Wal-Mart responds that the real estate was made available for commercial purchase, and that extensive studies showed that the location would be extremely profitable. By extension, the company stated that potential customers' enthusiasm for the store indicated that they were willing to accept the store's presence in order to lower prices and imporove the quality of life.

Employee/Labor Relations

(for information on the large-scale impact of Wal-Mart's employment practices, see the section on Community Impact)

Opposition to unions

The target of persistent unionizing efforts, Wal-Mart aggressively (and at times illegally) resists union attempts. The company has been accused of firing workers sympathetic to unionization, and the company does show anti-union videos in an effort to discourage unionization. So far, only a few North American stores have successfully voted to unionize.

In 2000, the meat-cutting department of the Wal-Mart superstore in Jacksonville, Texas voted to unionize. After the vote, Wal-Mart eliminated its meat-cutting operations at the store. Likewise, when the employees of a Wal-Mart in Jonquière, Quebec, Canada voted to unionize, Wal-Mart announced that it would close the store. [6] On April 30, 2005,Wal-Mart closed the doors at its first unionized outlet in North America Friday. The closure eliminated almost 200 jobs in the small town of Jonquière, Quebec. Wal-Mart Canada spokesman Kevin Groh, said the store shut at noon Friday rather than the planned date of May 6 because it no longer had any merchandise.

Michael J. Fraser, the union's national director said; "Wal-Mart is trying to send a message to the rest of their employees that if they join a union the same thing could happen to them," The union will be filing unfair labor practice charges against Walmart in Quebec.

The United Food and Commercial Workers union has drives in at least 25 Canadian stores.Workers at the Jonquiere store received union certification in August,2004 and St. Hyacinthe, Quebec has the only remaining unionized Wal-Mart in North America.

The consulting firm AT Kearny has stated that above all, low labor costs is a big source of cost advantage for Wal-Mart. Wal-Mart's employees might begin at as little as $8 an hour which is 20-30% less than unionized workers at rival discount stores.

Walmart's CEO, H. Lee Scott Jr. Scott is on record as saying that Wal-Mart sees no upside to the higher labor costs and "a bunch of work rules". In both cases, Wal-Mart has claimed that the increased costs associated with a unionized workforce would lead to unprofitability at current retail price levels. Rather than raise retail prices, the company elected to eliminate those jobs.

There have been several other votes to unionize at North American stores. In most cases, unionization proposals are defeated by employees. Critics argue that this is due to employees' fear of corporate retaliation. Wal-Mart states that employees are aware of the company's cost structure and corporate strategy, so the employees assume that the store will not raise prices in order to accomodate union-related costs.

The Quebec Labour Relations Board found the company guilty of harassing and intimidating workers trying to join the United Food and Commercial Workers Union at another store in Ste-Foy, Quebec. [7]

In Germany, all companies of considerable size are required by law to consider the views of workers through each company's or store's so-called "workers' council", but Wal-Mart has, so far, failed to comply even though they got into massive trouble with German labor unions and have been seriously criticized by the German media.

Treatment of employees

As with many US retailers, Wal-Mart experiences a high rate of employee turnover (approximately 50% of employees leave every year, according to the company). The average wage at Wal-Mart is almost double the federal minimum wage (Wal-Mart). However, founder Sam Walton once argued that his company should be exempt from the minimum wage. (Palast, 121).

It is alleged that Wal-Mart managers have sometimes pressured employees to work "off-the-clock" after they have worked 40 hours in order that overtime pay may be avoided. It remains to be determined whether this is misconduct by individual managers (something that might be inevitable, given the number of managers employed by Wal-Mart), or directed from higher up.

Since 1997, investigators have found 250 illegal immigrants working at Wal-Mart stores. These individuals were employed by custodial services subcontractors used by Wal-Mart. Many of the janitors worked seven days a week without overtime pay or injury compensation. To settle criminal charges relating to these incidents, Wal-Mart paid $11 million in March 2005 without admitting wrongdoing or liability. Several of the custodial services firms that employed the illegal immigrants pled guilty to criminal charges.

Although they are not confirmed, there are rumors that Wal-Mart Employees have been fired for not being "Family-Friendly", referring to things such as watching R-rated Movies and playing M-rated Video Games.

Gender Discrimination

Wal-Mart has also been accused of discriminating against women. A class-action suit alleging sex discrimination, Dukes vs. Wal-Mart, was brought against Wal-Mart. Representing 1.6 million women, it comprised of both current and former employees is based on statistics that show that women working at Wal-Mart are paid less than men in every region and in most job occupations and take longer to enter management positions. It is the largest class-action suit in American history. In June 2004, a California judge ruled in favor of the women. Wal-Mart is appealing the decision.

Wal-Mart asserts that statistics used in the suit were flawed, because aggregated numbers failed to take into account differing demographic characteristics of employee groups. After statistically accounting for age, education and length-of-service, Wal-Mart claims that statistical analysis shows no difference between male and female employees.

Wal-Mart, like many large American corporations with low-wage employees, screens potential hires through a drug test, in addition to a multiple choice personality test, which asks applicants to express their level of agreement with statements such as "rules have to be followed to the letter at all times." (Ehrenreich, 124)

Imports and Globalization

Worldwide, Wal-Mart has become a symbol of globalization to the Anti-globalization movement by encouraging imports and carrying what detractors term "sweat-shop" products.

Imports

Critics argue that Wal-Mart's pricing pressure forces the relocation of manufacturing capacity to China, because China currently offers the lowest-cost manufacturing environment in the world.

Supporters argue that the shift of manufacturing capacity to China is part of an inevitable trend towards globalization due to China's comparative advantage in labor intensive manufacturing.

In the mid-1990s, Wal-Mart had a "Buy American" campaign, but it was eventually cancelled. As of 2004, about 70% of the products sold in Wal-Mart stores have at least a component manufactured in China. It has been estimated that Wal-Mart alone makes 10% of the US imports from China and if taken separated from the US, it would be China's 8th trading partner, ahead of countries such as Germany and Russia. The growing deficite with China, heavily influenced by Wal-Mart imports, is estimated to have moved over a million American jobs to China.

Use of sweatshop labor

Wal-Mart is criticized for failure to maintain adequate supervision over its foreign suppliers. This lack of supervision has led to incidents where Wal-Mart products have been made using sweatshop or slave labor. Greg Palast reports that Chinese dissident Harry Wu (Wu Hongda) discovered, in 1995, that Wal-Mart was contracting prison "slave labor" in Guangdong Province. Wu and Palast argue that numerous items at Wal-Mart are made by the Chinese People's Liberation Army rather than being "made in America".

In Bangladesh, Palast reported that in 1992 teenagers were working in "sweatshops" approximately 80 hours per week, at $0.14 per hour, for Wal-Mart contractor Beximco. In 1994, Guatemalan Wendy Diaz reported that, at the age of 13, she had been working for Wal-Mart at $0.30 per hour. (Palast pp. 119-120)

Wal-Mart responds that simply comparing wage levels leads to inaccurate conclusions. The company also asserts that wages paid to overseas workers are comparable to or exceed local prevailing wages. In that case, the company states that the overseas manufacturing jobs it creates are often an improvement in the quality of life for its employees. The company has also asserted that factory jobs with its suppliers are often safer and healthier than local alternatives, which may include prostitution, the drug trade or scavenging.

References

External links

See also

Wal-Mart

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Wal-Mart Stores, Inc.
Company type Public
Industry Retail
Founded Rogers, Arkansas, 1962
Headquarters Bentonville, Arkansas
Key people
Sam Walton 1918-1992, Founder
H. Lee Scott, CEO
S. Robson Walton, Chairman
Products Wal-Mart Discount Stores
Wal-Mart Supercenter
Sam's Club
Neighborhood Markets
Revenue US$285.2 Billion (FYE Jan 31, 2005)
20,428,000,000 United States dollar (2022) Edit this on Wikidata
11,680,000,000 United States dollar (2022) Edit this on Wikidata
Total assets 252,496,000,000 United States dollar (2021) Edit this on Wikidata
Number of employees
1.7 million
Website www.walmartstores.com

Wal-Mart Stores, Inc. NYSEWMT is the 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, 2005, Wal-Mart had US$285.2 billion in sales and net income of $10.3 billion (a 3.6% profit margin). Forbes magazine points out that if Wal-Mart were its own economy, it would rank 23rd in the world, with a GDP between Austria and Saudi Arabia. It is the largest private employer in the United States, Mexico, and Canada. It holds a 8.9 percent retail store market share; in other words, $8.90 out of every $100 spent in American stores is spent at Wal-Mart.

History

File:Walmart rollback 1.jpg
A Wal-Mart advertisement, showing a Wal-Mart greeter.
  • 1962 First Wal-Mart store opens in Rogers, Arkansas
  • 1969 The company incorporates as Wal-Mart Stores, Inc. on Oct. 31.
  • 1970 Wal-Mart opens first distribution center and home office in Bentonville, Arkansas.
  • 1972 Wal-Mart listed on the New York Stock Exchange.
  • 1975 Sam Walton introduces the "Wal-Mart Cheer" to employees.
  • 1983 First Sam's Club opens in Midwest City, Oklahoma.
  • 1987 Wal-Mart completes its satellite network, the largest private satellite communication system in the U.S.
  • 1988 First Supercenter opens in Washington, Missouri.
  • 1990 Wal-Mart becomes nation's No. 1 retailer.
  • 1991 The first store outside of the U.S. opens, in Mexico City.
  • 1992 Sam Walton receives the Presidential Medal of Freedom from George H. W. Bush, before Walton's death in April.
  • 1992 Wal-Mart enters Puerto Rico.
  • 1993 The company has its first billion-dollar sales week, in December.
  • 1994 Wal-Mart acquires 122 Woolco stores in Canada.
  • 1995 Wal-Mart builds three units in Argentina and five in Brazil.
  • 1996 Wal-Mart enters China through a joint-venture agreement.
  • 1997 Wal-Mart becomes the No. 1 employer in the United States, with 680,000 employees worldwide. It replaces Woolworth on the Dow Jones Industrial Average.
  • 1997 Wal-Mart has its first $100 billion sales year.
  • 1998 Wal-Mart opens its first Neighborhood Market stores in Arkansas and enters Korea through a joint venture agreement. It also exceeds $100 million in annual charitable contributions for the first time.
File:Walmart rollback 2.jpg
Another Wal-Mart advertisement
  • 1999 Wal-Mart has 1,140,000 employees, making it the largest private employer in the world. It acquires the ASDA Group with 229 stores in the United Kingdom.
  • 2000 The Walmart.com web site opens, to provide products online.
  • 2001 Wal-Mart has its biggest single day sales in history: US$1.25 billion on the day after Thanksgiving.
  • 2003 Wal-Mart launches online DVD rental service to compete with Netflix.
  • 2004 Wal-Mart buys the Amigo supermarket chain in Puerto Rico for $17 million.
  • 2004 In fiscal year ending 2004, Wal-Mart spent over $137.5 billion with suppliers in the U.S.
  • 2004 Wal-Mart opens a US Global Procurement office to export U.S.-made goods to Wal-Mart stores internationally.
  • 2004 Total charitable contributions total over $170 million.
  • 2004 Wal-Mart employees in Jonquière, Quebec, Canada vote in favor of becoming the first unionized Wal-Mart in North America. Five months later, Wal-Mart announces that it would close the store.

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 January 2005 Wal-Mart employed 1.3 million people in the United States. Wal-Mart's Home Office is located in Bentonville, Arkansas. Apart from stores and clubs, it also operated 99 Distribution Centers/Transportation Offices in the United States. Internationally Wal-Mart employs over 410,000 people (excluding Japan) for a company-wide total of 1.7 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 a majority stake in the future.

In the past Wal-Mart has operated dot Discount Drugs, Bud's Discount City, Hypermart*USA, OneSource Nutrition Centers, and Save-Co Home Improvement stores. 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.

Retail Operations

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

Wal-Mart Retail Formats
Wal-Mart Retail Formats

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

  • Wal-Mart Stores USA
    • Wal-Mart Discount Stores — Average 100,000 square feet (9,290 m²) 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 m²) and combine a standard Wal-Mart Discount Store with a full-line supermarket.
    • Wal-Mart Neighborhood Market — Average 43,000 square feet (4,000 m²) 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. Clubs average 128,000 square feet (11,891 m²).
  • Wal-Mart International — operates various formats internationally, including (but not limited to) SAM'S CLUB, Discount Stores, Supercenters, Supermarkets, and restaurants.
Exterior of a typical Wal-Mart store.

Store Counts & Revenue

Current store counts and revenue for Fiscal Year Ending January 31, 2005 (revenue amounts in U.S. Dollars):

ASDA in the United Kingdom is the largest of the international businesses by sales.

Competition

Wal-Mart's chief competitors in the discount retail space nationally include the Kmart Corporation and the Target Corporation, along with many smaller regional chains. Wal-Mart's move into grocery has also positioned it against major grocery chains such as Kroger, Publix, and local grocery chains. In the Sam's Club warehouse business, Wal-Mart's chief competitor is Costco, which is slightly larger than Sam's in terms of sales.

Wal-Mart TV Network

Wal-Mart TV Network is an in-store network in Wal-Mart stores showing soon to be released movies, clips of concerts and news, as well as commercials for products found in the stores. According to a New York Times story, Wal-Mart TV Network is seen by 130 million people a month, making it the fifth largest network in America, behind NBC, CBS, ABC and Fox.

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 (theoretically) starts with a store-wide meeting where managers discuss with hourly associates daily sales figures, company news, and goals for the day.

All Wal-Mart stores have employees referred to as "People Greeters." They welcome people to the store and prevent shoplifting. At Sam's Club these employees inspect the contents of the shopping carts of every exiting customer and check them off item by item against the printed receipt.

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

Financial Success

Wal-Mart is financially successful by any measure. For example, Wal-Mart is now the top 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.
  • Information Systems: Wal-Mart helped push the retail industry to adopt UPC codes and bar-code scanning equipment. Also, Wal-Mart's focus on cost reduction has led to its involvement in a standards effort [8] to use RFID-based Electronic Product Codes to lower the costs of supply chain management. As of June 2004, it has announced plans [9] to require the use of the technology among its top 300 suppliers by January 2006.
  • Suppliers: A spokesperson for the company told the Wall Street Journal on 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 U.S. operations. U.S. current account imports from China was reported as $152.4 billion during 2003 ([10]). Mainland Chinese media place Wal-Mart as their 8th largest trading partner in front of Russia and the UK on the top-10 list.
  • Cost Control: Wal-Mart watches very closely controllable expenses. Hourly associates are asked to keep overtime to a minimum. Wal-Mart also squeezes out any inefficencies in the business such as reducing paper used through computerization.

Sam's Rules

The very Foundation of Wal-Mart is Sam Waltons 10 Basic Rules. People often ask, "What is Wal-Mart's secret to success?" In response to this ever-present question, in his 1992 book Made in America, Sam Walton compiled a list of ten key factors that unlock the mystery. These factors are known as "Sam's Rules for Building a Business." (Visa Canada website)

Rule #1 Commit to your business. Believe in it more than anything else. If you love your work, you’ll be out there every day trying to do the best you can, and pretty soon everybody around will catch the passion from you - like a fever.

Rule #2 Share your profits with all your associates, and treat them as partners. In turn, they will treat you as a partner, and together you will all perform beyond your wildest expectations.

Rule #3 Motivate your partners. Money and ownership aren’t enough. Set high goals, encourage competition and then keep score. Make bets with outrageous payoffs.

Rule #4 Communicate everything you possibly can to your partners. The more they know, the more they’ll understand. The more they understand, the more they’ll care. Once they care, there’s no stopping them. Information is power, and the gain you get from empowering your associates more than offsets the risk of informing your competitors.

Rule #5 Appreciate everything your associates do for the business. Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise. They’re absolutely free and worth a fortune.

Rule #6 Celebrate your success and find humour in your failures. Don’t take yourself so seriously. Loosen up and everyone around you will loosen up. Have fun and always show enthusiasm. When all else fails put on a costume and sing a silly song.

Rule #7 Listen to everyone in your company, and figure out ways to get them talking. The folks on the front line - the ones who actually talk to customers - are the only ones who really know what’s going on out there. You’d better find out what they know.

Rule #8 Exceed your customer’s expectations. If you do they’ll come back over and over. Give them what they want - and a little more. Let them know you appreciate them. Make good on all your mistakes, and don't make excuses - apologize. Stand behind everything you do. ‘Satisfaction guaranteed’ will make all the difference.

Rule #9 Control your expenses better than your competition. This is where you can always find the competitive advantage. You can make a lot of mistakes and still recover if you run an efficient operation. Or you can be brilliant and still go out of business if you’re too inefficient.

Rule #10 Swim upstream. Go the other way. Ignore the conventional wisdom. If everybody is doing it one way, there’s a good chance you can find your niche by going exactly in the opposite direction.

Wal-mart Benefits

Wal-Mart offers the following Benefits to its associates:

  • Health (80/20 Co-pay Cost Varies By plan and health Wal-Mart pays average of 90% of insurance cost)
  • Dental (80/20 Co-pay)
  • Stock Options (1.5% Return Default)
  • 401k(50% Company paid)
  • Life Insurance (up to 200,000)
  • Company Paid Life Insurance (up to 50,000)
  • Accidental Death and dismemberment (100% Company Paid)
  • Short Term Disability (100% Company paid)
  • Long Term Disability
  • Premium Pay (Sundays)
  • Prescription Drug Benefit
  • 10% Discount
  • Stake Holders Bonus (Varies per Store Based on sale Threshold)
  • Holiday Pay (All Major holidays)
  • Sick Pay
  • Vacation pay
  • Personal time pay
  • Bereavement Pay (Immediate Family members)
  • Cancer Treatment and support

Criticism

Overview

From a financial standpoint, Wal-Mart is one of the most successful companies ever. Due to the scope of its operations, the company has lowered retail price levels and increased real income levels in the communities where it is located. Critics state that the company's success derives from business practices harmful to employees, local communities, the economy or the environment. Any organization on the scale of Wal-Mart will have problems at the level of individual stores; this article concentrates chiefly on systemic issues instead of single incidents.

Wal-Mart is the most-frequently sued corporate entity in the United States. As the largest company and largest retailer in the world, this is not surprising. Its legal department has a reputation for aggressive legal tactics, and the corporation has been sanctioned by several courts for improper courtroom behavior. Details of specific, major lawsuits are included in article sections below based on each lawsuit's primary subject.

Product Controversy

Wal-Mart is accused of allowing right-wing conservative values to influence its product selection:

  • In 1999, Wal-Mart announced that it would not stock the morning-after pill in its pharmacies.
  • In 2002, Wal-Mart announced that it would not carry magazines it deemed inappropriate. At the time of the announcement, Maxim, FHM and Stuff were removed from stores. Other titles were moved to displays that obscured magazine covers which were deemed offensive by the company. Redbook, Cosmopolitan and Marie Claire were among those magazines relocated. Editors and publishers of titles that received this treatment complained that the action abriged their editorial freedom.
  • Wal-Mart does not carry music albums marked with RIAA's Parental Advisory Label. The store does carry edited versions of those albums. These versions have obscenities completely removed or overdubbed with less offensive lyrics. Such versions, sometimes referred to as radio edits, are produced by music publishers to increase retail sales. Notably, albums critical of Wal-Mart itself have been removed from the shelves.
  • In 2004 Wal-Mart sold the notoriously anti-Semitic The Protocols of the Elders of Zion on its website. Most scholars consider the text to be a forgery, but Wal-Mart's product description suggested the text was genuine. The company ceased selling the book in September 2004, citing "a business decision".

Supplier Relations

(for more coverage of imports/outsourcing/globalization, refer to that section)

As the single largest customer to most of its suppliers, Wal-Mart openly uses its bargaining power to negotiate lower prices from suppliers. Some suppliers say Wal-Mart has demanded access to their financial statements in order to look for "excessive profit margins." This information can be used as leverage in pricing negotiatons, leading to reduced profit margins for suppliers.

Economic analysis suggests that suppliers will never supply products to Wal-Mart at loss-making prices over the long term. According to this analysis, Wal-Mart is a force for reducing waste and inefficiency from the supply chain while maintaining economically feasible levels of supplier profitability. Wal-Mart's gross margin has been consistent over time, fluctuating between 20.8% and 22.9% over the last ten years. By comparison, the entire department and discount retail industry has an average gross margin of 34.9%. The company's consistent margins indicate that most cost savings negotiated from suppliers are passed on to customers through lower retail prices.

Former suppliers have stated that Wal-Mart threatens to cease carrying a supplier's entire product line unless the prices of specific products are lowered. This is analogous, but not identical, to the illegal practice of product tying practiced by manufacturers and suppliers. As a purchaser rather than a seller, Wal-Mart is not bound by regulations in this regard, so the practice is not illegal in the United States.

Wal-Mart is praised by suppliers for paying bills on time. There have been few reported instances where Wal-Mart cheated its suppliers.

Competitive Practices

Wal-Mart has been prosecuted for predatory pricing behavior, temporarily lowering prices in order to drive competitors out of business and develop local monopolies. The chain has been found guilty of predatory pricing in lower courts, but those convictions have been overturned on appeal. There are also several ongoing cases alleging predatory pricing. There have been no successful federal or state actions to sanction Wal-Mart for practicing predatory pricing.

The company admits to using certain products as loss leaders to increase business, but this practice is not illegal in most cases.

Political/Lobbying Activities

Wal-Mart sometimes garners subsidies from local municipalities in exchange for building new stores or disribution centers. Municipalities typically grant these subsidies with the goal of expanding tax or employment bases. In some cases, Wal-Mart has purchased land after successful eminent domain actions by municipalities. Such support from local governments is often extended to Wal-Mart and not to exisiting, local businesses.

Local Community Impacts

Community activists often organize campaigns against proposed new store locations. Critics and academic studies note that Wal-Mart displaces locally owned stores and results in the reduction of locally-owned corporate assets and real estate. Critics compare this sort of practice to that of an absentee landlord.

Wal-Mart asserts that the absentee landlord analogy is inaccurate. The transfer of local assets from local owners to Wal-Mart has no impact on local property tax revenues. Unlike an absentee landlord, Wal-Mart has full financial interest in maintaining and enhancing the property value of its stores. This often leads to an increase in appraised values used to assess local property taxes. Additionally, Wal-Mart stores often result in increased sales tax revenues to local municipalities.

A 2002 study[11] by Emek Basker examined the impact of Wal-Mart on local employment. Basker found that Wal-Mart's entry into a county increased net retail employment in that county by 100 jobs in the short term. Half of this increase disappeared as other retail establishments closed over a five-year period. Basker found an average decrease of 30 retail jobs in neighbouring counties and 25 wholesale jobs in the entered county. Basker concluded that the net change in the number of jobs was not significant. Basker's study did not distinguish between low-paying and high-paying jobs.

In 2004, the University of California at Berkeley published a study which asserted that Wal-Mart's low wages and benefits resulted in an increased burden on the social safety net, costing California taxpayers $86 million.

A study by the state of Georgia, cited (see below) by California State Assembly member Sally Lieber, points out that a survey of children in the state's subsidized health care system, PeachCare, found that Wal-Mart employed more of the parents of these children than any other employer. More than 10,000 children who qualified for the program had parents working at Wal-Mart. The next largest employer employed the parents of less than 800 children in the program.

The quantity and demographic characteristics of Wal-Mart employees may explain some of this discrepancy. Wal-Mart is one of the largest employers in most states, so it follows that its employees' children will be relatively numerous. Wal-Mart's employees are more likely to have children than most other large employers, a fact that also helps explain the Georgia study.

The company responds to all critiques of store openings by explaining that it extensively studies potential locations before deciding to build a store. The company's rule-of-thumb is that a location must have the economic base to support one-and-a-half Wal-Mart stores. In other words, there is more than sufficient customer demand for a Wal-Mart to be built in the locations it ultimately selects.

The "Bland and Boxy" architecture of it's buildings has also created problems with members of city planning and architetural community, though it should be noted that most major retailers follow the same inexpensive style (such as Home Depot, Target, Bed Bath and Beyond, etc).

Specific Instances of Community Protests

Wal-Mart has sought to open new stores in Chicago and failed due to community pressure. Despite multiple well-funded attempts to develop Supercenters in at least two wards, unions and community groups such as ACORN focused effective community opposition. In September of 2004, Mayor Daley said this of the debate, "Wal-Mart has a PR problem. I feel sorry for them. They've got a big problem."

In late 2003, the company undertook an unusual step after failing to gain the support of the Inglewood, California City Council for a proposed development of a supercenter. The council had cited a wide range of concerns, including traffic, the environment, labor practices, and public safety. In response, Wal-Mart obtained the signatures of thousands of voters, forcing the council to call a special election. The resulting 71-page measure, Initiative 04-A, asked voters to allow the company to create its supercenter and a collection of chain shops and restaurants on a sixty acre (243,000 m²) parcel near Hollywood Park Racetrack. The proposal exempted the company from all of Inglewood's planning, zoning and environmental regulations. The special election was held April 7, 2004; by a 60-40 margin the Wal-Mart proposal was defeated.

Complaints about International Locations

Wal-Mart has been accused of "insensitive placement of stores" abroad. In 2004, amid local community resistance and protests, both from environmentalists and anti-globalists, Wal-Mart opened a new Superstore in Teotihuacan, Mexico, near ancient Pre-Columbian pyramids. Local opposition characterised the opening as being "extremely symbolic" and "...like planting the staff of globalization in the heart of ancient Mexico". (Quote is from Homero Ardijis, one of the store's lead opponents in the community.)[12]

Wal-Mart responds that the real estate was made available for commercial purchase, and that extensive studies showed that the location would be extremely profitable. By extension, the company stated that potential customers' enthusiasm for the store indicated that they were willing to accept the store's presence in order to lower prices and imporove the quality of life.

Employee/Labor Relations

(for information on the large-scale impact of Wal-Mart's employment practices, see the section on Community Impact)

Opposition to unions

The target of persistent unionizing efforts, Wal-Mart aggressively (and at times illegally) resists union attempts. The company has been accused of firing workers sympathetic to unionization, and the company does show anti-union videos in an effort to discourage unionization. So far, only a few North American stores have successfully voted to unionize.

In 2000, the meat-cutting department of the Wal-Mart superstore in Jacksonville, Texas voted to unionize. After the vote, Wal-Mart eliminated its meat-cutting operations at the store. Likewise, when the employees of a Wal-Mart in Jonquière, Quebec, Canada voted to unionize, Wal-Mart announced that it would close the store. [13] On April 30, 2005,Wal-Mart closed the doors at its first unionized outlet in North America Friday. The closure eliminated almost 200 jobs in the small town of Jonquière, Quebec. Wal-Mart Canada spokesman Kevin Groh, said the store shut at noon Friday rather than the planned date of May 6 because it no longer had any merchandise.

Michael J. Fraser, the union's national director said; "Wal-Mart is trying to send a message to the rest of their employees that if they join a union the same thing could happen to them," The union will be filing unfair labor practice charges against Walmart in Quebec.

The United Food and Commercial Workers union has drives in at least 25 Canadian stores.Workers at the Jonquiere store received union certification in August,2004 and St. Hyacinthe, Quebec has the only remaining unionized Wal-Mart in North America.

The consulting firm AT Kearny has stated that above all, low labor costs is a big source of cost advantage for Wal-Mart. Wal-Mart's employees might begin at as little as $8 an hour which is 20-30% less than unionized workers at rival discount stores.

Walmart's CEO, H. Lee Scott Jr. Scott is on record as saying that Wal-Mart sees no upside to the higher labor costs and "a bunch of work rules". In both cases, Wal-Mart has claimed that the increased costs associated with a unionized workforce would lead to unprofitability at current retail price levels. Rather than raise retail prices, the company elected to eliminate those jobs.

There have been several other votes to unionize at North American stores. In most cases, unionization proposals are defeated by employees. Critics argue that this is due to employees' fear of corporate retaliation. Wal-Mart states that employees are aware of the company's cost structure and corporate strategy, so the employees assume that the store will not raise prices in order to accomodate union-related costs.

The Quebec Labour Relations Board found the company guilty of harassing and intimidating workers trying to join the United Food and Commercial Workers Union at another store in Ste-Foy, Quebec. [14]

In Germany, all companies of considerable size are required by law to consider the views of workers through each company's or store's so-called "workers' council", but Wal-Mart has, so far, failed to comply even though they got into massive trouble with German labor unions and have been seriously criticized by the German media.

Treatment of employees

As with many US retailers, Wal-Mart experiences a high rate of employee turnover (approximately 50% of employees leave every year, according to the company). Wages at Wal-Mart are about 20% less than at other retail stores. Founder Sam Walton once argued that his company should be exempt from the minimum wage. (Palast, 121).

It is alleged that Wal-Mart managers have sometimes pressured employees to work "off-the-clock" after they have worked 40 hours in order that overtime pay may be avoided. It remains to be determined whether this is misconduct by individual managers (something that might be inevitable, given the number of managers employed by Wal-Mart), or directed from higher up.

Since 1997, investigators have found 250 illegal immigrants working at Wal-Mart stores. These individuals were employed by custodial services subcontractors used by Wal-Mart. Many of the janitors worked seven days a week without overtime pay or injury compensation. To settle criminal charges relating to these incidents, Wal-Mart paid $11 million in March 2005 without admitting wrongdoing or liability. Several of the custodial services firms that employed the illegal immigrants pled guilty to criminal charges.

Although they are not confirmed, there are rumors that Wal-Mart Employees have been fired for not being "Family-Friendly", referring to things such as watching R-rated Movies and playing M-rated Video Games.

Gender Discrimination

Wal-Mart has also been accused of discriminating against women. A class-action suit alleging sex discrimination, Dukes vs. Wal-Mart, was brought against Wal-Mart. Representing 1.6 million women, it comprised of both current and former employees is based on statistics that show that women working at Wal-Mart are paid less than men in every region and in most job occupations and take longer to enter management positions. It is the largest class-action suit in American history. In June 2004, a California judge ruled in favor of the women. Wal-Mart is appealing the decision.

Wal-Mart asserts that statistics used in the suit were flawed, because aggregated numbers failed to take into account differing demographic characteristics of employee groups. After statistically accounting for age, education and length-of-service, Wal-Mart claims that statistical analysis shows no difference between male and female employees.

Wal-Mart, like many large American corporations with low-wage employees, screens potential hires through a drug test, in addition to a multiple choice personality test, which asks applicants to express their level of agreement with statements such as "rules have to be followed to the letter at all times." (Ehrenreich, 124)

Imports and Globalization

Worldwide, Wal-Mart has become a symbol of globalization to the Anti-globalization movement by encouraging imports and carrying what detractors term "sweat-shop" products.

Imports

Critics argue that Wal-Mart's pricing pressure forces the relocation of manufacturing capacity to China, because China currently offers the lowest-cost manufacturing environment in the world.

Supporters argue that the shift of manufacturing capacity to China is part of an inevitable trend towards globalization due to China's comparative advantage in labor intensive manufacturing.

In the mid-1990s, Wal-Mart had a "Buy American" campaign, but it was eventually cancelled. As of 2004, about 70% of the products sold in Wal-Mart stores have at least a component manufactured in China. It has been estimated that Wal-Mart alone makes 10% of the US imports from China and if taken separated from the US, it would be China's 8th trading partner, ahead of countries such as Germany and Russia. The growing deficite with China, heavily influenced by Wal-Mart imports, is estimated to have moved over a million American jobs to China.

Use of sweatshop labor

Wal-Mart is criticized for failure to maintain adequate supervision over its foreign suppliers. This lack of supervision has led to incidents where Wal-Mart products have been made using sweatshop or slave labor. Greg Palast reports that Chinese dissident Harry Wu (Wu Hongda) discovered, in 1995, that Wal-Mart was contracting prison "slave labor" in Guangdong Province. Wu and Palast argue that numerous items at Wal-Mart are made by the Chinese People's Liberation Army rather than being "made in America".

In Bangladesh, Palast reported that in 1992 teenagers were working in "sweatshops" approximately 80 hours per week, at $0.14 per hour, for Wal-Mart contractor Beximco. In 1994, Guatemalan Wendy Diaz reported that, at the age of 13, she had been working for Wal-Mart at $0.30 per hour. (Palast pp. 119-120)

Wal-Mart responds that simply comparing wage levels leads to inaccurate conclusions. The company also asserts that wages paid to overseas workers are comparable to or exceed local prevailing wages. In that case, the company states that the overseas manufacturing jobs it creates are often an improvement in the quality of life for its employees. The company has also asserted that factory jobs with its suppliers are often safer and healthier than local alternatives, which may include prostitution, the drug trade or scavenging.

References

External links

See also

Wal-Mart

Other

External links

Wal-Mart Corporate Sites

Articles

Documentaries

Critics

Data

Other resources

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

Articles

Documentaries

Critics

Data

Other resources

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