Wal-Mart Stores, Inc. (or Walmart as written in its new logo) is an American public corporation that runs a chain of large, discount department stores. It is the world's largest public corporation by revenue, according to the 2008 Fortune Global 500. Founded by Sam Walton in 1962, it was incorporated on October 31, 1969, and listed on the New York Stock Exchange in 1972. It is the largest private employer in the world and the fourth largest utility or commercial employer, trailing the British National Health Service, and the Indian Railways. Wal-Mart is the largest grocery retailer in the United States, with an estimated 20% of the retail grocery and consumables business. It also owns and operates the North American company, Sam's Club.
It operates in Mexico as Walmex, in the UK as ASDA, and in Japan as Seiyu. It has wholly-owned operations in Argentina, Brazil, Canada, Puerto Rico. Wal-Mart's investments outside North America have had mixed results: its operations in South America and China are highly successful, while it was forced to pull out of Germany and South Korea when ventures there were unsuccessful.
Wal-Mart has been criticized by some community groups, women's rights groups, grassroots organizations, and labor unions, specifically for its extensive foreign product sourcing, low rates of employee health insurance enrollment, resistance to union representation, and alleged sexism.
Sam Walton, a businessman from Arkansas, began his retail career when he started work on June 3, 1940, at a J.C. Penney store in Des Moines, Iowa where he remained for 18 months. In 1945, he met Butler Brothers, a regional retailer that owned a chain of variety stores called Ben Franklin and that offered him one in Newport, Arkansas.
Walton was extremely successful in running the store in Newport, far exceeding expectations. However, when the lease came up for renewal, Walton could neither come to agreement on the existing store's lease renewal nor find a new location in Newport. Instead, he opened a new Ben Franklin franchise in Bentonville, Arkansas, but called it "Walton's Five and Dime." There he achieved higher sales volume by marking up slightly less than most competitors.
On July 2, 1962, Walton opened the first Wal-Mart Discount City store located in Rogers, Arkansas. Within five years, the company expanded to 24 stores across Arkansas and reached $12.6 million in sales. In 1968, it opened its first stores outside Arkansas, in Sikeston, Missouri and Claremore, Oklahoma.
During the 1980s, Wal-Mart continued to grow rapidly, and by its 25th anniversary in 1987 there were 1,198 stores with sales of $15.9 billion and 200,000 associates. This year also marked the completion of the company's satellite network, a $24 million investment linking all operating units of the company with its Bentonville office via two-way voice and data transmission and one-way video communication. At the time, it was the largest private satellite network, allowing the corporate office to track inventory and sales and to instantly communicate to stores. In 1988, Sam Walton stepped down as CEO and was replaced by David Glass. Walton remained as Chairman of the Board, and the company also rearranged other people in senior positions.
In 1988, the first Wal-Mart Supercenter opened in Washington, Missouri. Thanks to its superstores, it surpassed Toys "R" Us in toy sales in the late 1990s. The company also opened overseas stores, entering South America in 1995 with stores in Argentina and Brazil; and Europe in 1999, buying ASDA in the UK for $10 billion.
In 1998, Wal-Mart introduced the "Neighborhood Market" concept with three stores in Arkansas. By 2005, estimates indicate that the company controlled about 20% of the retail grocery and consumables business.
In 2000, H. Lee Scott became President and CEO, and Wal-Mart's sales increased to $165 billion. In 2002, it was listed for the first time as America's largest corporation on the Fortune 500 list, with revenues of $219.8 billion and profits of $6.7 billion. It has remained there every year, except for 2006.
In 2005, Wal-Mart had $312.4 billion in sales, more than 6,200 facilities around the world—including 3,800 stores in the United States and 2,800 elsewhere, employing more than 1.6 million "associates" worldwide. Its U.S. presence grew so rapidly that only small pockets of the country remained further than 60 miles (100 km) from the nearest Wal-Mart.
As Wal-Mart grew rapidly into the world's largest corporation, many critics worried about the effect of its stores on local communities, particularly small towns with many "mom and pop" stores. There have been several studies on the economic impact of Wal-Mart on small towns and local businesses, jobs, and taxpayers. In one, Kenneth Stone, a Professor of Economics at Iowa State University, found that some small towns can lose almost half of their retail trade within ten years of a Wal-Mart store opening. However, in another study, he compared the changes to what small town shops had faced in the past — including the development of the railroads, the advent of the Sears Roebuck catalog, as well as the arrival of shopping malls — and concluded that shop owners who adapt to changes in the retail market can thrive after Wal-Mart arrives. A later study in collaboration with Mississippi State University showed that there are "both positive and negative impacts on existing stores in the area where the new supercenter locates. (See also: Criticism of Wal-Mart: Economic impact)
In October 2005, Wal-Mart announced it would implement several environmental measures to increase energy efficiency. The primary goals included spending $500 million a year to increase fuel efficiency in Wal-Mart’s truck fleet by 25% over three years and double it within ten, reduce greenhouse gas emissions by 20% in seven years, reduce energy use at stores by 30%, and cut solid waste from U.S. stores and Sam’s Clubs by 25% in three years. CEO Lee Scott said that Wal-Mart's goal was to be a "good steward for the environment" and ultimately use only renewable energy sources and produce zero waste. The company also designed three new experimental stores in McKinney, Texas, Aurora, Colorado, and Las Vegas, Nevada. with wind turbines, photovoltaic solar panels, biofuel-capable boilers, water-cooled refrigerators, and xeriscape gardens. Despite much criticism of its environmental record, Wal-Mart took a few steps in what is viewed as a positive direction, which included becoming the biggest seller of organic milk and the biggest buyer of organic cotton in the world, as well as reducing packaging and energy costs. Wal-Mart also spent nearly a year working with outside consultants to discover the company's total environmental impact and find where they could improve. They discovered, for example, that by eliminating excess packaging on their toy line Kid Connection, they could save $2.4 million a year in shipping costs, 3,800 trees, and a million barrels of oil. Wal-Mart has also recently created its own electric company in Texas, Texas Retail Energy, and plans to supply its stores with cheap power purchased at wholesale prices. Through this new venture, the company expects to save $15 million annually and also lays the groundwork and infrastructure to sell electricity to Texas consumers in the future.
In March 2006, Wal-Mart sought to appeal to a more affluent demographic. The company launched a new Supercenter concept in Plano, Texas, intended to compete against stores seen as more upscale and appealing, such as Target. The new store has wood floors, wider aisles, a sushi bar, a coffee/sandwich shop with free Wi-Fi Internet access, and more expensive beers, wines, electronics, and other goods. The exterior has a hunter green background behind the Wal-Mart letters, similar to Wal-Mart Neighborhood Markets, instead of the blue previously used at its supercenters.
On September 12, 2007, Wal-Mart introduced new advertising with the slogan, "Save Money Live Better," replacing the "Always Low Prices, Always" slogan, which it had used for the previous 19 years. Global Insight, which conducted the research that supported the ads, found that Wal-Mart's price level reduction resulted in savings for consumers of $287 billion in 2006, which equated to $957 per person or $2,500 per household (up 7.3% from the 2004 savings estimate of $2,329).
On June 30, 2008, Wal-Mart unveiled a new company logo, featuring the non-hyphenated name "Walmart" followed by a stylized spark, as it is referred to on store advertisements. The new logo received mixed reviews from some design critics, who question whether the new logo is as bold as competitors such as the Target bullseye or as instantly recognizable as the former company logo, which was used for 18 years. The new logo made its debut on the company's walmart.com website on July 1, 2008, although the old logo still appears on the corporate site, walmartstores.com. The new logo will eventually replace store logos at the company's US locations throughout the year. Wal-Mart international have not yet adopted the new logo.
Wal-Mart Discount Stores are discount department stores with size varying from to , with an average store covering about . They carry general merchandise and a selection of food. Many of these stores also have a garden center, a pharmacy, Tire & Lube Express, optical center, one-hour photo processing lab, portrait studio, a bank branch, a cell phone store and a fast food outlet. Some also have gasoline stations.
The first Wal-Mart store opened in Rogers, Arkansas in 1962.
In 1990, Wal-Mart opened its first Bud's Discount City location in Bentonville. Bud's operated as a closeout store, much like Big Lots. Many locations were opened to fulfill leases in shopping centers as Wal-Mart stores left and moved into newly-built Supercenters. All of the Bud's Discount City stores closed or converted into Wal-Mart Discount Stores by 1997.
As of January 31, 2008, there were 971 Wal-Mart Discount Stores in the United States. In 2006, the busiest in the world was one in Rapid City, South Dakota.
Wal-Mart Supercenters are hypermarkets with size varying from to , with an average of about . These stock everything a Wal-Mart Discount Store does, and also include a full-service supermarket, including meat and poultry, baked goods, delicatessen, frozen foods, dairy products, garden produce, and fresh seafood. Many Wal-Mart Supercenters also have a garden center, pet shop, pharmacy, Tire & Lube Express, optical center, one-hour photo processing lab, portrait studio, and numerous alcove shops, such as cellular phone stores, hair and nail salons, video rental stores, local bank branches, and fast food outlets. Some also sell gasoline; distributors include Murphy Oil Corporation (whose Wal-Mart stations are branded as "Murphy USA"), Sunoco, Inc. ("Optima"), or Tesoro Corporation ("Mirastar").
The first Supercenter opened in 1988 in Washington, Missouri. A similar concept, Hypermart USA, opened in Garland, Texas a year earlier. All of the Hypermart USA stores were later closed or converted into Supercenters.
Neighborhood Markets are used to fill the gap between Discount Stores and Supercenters.
The first Neighborhood Market opened in 1998 in Bentonville, Arkansas. As of January 31, 2008, there were 132 of them in the United States.
Sam's Club is a chain of warehouse clubs which sell groceries and general merchandise, often in large quantities. Sam's Club stores are "membership" stores and most customers buy annual memberships. However, non-members can make purchases either by buying a one-day membership or paying a surcharge based on the price of the purchase. Some locations also sell gasoline. The first Sam's Club opened in 1983 in Midwest City, Oklahoma under the name "Sam's Wholesale Club".
Sam's has found a niche market in recent years as a supplier to small businesses. All Sam's Club stores are open early hours exclusively for business members and their slogan is "We're in Business for Small Business."
According to Wal-Mart's 2007 Annual Report, Sam's Club's sales during 2007 were $42 billion, or 12.1% of Wal-Mart's total 2007 sales. As of January 31, 2008, there were 591 Sam's Clubs in the United States.
Wal-Mart's international operations currently comprise 2,980 stores in 14 countries outside the United States. According to Wal-Mart's 2006 Annual Report, the International division accounted for about 20.1% of sales. There are wholly-owned operations in Argentina, Brazil, Canada, Puerto Rico (although PR is part of the US, the company's operations there are managed through its international division), and the UK. With 1.8 million employees worldwide, the company is the largest private employer in the US and Mexico, and one of the largest in Canada.
Wal-Mart has operated in Canada since its acquisition of the Woolco division of Woolworth Canada, Inc in 1994. In 2007, it operates at 278 locations, employing 70,000 Canadians, with a local home office in Mississauga, Ontario. On November 8, 2006, Wal-Mart Canada's first three Supercentres (spelled as in Canadian English) opened in Hamilton, London, and Aurora, Ontario. As of January 31, 2007, there were six Wal-Mart Supercentres in Canada. As of November 30, 2006, there were six Sam's Clubs in Ontario, in London, Richmond Hill, Vaughan, Cambridge, Pickering, and Toronto). In December 2006, conversion of a Wal-Mart Discount Store into a Wal-Mart Supercentre began in Lethbridge, Alberta, making it the seventh in Canada and the first in western Canada.
Sales in 2006 for Wal-Mart's UK subsidiary, ASDA (which retains the name it had before acquisition by Wal-Mart), accounted for 42.7% of sales of Wal-Mart's international division. In contrast to Wal-Mart's US operations, ASDA was originally and still remains primarily a grocery chain, but with a stronger focus on non-food items than most UK supermarket chains other than Tesco. At the end of 2007, ASDA had 340 stores, some of which are branded ASDA Wal-Mart Supercentres, as well as ASDA Supermarkets, ASDA Living, George High Street and ASDA Essentials stores.
In addition to its wholly-owned international operations, Wal-Mart has joint ventures in China and several majority-owned subsidiaries. Wal-Mart's majority-owned subsidiary in Mexico is Walmex. In Japan, Wal-Mart owns about 53% of Seiyu. Additionally, Wal-Mart owns 51% of the Central American Retail Holding Company (CARHCO), consisting of more than 360 supermarkets and other stores in Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica.
In 2004, Wal-Mart bought the 116 stores in the Bompreço supermarket chain in northeastern Brazil. In late 2005, it took control of the Brazilian operations of Sonae Distribution Group through its new subsidiary, WMS Supermercados do Brasil, thus acquiring control of the Nacional and Mercadorama supermarket chains, the leaders in the Rio Grande do Sul and Paraná states, respectively. None of these was rebranded. As of August 2006, Wal-Mart operates 71 Bompreço stores, 27 Hiper-Bompreço stores, 15 Balaio stores, and three Hiper-Magazines (all originally parts of Bompreço). It also runs 19 Wal-Mart Supercenters, 13 Sam's Club stores, and two Todo Dia stores. With the acquisition of Bompreço and Sonae, Wal-Mart is currently the third largest supermarket chain in Brazil, behind Carrefour and Pão de Açúcar.
In July 2006, Wal-Mart announced its withdrawal from Germany due to sustained losses in a highly competitive market. The stores were sold to the German company Metro during Wal-Mart's fiscal third quarter.
In November 2006, Wal-Mart announced a joint venture with Bharti Enterprises to open retail stores in India. As foreign corporations are not allowed to directly enter the retail sector in India, Wal-Mart will operate through franchises and handle the wholesale end. The partnership will involve two joint ventures; Bharti will manage the front end involving opening of retail outlets, while Wal-Mart will take care of the back end, such as cold chains and logistics.
In June, 2007. Wal-Mart announced it was retiring the blue vest its 1.5 million associates wear, and replacing it with khakis and polos. The replacement was to help Wal-Mart increase sales.
Unlike many other retailers, Wal-Mart does not charge a slotting fee to suppliers for their products to appear in the store. Instead, it focuses on selling more popular products and often pressures store managers to drop unpopular products, as well as asking manufacturers to supply more popular products. More than 70% of the goods sold in Wal-Mart are manufactured in China.
On September 14, 2006, the company announced that it would phase out its layaway program, citing declining use and increased costs. Layaway ceased to be offered on November 19, 2006, and required merchandise pickup by December 8, 2006. Wal-Mart now focuses on other payment options, such as increased use of six- and twelve-month, zero-interest financing. The layaway location in most stores is now used for Wal-Mart's Site-To-Store program, which was introduced in March 2007. This enables walmart.com customers to buy goods online with a free shipping option, and have goods shipped to the nearest store for pickup.
Notable former members of the board include Hillary Clinton (1985–1992) and Tom Coughlin (2003–2004), the latter having served as Vice Chairman. Clinton left the board before the 1992 U.S. Presidential Election, and Coughlin left in December 2005 after pleading guilty to wire fraud and tax evasion for stealing hundreds of thousands of dollars from Wal-Mart. On August 11, 2006, he was sentenced to 27 months of home confinement, five years of probation, and ordered to pay $411,000 in restitution.
Wal-Mart also had to face fierce competition in some foreign markets. For example, in Germany it had captured just 2% of German food market following its entry into the market in 1997 and remained "a secondary player" behind Aldi with a 19% share. In July 2006, Wal-Mart announced its withdrawal from Germany. Its stores were sold to German company Metro. Wal-Mart continues to do well in the UK, and its ASDA subsidiary is the second largest chain after Tesco.
In May 2006, after entering the South Korean market in 1998, Wal-Mart withdrew and sold all 16 of its South Korean outlets to Shinsegae, a local retailer, for $882 million. Shinsegae re-branded the Wal-Marts as E-mart stores.
Wal-Mart struggled to export its brand elsewhere as it rigidly tried to reproduce its model overseas. In China, Wal-Mart hopes to succeed by adapting and doing things preferable to Chinese citizens. For example, it found that Chinese consumers preferred to select their own live fish and seafood; stores began displaying the meat uncovered and installed fish tanks, leading to higher sales.
In addition, under heavy pressure from the Chinese government, Wal-Mart accepted a form of organized labor in China. Chinese labor unions do not negotiate contracts but simply pay dues to the government, "to secure the social order." However, Chinese consumers may be more open to Americana than shoppers in Europe.
Each week, about 100 million customers, nearly one-third of the U.S. population, visit Wal-Mart's U.S. stores. Wal-Mart customers give low prices as the most important reason for shopping there, reflecting the "Low prices, always" advertising slogan that Wal-Mart used from 1962 until 2006. The average US Wal-Mart customer's income is below the national average, and analysts recently estimated that more than one-fifth of them lack a bank account, twice the national rate. A Wal-Mart financial report in 2006 also indicated that Wal-Mart customers are sensitive to higher utility costs and gas prices. A poll before the 2004 US Presidential Election indicated that 76% of voters who shopped at Wal-Mart once a week planned to vote for George W. Bush, while only 23% planned to vote for John Kerry. When measured against other similar retailers in the U.S., frequent Wal-Mart shoppers were rated the most politically conservative.
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." Around six months later, it unveiled a new slogan: "Saving people money so they can live better lives". This reflects the three main groups into which Wal-Mart categorizes its 200 million customers: "brand aspirationals" (people with low incomes who are obsessed with names like KitchenAid), "price-sensitive affluents" (wealthier shoppers who love deals), and "value-price shoppers" (people who like low prices and cannot afford much more). Wal-Mart has also made steps to appeal to more liberal customers, for example, by rejecting the American Family Association's recommendations and carrying the DVD Brokeback Mountain, a love story between two gay cowboys in Wyoming.
Labor unions, Christian organizations, and environmental groups have criticized Wal-Mart for its policies and/or business practices. In particular, several labor unions blame Wal-Mart workers' unwillingness to join their organizations on the company's anti-union stance. Others disapprove of the corporation's extensive foreign product sourcing, treatment of employees and product suppliers, environmental practices, and use of public subsidies, and the impact of stores on the local economies of towns in which they operate.
In 2005, labor unions created several websites and organizations to shed new light on Wal-Mart. These included Wake Up Wal-Mart (United Food and Commercial Workers) and Wal-Mart Watch (Service Employees International Union). By the end of 2005, Wal-Mart launched Working Families for Wal-Mart, an operation managed by Wal-Mart to tell the company's side of the story. Additional efforts to counter criticism included a PR campaign in 2005, managed through its PR website walmartfacts.com, as well as several television commercials. The company retained the PR firm Edelman to respond to negative media attention, and started interacting directly with bloggers by sending them news, suggesting topics for postings, and sometimes inviting them to visit its corporate headquarters.
Full-time Wal-Mart employees earn an average of $10.11 per hour, potentially supplemented by quarterly bonuses of up to $1000 through the retailer's "My$hare" program. But critics point out that the starting pay can be far lowerplacing some employees with children below the poverty lineand that payrates do not rise as quickly as with unionized companies. Others decry low levels of health coverage or overpriced health insurance, though the company reports that it offers rates as low as $5 per month in some areas ($9 per month nationwide) and that 92% of its associates are insured (though not necessarily through Wal-Mart). Other allegations regard poor working conditions, unfavorable employer-employee relationships, and anti-union policies. Many suggest that Wal-Mart's high annual turnover-rate of ~70% shows that workers are dissatisfied and maltreated.
In response, Jay Nordlinger of National Review argues that Wal-Mart is attacked simply because it is a leader of the Fortune 500 list or the largest employer in America, and a "free-market success story". Penn & Teller devoted an episode of their show to an analysis of Wal-Mart criticism as a social movement. They theorized that despite the noble rhetoric, the real motivation of "Wal-Mart haters" was rooted in human psychology. They suggested that hating Wal-Mart permits a person "to feel better about themselves" for three main reasons: They "don't run a greedy international conglomerate", they aren't Wal-Mart workers, widely considered "low-skilled, minimum wage drones", and they aren't Wal-Mart customers thought of as "toothless, welfare-getting hillbillies". Wal-Mart stores are unionized in every country outside of North America.
Wal-Mart has opposed the Employee Free Choice Act (EFCA), which would make it easier for workers to unionize. In mid-2008, the company required store managers and department heads to attend meetings at which opposition to the EFCA was used as a fulcrum for criticism of Democratic candidates in the elections for the United States Senate and the House of Representatives, as well as of the presumptive Democratic Presidential nominee, Senator Barack Obama. At these meetings, Wal-Mart human resources managers warned that Democratic victories might result in passage of the EFCA and hence more unionization. At one meeting, a Wal-Mart customer service supervisor from Missouri stated, "I am not telling you how to vote, but if the Democrats win, this bill will pass and you won't have a vote on whether you want a union. A Wal-Mart spokesman, while acknowledging that the meetings were taking place nationwide, said, "If anyone representing Wal-Mart gave the impression we were telling associates how to vote, they were wrong and acting without approval." Several labor-rights groups including the AFL-CIO have asked the Federal Election Commission to investigate whether Wal-Mart broke federal election rules by advocating against Democratic candidate Barack Obama in meetings with employees.
A similar lawsuit, EEOC (Janice Smith) v. Wal-Mart Stores, Inc., was filed on August 24, 2001. It accused the retailer of discriminatory hiring practices at its London, Kentucky Distribution Center, dating back to 1995. Mauldin v. Wal-Mart Stores, Inc. charges that the company's denial of health insurance coverage for birth control is unfair to female employees. In 2002, the lawsuit was granted class action status, allowing all female employees after March 2001 to file claims if they were using contraceptives.
From 2002 through 2006, Wal-Mart received steadily increasing scores on the Human Rights Campaign's Corporate Equality Index, a measure of how companies treat LGBT employees and customers. The company's rating increased from 14% in 2002 to 43% in 2004, due to an expanded antidiscrimination policy to protect gay and lesbian employees. The score increased to 57% in 2005, because of the company's new definition of family that included same-sex partners, and increased again in 2006 to a high of 65%. However, the rating for the 2008 edition dropped back to 40%, attributable to losses in two key areas: not renewing its membership in the National Gay and Lesbian Chamber of Commerce (which it joined in 2006), and a discrepancy from last year's study that was discovered in this year's answers and resulted in another 10-point loss (by comparison, Target scored 80% and Kmart 100%). As a result of the 40% rating, HRC encouraged consumers to "strongly consider other [shopping] options."
In January 2006, Wal-Mart announced that "diversity efforts include new groups of minority, female and gay employees that meet at Wal-Mart headquarters in Bentonville to advise the company on marketing and internal promotion. There are seven Business Resource Groups: women, African-Americans, Hispanics, Asians, Native Americans, Gays and Lesbians, and a disabled group.