Wal-Mart



Wal-Mart Stores, Inc. (NYSE: WMT) is an American public corporation, founded by Sam Walton in 1962 and first incorporated on October 31, 1969, and listed on the New York Stock Exchange in 1972. It is the largest retailer in the world and the second largest corporation in the world, behind Exxon Mobil, based on revenue as of 2006. For the fiscal year ending January 31, 2006, Wal-Mart reported net income of $11.2 billion on $316 billion of sales revenue (3.5% profit margin). It is the largest private employer in the United States and Mexico.

In the United States, Wal-Mart holds an 8.9% retail store market share and is also the largest grocery retailer in the US, with an estimated 20% of the retail grocery and consumables business, and is also the largest toy seller in the US, with an estimated 22 percent of the retail toy business, having surpassed Toys "R" Us in the late-1990s.

Internationally, Wal-Mart operates in Mexico as Walmex, in the United Kingdom as ASDA and in Japan as The Seiyu Co., Ltd.. In 2006, Wal-Mart's international operations accounted for approximately 20.1% of total sales. Wholly-owned operations are located in Argentina, Brazil, Canada, South Korea, Puerto Rico, and the UK. Wal-Mart's investments outside of North America have produced mixed results. Recently Wal-Mart moved to sell its retail operations in South Korea and Germany.

Wal-Mart has been widely criticized for its policies and business practices by community groups, grassroots organizations, labor unions, religious organizations, and environmental groups. Specific concerns include the corporation's extensive foreign product sourcing, treatment of employees and product suppliers, environmental practices, the use of public subsidies, and the impact of stores on the local economies of towns in which they operate.

Sam Walton's retailing career began when he accepted a job offer at a JC Penney store in Des Moines, Iowa on June 3, 1940 where he remained for eighteen months. In 1945, Walton met with Butler Brothers, a regional retailer that owned a chain of variety stores called Ben Franklin. Butler Brothers offered him a Ben Franklin store in Newport, Arkansas. After a period of success, Walton was unable to come to agreement on his lease renewal and unable to find a new location in Newport; so he located a new variety store in Bentonville, Arkansas which he would open as another Ben Franklin franchise, but called "Walton's Five and Dime." Walton achieved higher sales volume by selling products with slightly smaller markups than most competitors.

In 1962, the first Wal-Mart store opened in Rogers, Arkansas. By 1967, the company grew to 24 stores across the state of Arkansas, and had reached $12.6 million in sales, and by 1968, the company opened its first stores outside of Arkansas in Sikeston, Missouri and Claremore, Oklahoma.

The company was incorporated as Wal-Mart Stores, Inc. on October 31, 1969, and by 1970, opened its home office in Bentonville, Arkansas, as well as its first distribution center. There were now 38 stores operating with 1,500 employees and sales of $44.2 million. The company began trading stock at this time as a publicly-held company on October 1, 1972, and was listed on the New York Stock Exchange shortly thereafter. The first stock split occurred in May, 1971 at a market price of $47. By this time, Wal-Mart was operating in five states: Arkansas, Kansas, Louisiana, Missouri and Oklahoma, and entered Tennessee in 1973, and Kentucky and Mississippi in 1974. As the company moved into Texas in 1975, there were 125 stores with 7,500 employees, and total sales of $340.3 million.

Wal-Mart grew rapidly during the 1980s and 1990s. In 2005, it was the world's second highest-grossing corporation.

Wal-Mart's operations are comprised primarily in three retailing subsidiaries: Wal-Mart Stores Division U.S., SAM'S CLUB, and Wal-Mart International. Wal-Mart does business under nine different retail formats: supercenters, food and drugs, general merchandise stores, bodegas (small markets), cash and carry stores, membership warehouse clubs, apparel stores, soft discount stores and restaurants.

Wal-Mart Stores Division U.S. is Wal-Mart's largest business subsidiary, accounting for 67.2% of fiscal 2006 net sales. This segment consists of three traditional retail formats: discount stores, supercenters, and neighborhood markets, all of which are located in the United States, as well as Wal-Mart's online retailer, walmart.com.

Wal-Mart Stores operates retail department stores selling a range of non-grocery products, though emphasis is now focused on the supercenters, which include more grocery items.

Wal-Mart Discount Stores are a chain of discount department stores that range in size from 30,000 square ft. (3,000 m²) to 224,000 square ft. (21,000 m²) with an average size of approximately 102,000 sq. feet (9,500 m²). They carry an amount of general merchandise products with a selection of food items. Many Wal-Mart Discount Stores also feature a garden center, a pharmacy, a tire and oil change shop, optical center, one-hour photo processing lab, portrait studio, as well as a fast food outlet.

The first Wal-Mart store opened in 1962 in Rogers, Arkansas.

As of July 31, 2006, there were 1,146 Wal-Mart Discount Stores in the United States.

Wal-Mart Supercenter is a chain of hypermarkets that range in size from 99,000 square ft. (9,000 m²) to 261,000 square feet (24,000 m²) with an average size of approximately 187,000 square ft. (17,000 m²). They carry everything a Wal-Mart Discount Store does in addition to a full-line supermarket (including meat, bakery, deli, frozen foods, dairy, produce and seafood). Many Wal-Mart Supercenters also feature a garden center, a pharmacy, a tire and oil change shop, optical center, one-hour photo processing lab, portrait studio, and numerous alcove shops such as a SunTrust personal finance center, a cellular phone store, hair and nail salons, video rental by either Movie Gallery or Hollywood Video, a family fun center, a branch of a local bank, and possibly a fast food outlet. Some locations also sell gasoline through Murphy USA.

The first Supercenter opened in 1988 in Washington, Missouri.

As of July 31, 2006, there were 2,098 Wal-Mart Supercenters in the United States.

Wal-Mart Neighborhood Market is a chain of supermarkets that average about 42,000 square feet (3,900 m²). They offer a variety of products including a full-line of groceries, pharmaceuticals, health and beauty aids, photo developing services, and a limited selection of general merchandise. Some locations also sell gasoline through Murphy USA.

The first Neighborhood Market opened in 1998 in Bentonville, Arkansas.

As of July 31, 2006, there were 107 Neighborhood Markets in the United States.

Wal-Mart operates SAM'S CLUB, a chain of warehouse clubs that sells merchandise, often in large quantities or volume, to customers who pay an annual fee for the privilege of shopping there. According to Wal-Mart's 2006 Annual Report, Sam's Club accounted for approximately 12.7% of fiscal 2006 sales.

Chief competitors of Wal-Mart's Sam's Club division are Costco, with a slightly higher gross than Sam's Club outlets, as well as the smaller BJ's Wholesale Club chain operating mainly in the eastern United States.

The first SAM’S Club opened in 1983 in Midwest City, Oklahoma.

As of July 31, 2006, there were over 567 Sam's Clubs in the United States.

The operations of Wal-Mart International comprise 2,700 stores in 14 countries outside the United States. According to Wal-Mart's 2006 Annual Report, International accounted for approximately 20.1% of fiscal 2006 sales. Wholly-owned operations are located in Argentina, Brazil, Canada, South Korea, Puerto Rico and the United Kingdom.

Fiscal 2006 for Wal-Mart's United Kingdom subsidiary, ASDA, were 42.7% of the International segment sales. In contrast to Wal-Mart's U.S. operations ASDA was originally and remains primarily a grocery chain, but it has a stronger focus on non-foods than most UK supermarket chains. At fiscal 2006, there were 236 ASDA stores, 10 George stores, 5 ASDA Living and 43 ASDA small stores.

In addition to its wholly-owned international operations, Wal-Mart has joint ventures in China and several majority owned subsiduaries. Wal-Mart's majority owned subsidiary in Mexico is Walmex. In Japan, Wal-Mart owns 55.3% of The Seiyu Co., Ltd. Additionally, Wal-Mart owns 51% of the Central American Retail Holding Company (CARHCO) formed from more than 360 supermarkets and other store formats, operating in 5 Central American countries: Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica.

In 2004, Wal-Mart bought the Bompreço supermarket chain, comprised by 116 stores. Bompreço is the major supermarket chain in Northeastern Brazil. In late 2005, Wal-Mart took control of the Brazilian operations of Sonae Distribution Group through its new subsidiary, called WMS Supermercados do Brasil, thus acquiring control of the Nacional, Big and Mercadorama supermarket chains, the leaders in Rio Grande do Sul and Paraná states. None of those operations were rebranded. As of August 2006, Wal-Mart operates 71 Bompreço stores, 27 Hiper-Bompreço stores, 15 Balaio stores and 3 Hiper-Magazines (all were originally part of Bompreço). It also operates 67 Nacional stores, 24 Mercadorama stores, 15 Big stores through WMS. It also runs 19 Wal-Mart Supercenters, 13 Sam's Club stores and 2 Todo Dia (small stores) stores. With the acquisition of Bompreço and Sonae, Wal-Mart is currently the third biggest supermarket chain in Brazil, only behind Carrefour and Pão de Açúcar.

In July 2006, Wal-Mart announced its withdrawal of operations from Germany because of sustained losses. Their stores will be sold to the German company METRO AG. The sale is subject to regulatory approval.

In Canada they are opening their first supercenter in London Ontario. In late 2006, 2 Supercenter Wal-Marts will open; one in North London, and the other in Toronto.

Wal-Mart's business model is based on selling a wide variety of general merchandise and marketing "always low prices." The company refers to its employees as, "associates." All Wal-Mart stores in the United States and Canada also have designated "people greeters," whose general role is to welcome shoppers at the store entrance, as well as playing a role in loss prevention and security.

Unlike many other retailers, Wal-Mart does not charge a slotting fee to suppliers for their products to appear on the store. Alternatively, they focus on selling more popular products, and often pressure store managers to drop unpopular products in favor of more popular ones, as well as manufacturers to supply more popular products.

Wal-Mart is governed by a thirteen-member Board of Directors, which is elected annually by shareholders. S. Robson Walton, the eldest son of founder Sam Walton, serves as Chairman of the Board, and H. Lee Scott, the Chief Executive Officer, serves on the board as well. Other members of the board include Aida M. Alvarez, James W. Breyer, M. Michele Burns, James I. Cash, Jr., Douglas N. Daft, David D. Glass, Roland A. Hernandez, Jack C. Shewmaker, Jim C. Walton, Christopher J. Williams, and Linda S. Wolf.

Notable former members of the board include Hillary Clinton (1985-1992), and Tom Coughlin (2003-2004), who also served as Vice Chairman. Clinton left the Board prior to the 1992 U.S. Presidential Election, and Coughlin left the board 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 twenty-seven months of home confinement, five years of probation, and ordered to pay $411,000 in restitution.

In the United States, Wal-Mart's chief competitors in low-end general merchandise include Sears Holdings Corporation's Kmart chain and Target. Many smaller regional chains, such as Meijer in the midwest, are also competitors. Wal-Mart's move into the grocery business has also positioned it against major grocery chains such as HEB, Kroger, Albertsons, Publix, Giant Eagle, Safeway, Winn-Dixie, Ahold and many other regional chains and independents. A niche has been carved out of Wal-Mart's dominance in the United States by several retail corporations. By focusing on a small number of low-cost products, dollar store retailers such as Family Dollar and Dollar General have successfully competed head-to-head with Wal-Mart for home consumer sales. In 2004, Wal-Mart responded by testing their own dollar store concept, a subsection of some stores known as "Pennies-n-Cents."

In Canada Wal-Mart competes with the Hudson Bay Companys low cost department store Zellers, which is the second largest chain of discount department stores in Canada after Wal-Mart. Wal-Mart also competes with Canadian department stores Sears Canada, Winners, Giant Tiger, and various other regional chains. For Grocery in Canada Wal-Mart competes with Loblaws, Safeway, Sobeys, No Frills and various other Canadian grocery store chains.

Wal-Mart has struggled in other foreign markets. For example, in Germany, Wal-Mart had captured just 2% of German food sales following its entry into the market in 1997 and had remained "a secondary player" compared to competitor Aldi which boasts 19% share of the German market. In July 2006, Wal-Mart announced its withdrawal of operations from Germany because of sustained losses. Wal-Mart's stores are to be sold to German company METRO AG. In China, Wal-Mart is "a small fish" as its strategy of "everyday low prices" has not been successful against "Chinese mom-and-pop shops that are used to cutthroat pricing." On 2006-05-22, Wal-Mart withdrew from South Korea market when it agreed to sell all 16 of its South Korean outlets to Shinsegae, a local retailer, for $882 million. Wal-Mart had originally entered the South Korea market in 1998. In the United Kingdom, Wal-Mart's Asda subsidiary is the second largest chain in the UK after Tesco. Specifically, ASDA is a distant second to Tesco in the UK grocery market, and as of 2006 the gap is widening, based on market share figures published by TNS Superpanel.

Wal-Mart is a global company with a diverse customer base. Wal-mart customers place low prices and value as the most important reason for shopping at Wal-Mart. Financial results in 2006 have indicated Wal-Mart customers are sensitive to higher utility costs and gas prices.

In the United States, it has been reported that eighty percent of residents of the United States shop at Wal-Mart at least once a year. And each week, 100 million customers visit Wal-Mart's U.S. stores - "more than one-third of the U.S. population."

Frequent Wal-Mart customers show some demographic trends. In the U.S., Wal-Mart customer's average incomes are below the national average. Analysts have estimated that more than one-fifth of Wal-Mart's U.S. customers have no bank accounts, twice the national rate. Polling Data reported by John Zogby suggests there is a correlation between how often consumers shop at Wal-Mart and how conservative they are. In the 2004 US Presidential election 76% of voters who shopped at Wal-Mart once a week voted for George W. Bush while only 23% voted for John Kerry. By contrast 80% of voters who never shopped there voted for Kerry with 18% voting for Bush. African American and Hispanic voters who shop there are described as "significantly more conservative" than their non Wal-Mart shopping peers. When measured against other similar retailers in the United States, Wal-Mart frequent shoppers were rated the most politically conservative.

Wal-Mart has recently taken actions to expand its U.S. customer base. On September 7, 2006, the Wall Street Journal reported that Wal-Mart was modifying its U.S. stores from a one-size-fits-all merchandising strategy to a custom-fitting merchandise assortment designed to "reflect each of six demographic groups -- African-Americans, the affluent, empty-nesters, Hispanics, suburbanites and rural residents." An example of the company's efforts to broaden its U.S. customer base include a focus on gay and lesbian customers including a December 2005 internal seminar and the August 2006 joining of the corporate advisory council of the National Gay and Lesbian Chamber of Commerce in what is described as a "pragmatic" effort "to broaden its appeal as it tries to expand into new territories, particularly in the more liberal and union-friendly urban and coastal regions". It's noted that Wal-Mart rejected the American Family Association's recommendations by carrying the movie "Brokeback Mountain," a love story about two cowboys in Wyoming.

Wal-Mart's private label store brands include: Great Value, Equate, and Sam's Choice. In a 2006 study, The Hartman Group marketing research firm issued a report that found that, "While clearly other results in this study point to the success of other retailers, we are struck by the magnitude of mind-share Wal-Mart appears to hold in shoppers' minds when it comes to awareness of private label brands and retailers."

Wal-Mart has some critics, including community groups, grassroots organizations, trade unions, and environmental groups. Specific concerns include the company's extensive foreign product sourcing, treatment of employees and product suppliers, environmental carelessness, use of public subsidies, and store impacts on local communities and businesses. Additionally, Wal-Mart has faced accusations of illegal activities, including predatory pricing, discrimination and violation of labor laws.

In the United States, one common criticism derives from claims that Wal-Mart uses cheap, foreign labor in an attempt to provide its customers with lower prices. According to the AFL-CIO, "Wal-Mart is the single largest importer of foreign-produced goods in the United States", their biggest trading partner is China, and their trade with China alone constitutes approximately 10 percent of the total US trade deficit with China as of 2004. While Wal-Mart highlights its US suppliers, 60% of its products are imported from other countries as of 2004, compared with 6% in 1996. Other Wal-Mart goods have been manufactured and imported from such places as South Korea, Philippines, Malaysia, Cambodia, Thailand, and Vietnam.

Another United States-specific criticism concerns Wal-Mart's health insurance. According to an October 2005 article in BusinessWeek, Wal-Mart's health insurance covers 44% or approximately 572,000 of its 1.3 million U.S. workers. In comparison, Wal-Mart rival Costco insures approximately 96% of its eligible workers. Further, Wal-Mart spends an average of $3,500 per employee for health care, 27% less than the retail-industry average of $4,800. Wal-Mart CEO Lee Scott acknowledged benefits could improve by claiming Wal-Mart employees can get better value from taxpayer funded health care than from Wal-Mart's own health plans, "In some of our states, the public program may actually be a better value - with relatively high income limits to qualify, and low premiums." On April 17, 2006, Wal-Mart announced that it was making a health care plan available to part-time workers after only 1 year of service, instead of the prior 2 year requirement, as well as extending the coverage to include children. The company estimates that this new change could add 150,000 workers to health coverage plans, if all eligible choose to take part. However, there is concern that since the new plan provides a benefit only after a $1,000 deductible is paid ($3,000 for a family), many workers will be unable to afford the coverage and will opt not to participate in the plan.

The State of Maryland passed a controversial bill in January of 2006 requiring that all corporations with more than 10,000 employees in the state spend at least 8% of their payroll on employee benefits, or pay into a state fund for the uninsured. Wal-Mart, with about 17,000 employees in Maryland, was the only known company to not meet this requirement before the bill passed. On July 7, 2006, the Maryland law was overturned in federal court by U.S. District Judge Frederick Motz who ruled that the law would "hurt Wal-Mart by imposing the administrative burden of tracking benefits in Maryland differently than in other states."

Wal-Mart has been criticized for their aggressive policies against labor unions. In North America, the company has largely thwarted unionization through aggressive anti-union tactics such as managerial surveillance and pre-emptive closures of stores or departments who choose to unionize. Wal-Mart's anti-union policy at home is also used in Canada, as well as several other countries. For example, when workers at a Jonquière, Quebec Wal-Mart voted to unionize, Wal-Mart closed the store five months later, citing weak profits. In countries that require unions or the option to join a union, such as Germany and China, Wal-Mart allows them. In August 2006 Wal-Mart announced that it will allow workers at all of its Chinese stores to become members of trade unions. The US retailer said it would work with the state-sanctioned All-China Federation of Trade Unions (ACFTU) on representation for its 28,000 staff.

In August, 2006, the company announced that it would roll out an average pay increase of 6% for all new hires at 1,200 Wal-Mart and Sam's Club locations nationwide, and at the same time would institute pay caps on veteran workers. While Wal-Mart claims the measures are necessary to stay competitive, critics claim the salary caps are primarily an effort to push higher-paid, veteran workers out of the company.

Wal-Mart's United Kingdom subsidiary, ASDA, was voted a top ten UK employer by the UK newspaper Sunday Times Top 100 Best Employers Survey in 2003, 2004 and 2005.Permission is granted to copy, distribute and/or modify this document under the terms of the GNU Free Documentation License, Version 1.2 or any later version published by the Free Software Foundation; with no Invariant Sections, with no Front-Cover Texts, and with no Back-Cover Texts.
Virtual Magic is a human knowledge database blog. Text Based On Information From Wikipedia, Under The GNU Free Documentation License. Copyright (c) 2007 Virtual Magic. Permission is granted to copy, distribute and/or modify this document under the terms of the GNU Free Documentation License, Version 1.1 or any later version published by the Free Software Foundation; with no Invariant Sections, no Front-Cover Texts and no Back-Cover Texts. A copy of the license is included in the section entitled "GNU Free Documentation License".

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