Wal-Mart
|
|
Template:Message boxTemplate:Infobox Company Wal-Mart Stores, Inc. Template:Nyse, founded by Sam Walton in 1962, is the largest retailer and largest company in the world based on revenue. In the fiscal year ending January 31, 2005, Wal-Mart reported net income of US$10.3 billion on US$285.2 billion of sales revenue (3.6% profit margin). 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—$8.90 out of every $100 spent in U.S. retail stores is spent at Wal-Mart.
Wal-Mart Stores, Inc. is classified as 45291 (Warehouse Clubs and Superstores) and 45299 (All Other General Merchandise Stores) using NAICS.
| Contents |
|
2.1 Retail operations |
History
Walmart_rollback_1.jpg
- 1962 First Wal-Mart store opens in Rogers, Arkansas
- 1969 The company incorporates as Wal-Mart Stores, Inc. on Oct. 31.
- 1972 Wal-Mart listed on the New York Stock Exchange.
- 1983 First Sam's Club opens in Midwest City, Oklahoma.
- 1987 Wal-Mart completes largest private satellite communication system in the U.S.
- 1988 First Supercenter opens in Washington, Missouri.
- 1990 Wal-Mart becomes nation's largest retailer.
- 1991 The first store outside of the U.S. opens, in Mexico City.
- 1994 Wal-Mart acquires 122 Woolco stores in Canada.
- 1996 Wal-Mart enters China through a joint-venture agreement.
- 1997 Wal-Mart replaces Woolworth on the Dow Jones Industrial Average.
- 1997 Wal-Mart becomes largest private employer in the United States, with 680,000 employees worldwide.
- 1997 Wal-Mart has its first $100 billion sales year.
Walmart_rollback_2.jpg
- 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.
- 2003 Wal-Mart sets a single-day sales record of $1.52 billion on Black Friday.
- 2004 Wal-Mart buys the Amigo supermarket chain in Puerto Rico for $17 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 in a public relations effort to counter 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.
Walmartlogosheet.jpg
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. (commonly known as big box stores)
- 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 and online photo processing.
- 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.
Store counts & revenue
Current store counts and revenue for Fiscal Year Ending January 31, 2005 (revenue amounts in U.S. Dollars):
- Company Total: 5,246 stores (excludes Seiyu operations) (US$285.2 billion)
- Wal-Mart Stores USA (3,151 stores, excluding Puerto Rico) (US$191.8 billion)
- Discount Stores: 1,353
- Supercenters: 1,713
- Neighborhood Markets: 85
- SAM'S CLUB (United States): 551 Clubs (US$37.1 billion total)
- International: 1,587 (US$56.3 billion total)
- Argentina: 11
- Brazil: 149
- Canada: 262
- China: 43
- Germany: 91
- South Korea: 16
- Mexico: 679
- Puerto Rico (United States insular area): 54
- United Kingdom (ASDA): 282
- Wal-Mart Stores USA (3,151 stores, excluding Puerto Rico) (US$191.8 billion)
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 showing commercials for products sold in the stores, concerts clips and music videos for artists sold in the stores, trailers for upcoming movie releases, and news. According to a New York Times story, it is seen by 130 million people a month, making it the fifth largest network in America, behind NBC, CBS, ABC and Fox.
Philanthropy
In 2004, cash donations to charities by Wal-Mart, its employees, and its customers made through Wal-Mart, the Wal-Mart Foundation and the Sam's Club Foundation totaled more than $170 million (less than 0.06% of Wal-Mart's gross revenue, less than 1.7% of profit).
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; however, nonmember U.S. customers may legally refuse to reveal the contents of their purchase.
U.S. Senator Hillary Clinton (Democrat, New York) formerly worked as a lawyer for Wal-Mart and also served on its Board of Directors.
Key employees
| Executive Board | |
| S. Robson Walton | Chairman of the Board |
| H. Lee Scott, Jr. | President, CEO, Director (2004 Compensation: $12,444,790 USD) |
| Thomas M. Schoewe | CFO (2004 Compensation: $2,681,682 USD) |
| Non Executive Board | |
| David D. Glass | Chairman of the Executive Committee, Director |
| James W. Breyer | Director |
| Michele M. Burns | Director |
| Roland A. Hernandez | Director |
| John D. Opie | Director |
| Paul J. Reason | Director |
| Jack C. Shewmaker | Director |
| Jose H. Villarreal | Director |
| John T. Walton | Director |
| Christopher J. Williams | Director |
| Senior Management (non-exhaustive list) | |
| John B. Menzer | EVP and President and CEO, Wal-Mart International Division |
| Michael T. Duke | EVP and President and CEO, Wal-Mart Stores Division |
| Eduardo Castro-Wright | EVP and COO, Wal-Mart Stores Division |
| Linda M. Dillman | EVP and CIO |
| Rollin L. Ford | EVP, Logistics and Supply Chain |
| Lawrence V. Jackson | EVP, People Division (Chief HR Officer) |
| Charles M. Holley, Jr. | SVP, CAO, Controller |
| Thomas D. Hyde | EVP, Legal and Corporate Affairs, Corporate Secretary |
| Karen Stuckey | SVP of Product Development, Wal-Mart Stores USA |
| Kevin B. Turner | EVP; President and CEO, SAM'S CLUB |
Wal-Mart benefits
Wal-Mart offers the following benefits to its employees:
- Health (80/20 co-pay cost varies by plan and health; Wal-Mart pays average of two-thirds of insurance cost.6)
- Dental (80/20 co-pay)
- Stock Options (1.5% return default)
- 401k (50% match, up to 4% of employees' pay)
- 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
- Prescription Drug Benefit
- 10% Discount
- Stake Holders Bonus (varies per store based on sale threshold)
- Sick Pay
- Vacation pay
- Personal time pay
- Bereavement Pay (immediate family members)
Employees are eligible for full benefits after six months of full-time employment, two years of peak-time (part-time or seasonal) employement, or 1000 hours worked. Most benefits, including limited health insurance, start at the first day of employment.
Over 500,000 of its 1.6 million employees have some coverage under the insurance plan.6
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:
- The company has always paid a great deal of attention to site selection; in the company's early years, Sam Walton would fly over small towns in a private plane to identify prospective locations. The company claims it analyzes potential locations to find those that would support "one and a half" stores.
- Wal-Mart benefits from economies of scale in 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 The 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] (http://www.epcglobalinc.org/about/about_epcglobal.html) to use RFID-based Electronic Product Codes to lower the costs of supply chain management. As of June 2004, it has announced plans [2] (http://www.walmartstores.com/wmstore/wmstores/Mainnews.jsp?pagetype=news&template=NewsArticle.jsp&categoryOID=-8300&contentOID=13926&catID=null&prevPage=NewsShelf.jsp&year=2004) to require the use of the technology among 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 billion, with $209 billion coming from U.S. operations. U.S. current account imports from China was reported as $152.4 billion during 2003 ([3] (http://www.bea.gov/bea/newsrel/tradannnewsrelease.htm)). Mainland Chinese media place Wal-Mart as their 8th largest trading partner in front of Russia and the UK on the top-10 list.
- 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 inefficiencies in the business such as reducing paper used through computerization. Wal-Mart has closed stores in what critics claim were efforts to avoid the expense of hiring union workers, but which stockholders may see as an effective means of avoiding costs.
Criticism
Overview
From a financial standpoint, Wal-Mart is one of the most successful companies ever. 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. 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 or religious values to influence its product selection. Critics claim this effectively forces the company's values on customers and suppliers.
- 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 or magazines that generated customer complaints. At the time of the announcement, Maxim, FHM and Stuff were removed from stores. Other titles deemed offensive by the company were moved to displays that obscured the magazines' covers. Magazines such as Redbook, Cosmopolitan and Marie Claire were among those magazines relocated. Editors and publishers of these titles criticized the action as an infringement upon 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. Record labels release edited versions with 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 information of imports/outsourcing/globalization, see the appropriate 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 negotiations, leading to reduced profit margins for suppliers.
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.
Economic theory suggests that suppliers will not 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. Suppliers, however, do not always behave according to economic theory, and Wal-Mart does not attempt to make them do so. In addition, suppliers may not have the long term relationship necessary to recoup any short term losses incurred.
Wal-Mart's supporters point out that 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 all cost savings above 2.1 percentage points (22.9% less 20.8%) have been passed on to customers through lower retail prices. UBS Warburg found that Wal-Mart's prices are 17% to 20% lower than other grocers.
There have been few, if any, documented allegations of non-payment by its suppliers. Generally, Wal-Mart is praised by suppliers for paying bills on time.
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 distribution 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 existing, 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] (http://econwpa.wustl.edu/eps/lab/papers/0303/0303002.pdf) 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, 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. (Wal-Mart has used satellite imagery to plan store openings based on such criteria as traffic flow and location of existing, competing, retail businesses.) 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 its buildings has also created problems with members of city planning and architectural community. Most major retailers follow the same inexpensive style (such as Home Depot, Target, Bed Bath and Beyond, etc).
The typical Supercenter raises or gives $30,000 to $50,000 a year to local charitable needs ranging from youth programs to literacy councils. Wal-Mart is the largest corporate cash contributor in America. In fiscal year ending 2005, Wal-Mart Stores, Inc. and the Wal-Mart & SAM'S CLUB Foundation and Wal-Mart customers and employees together contributed more than $170 million to support communities and local non-profit organizations. More than 90 percent of cash donations from Wal-Mart Stores and the Wal-Mart & SAM'S CLUB Foundation target local communities. In 2004, Wal-Mart collected $11.3 billion in state and local sales taxes and paid millions in property taxes.
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] (http://www.democracynow.org/article.pl?sid=04/11/08/1513234)
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 claims that potential customers' enthusiasm for the store indicated that they were willing to accept the store's presence in order to lower prices and improve the quality of life.
Employee/labor relations
- (For information on the large-scale impact of Wal-Mart's employment practices, see the local community impacts section.)
Opposition to unions
The target of persistent unionizing efforts, Wal-Mart aggressively resists union attempts. On several occasions, the company has been found to have acted illegally to prevent unionization. Wal-Mart is alleged to have fired 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. Of these, at least one (Jonquière in the province of Québec) was closed within one year of the successful vote to unionize.
In 2000, the meat-cutting department of the Wal-Mart superstore in Jacksonville, Texas voted to unionize. Eleven days later, Wal-Mart eliminated its meat-cutting operations at all Wal-Mart stores and switched to buying pre-cut meats. Likewise, when the employees of a Wal-Mart in Jonquière, Quebec, Canada voted to unionize, Wal-Mart announced that it would close the store for "financial difficulties" even though the Jonquière superstore was more profitable than the neighboring Saguenay superstore which still remains open today. [6] (http://montreal.cbc.ca/regional/servlet/View?filename=qc-walmart20050209)
On April 30, 2005, Wal-Mart closed the doors at its first North American, unionized, outlet. 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 April 30 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 Wal-Mart 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 Saint-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 are 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.
Wal-Mart'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 accommodate 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] (http://montreal.cbc.ca/regional/servlet/View?filename=qc-walmart20050225)
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 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). Although they average nearly double the federal minimum wage, 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 pressured employees to work "off-the-clock" in order to avoid overtime pay. It remains to be determined whether this is isolated misconduct by individual managers or a policy tacitly encouraged by corporate headquarters.
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. There were no charges brought against Wal-Mart or any of its associates. Several of the custodial services firms that employed the illegal immigrants pled guilty to criminal charges.
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)
Sex 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 both current and former employees and 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 against Wal-Mart and in favor of the plaintiffs.
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.
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 deficit with China, heavily influenced by Wal-Mart imports, is estimated to have moved over a million American jobs to China.
Wal-Mart supporters counter that it buys merchandise and services from more than 68,000 U.S suppliers and supports over 3.5 million supplier jobs in the United States.
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 sweatshops 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.
See also
Wal-Mart
- Code Adam, the Wal-Mart child-safety program
- List of assets owned by Wal-Mart Stores, Inc.
- Sam's Club
Other
References and external links
Wal-Mart corporate web sites
- Note 1: Wal-Mart Stores, Inc. Corporate Site (http://www.walmartstores.com/)
- Note 2: Wal-Mart Foundation (http://www.walmartfoundation.org)
- Note 3: Wal-Mart Corporate Communications site (http://www.walmartfacts.com)
- Note 6: Wal-Mart Facts web page, section regarding Benefits (retreived May 25, 2005) (http://www.walmartfacts.com/newsdesk/wal-mart-fact-sheets.aspx#a125)
Articles & reports
- Reclaim Democracy (http://reclaimdemocracy.org/walmart/) huge collection of articles, studies and websites on Wal-Mart. The articles largely are critical of Wal-Mart, but Wal-Mart supporters also are represented and the stories cover much of the best reporting and studies from multiple perspectives.
- UC Berkeley report on the community impact of Wal-Mart's lower wages (http://laborcenter.berkeley.edu/lowwage/walmart.pdf)(pdf)
- "Wal-Mart Sells the Marine Corps" (http://montages.blogspot.com/2005/04/wal-mart-sells-marine-corps.html)
- Wal-Mart's China inventory to hit US$18b this year (http://www.chinadaily.com.cn/english/doc/2004-11/29/content_395728.htm) China Daily, November 29, 2004.
- BBC Three, Outrageous Fortunes, aired on 26 April 2004, about the workings of Wal-Mart.
- "Inside the Leviathan" (http://www.nybooks.com/articles/17647) by Simon Head for The New York Review of Books, December 16, 2004
- Attacking Wal-Mart's Supply Chain (http://montages.blogspot.com/2004/12/attacking-wal-marts-supply-chain.html)
- "The Wal-Mart You Don't Know" (http://www.fastcompany.com/magazine/77/walmart.html), Fast Company, Issue 77, December 2003, Page 68
- "A distorted lens on Wal-Mart" (http://www.washtimes.com/commentary/20041121-105707-5851r.htm), Bruce Bartlett, Washington Times, November 22, 2004
- "Job Creation or Destruction? Labor-Market Effects of Wal-Mart Expansion" (http://econwpa.wustl.edu/eps/lab/papers/0303/0303002.pdf), Emek Basker, Dept. of Economics, University of Missouri, 2002.
- Study of Peachcare (http://democrats.assembly.ca.gov/members/a22/Press/p222004025.htm)
- Democratic Staff of the House Committee on Education and the Workforce, "Wal-Mart: High Prices for American Workers" (http://edworkforce.house.gov/democrats/WALMARTREPORT.pdf) (PDF file, February 16, 2004)
Documentaries
- Store Wars (http://www.pbs.org/itvs/storewars/index.html) is a PBS special taking a close look at one community's battle over Wal-Mart.
- Frontline: Is Walmart Good for America? (http://www.pbs.org/wgbh/pages/frontline/shows/walmart/) (PBS Frontline documentary on the impact of Walmart in the U.S. and China)
Books about Wal-Mart
- The Bully of Bentonville: How the High Cost of Wal-Mart's Everyday Low Prices Is Hurting America, by Anthony Bianco (2006)-ISBN 0385513569
- Data Warehousing: Using the Wal-Mart Model, by Paul Westerman (2000)-ISBN 155860684X
- How Wal-Mart Is Destroying America and the World: And What You Can Do about It (3rd edition), by Bill Quinn (2005)-ISBN 1580086683
- In Sam We Trust: The Untold Story of Sam Walton and Wal-Mart, the World's Most Powerful Retailer, by Bob Ortega (1998)-ISBN 0812963776
- Selling Women Short: The Landmark Battle for Workers' Rights at Wal-Mart, by Liza Featherstone (2004)-ISBN 0465023169
- Wal-Mart: A Field Guide to America's Largest Company and the World's Largest Employer, by Nelson Lichtenstein (2006)-ISBN 1595580212
- Wal-Mart: The High Cost of Low Price, by Disinformation Company (2005)-ISBN 1932857249
- The Wal-Mart Decade: How a New Generation of Leaders Turned Sam Walton's Legacy into the World's #1 Company, by Robert Slater (2003)-ISBN 1591840066
- The Wal-Mart Triumph: Inside the World's #1 Company, by Robert Slater (2004)-ISBN 1591840430
- The Wal-Mart Way: The Inside Story of the Success of the World's Largest Company, by Don Soderquist (2005)-ISBN 0785261192
- What I Learned from Sam Walton: How to Compete and Thrive in a Wal-Mart World, by Michael Bergdahl (2004)-ISBN 0471679984
Other Books and References
- Barbara Ehrenreich, Nickel and Dimed: On (Not) Getting By in America (2001, ISBN 0805063889)
- Greg Palast, The Best Democracy Money Can Buy (2002 ISBN 0745318460)
Critics
- Sprawl Busters (http://www.sprawl-busters.com/), site Al Norman, an activist who helps local "site fights" against big box stores
- Index of numerous studies on Wal-Mart's economic and social impacts (http://amiba.net/recommended.html#studies) from The American Independent Business Alliance.
- Wake-Up Wal-Mart (http://www.wakeupwalmart.com/) Join America's Campaign to change Wal-Mart
- Wal-Mart Watch (http://www.walmartwatch.com/)
- Wal-Mart Wiki (http://www.walmartwiki.com) Though not strictly critical, this wiki is definitely weighted against Wal-Mart in its current state.
- Wal-Mart Free NYC (http://walmartfreenyc.blogspot.com) A group fighting to keep New York City Wal-Mart free.
Data
- Yahoo! - Wal-Mart Stores, Inc. Company Profile (http://biz.yahoo.com/ic/11/11600.html)
- WMT: Profile for WAL-MART STORES - Yahoo! Finance (http://finance.yahoo.com/q/pr?s=WMT)
- 2004-04-09 10-K (http://www.sec.gov/Archives/edgar/data/104169/000119312504059900/d10k.htm)da:Wal-Mart
de:Wal-Mart el:Wal-Mart es:Wal-Mart fr:Wal-Mart nl:Wal-Mart ja:ウォルマート sv:Wal-Mart zh:沃尔玛