Wal-Mart Stores, Inc. 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.[5] 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 third-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.
Wal-Mart operates in Mexico as Walmex, in the UK as Asda, and in Japan as Seiyu. It has wholly owned operations in Argentina, Brazil, Canada, and 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, alleged sexism, and even management efforts to pressure employees to vote for specific parties during national elections. Conversely, others point out that Wal-Mart’s rapid growth and logistical efficiency has enabled it to bring lower prices to consumers and more jobs and new small businesses to the communities in which it operates.
History
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 at 719 Walnut Ave. in Rogers, Arkansas. The building is now occupied by a hardware store and a pawn shop. 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.
Incorporation and growth
The company was incorporated as Wal-Mart Stores, Inc. on October 31, 1969. In 1970, it opened its home office and first distribution center in Bentonville, Arkansas. It had 38 stores operating with 1,500 employees and sales of $44.2 million. It began trading stock as a publicly held company on October 1, 1972, and was soon listed on the New York Stock Exchange. The first stock split occurred in May 1971 at a market price of $47. By this time, Wal-Mart was operating in five states: Arkansas, Kansas, Louisiana, Missouri, and Oklahoma; it entered Tennessee in 1973 and Kentucky and Mississippi in 1974. As it moved into Texas in 1975, there were 125 stores with 7,500 employees and total sales of $340.3 million.
Logo used from 1992-2008 (2001-2009 in Canada, 1992-2009 in Mexico)In 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.
Inside a Walmart Supercenter in MexicoIn 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.”
In the aftermath of Hurricane Katrina in September 2005, Wal-Mart was able to use its logistical efficiency in organizing a rapid response to the disaster, donating $20 million in cash, 1,500 truckloads of free merchandise, food for 100,000 meals, as well as the promise of a job for every one of its displaced workers. An independent study by Steven Horwitz of St. Lawrence University found that Wal-Mart, Home Depot, and Lowe’s, made use of their local knowledge about supply chains, infrastructure, decision makers and other resources to provide emergency supplies and reopen stores well before FEMA began its response. While the company was overall lauded for its quick response – amidst the criticisms of the Federal Emergency Management Agency – several critics were nonetheless quick to point out that there still remain issues with the company’s labor relations issues.
Recent initiatives
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.[28] 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 not only save $2.4 million a year in shipping costs but also 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.
At the same time that AIG was criticized for using government bailout funds to awards executives $165 million, Wal-Mart announced an expansion of its annual bonus program to employees. On March 20, 2009, Wal-Mart announced that it is paying a combined $933.6 million in bonuses to every full and part time hourly worker of the company. An additional $788.8 million in profit sharing, 401(k) contributions, and hundreds of millions of dollars in merchandise discounts and contributions to the employees’ stock purchase plan is also included in this plan. While the economy at large was in an ongoing recession, the largest retailer in the U.S. reported solid financial figures for the most recent fiscal year (ending January 31, 2009), with $401.2 billion in net sales, a gain of 7.2% from the prior year. Income from continuing operations increased 3% to $13.3 billion, and earnings per share rose 6% to $3.35
Subsidiaries
Wal-Mart’s operations primarily comprises three retailing subsidiaries: Wal-Mart Stores Division U.S., Sam’s Club, and Wal-Mart International. The company does business in nine different retail formats: supercenters, food and drugs, general merchandise stores, bodegas (small markets), cash and carry stores, membership warehouse clubs, apparel stores, soft discount stores and restaurants.
Wal-Mart Stores Division U.S.
Wal-Mart Stores Division U.S. is Wal-Mart’s largest business subsidiary, accounting for 67.2% of net sales for financial year 2006. It consists of three retail formats that have become commonplace in the United States: Discount Stores, Supercenters, and Neighborhood Markets. The retail department stores sell a variety of mostly non-grocery products, though emphasis has now shifted towards supercenters, which include more grocery items. This division also includes Wal-Mart’s online retailer, walmart.com.
In September 2006, Wal-Mart announced a new pilot program to sell generic drugs at just $4 per prescription. The pilot program was launched at stores in the Tampa, Florida area, and expanded to all stores in Florida by January 2007. While the average price of generics is $29 per prescription, compared to $102 for name-brand drugs, Wal-Mart maintains that it is not selling at a loss, or providing as an act of charity – instead, they are using the same mechanisms of mass distribution that it uses to bring lower prices to other products.
On February 6, 2007, the company launched a “beta” version of its new movie download service, mediadownloads.walmart.com, which sells 3,000 films and television episodes from all major studios and television networks. This service was discontinued on December 21, 2007.
Wal-Mart Discount Stores
A typical Wal-Mart discount department store in Laredo, TexasWal-Mart Discount Stores are discount department stores with size varying from 51,000 square feet (4,738.1 m2) to 224,000 square feet (20,810.3 m2), with an average store covering about 102,000 square feet (9,476.1 m2). 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 Supercenter
Wal-Mart Supercenters are hypermarkets with size varying from 98,000 square feet (9,104.5 m2) to 261,000 square feet (24,247.7 m2), with an average of about 197,000 square feet (18,301.9 m2). 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 (usually Subway; several Supercenter and discount locations have also had McDonald’s locations, usually with reduced menus, beginning in the early 1990s). Some Dunkin’ Donuts or Blimpie restaurants can be found inside Walmart Supercenters. Some also sell gasoline distributed by 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.
As of January 31, 2008, there were 2,447 Wal-Mart Supercenters in the United States. The nation’s largest Supercenter, covering 260,000 square feet (24,000 m2) and two floors, is located in Crossgates Commons in Albany, New York.
Wal-Mart Neighborhood Market
Main article: Wal-Mart Neighborhood Market
Wal-Mart Neighborhood Market in Winter Springs, FloridaWal-Mart Neighborhood Markets are grocery stores that average about 42,000 square feet (3,901.9 m2).They offer a variety of products, which include full lines of groceries, pharmaceuticals, health and beauty aids, photo developing services, and a limited selection of general merchandise.
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.
Wal-Mart Neighborhood Market now has the same logo as Wal-Mart does. However, this change took place a few months after the new logo was introduced on June 30, 2008
Sam’s Club
Main article: Sam’s Club
A typical Sam’s Club store in Maplewood, MissouriSam’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.” In March 2009, the company announced that it plans to enter the electronic medical records business by offering a software package to physicians in small practices for $25,000. Wal-Mart is partnering with Dell and eClinicalWorks.com in this new venture.
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.
Marketside
Main article: Marketside
Marketside is a new chain of grocery stores opened in October 2008, the stores are said to be less than half the size of a conventional supermarket, as stated in the backgrounder found on Wal-Mart’s official homepage. Each of their stores is open from 7 a.m. to 10 p.m.
Wal-Mart International
Wal-Mart’s UK subsidiary, Asda
ASDA’s headqaurters, ASDA House in Leeds
A Wal-Mart/Walmex store in Playa del Carmen, Mexico
A typical Wal-Mart store in Moncton, New BrunswickWal-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 122 stores comprising the Woolco division of Woolworth Canada, Inc in 1994. As of October 31, 2008, it operates 310 locations, employing 77,500 Canadians, with a local home office in Mississauga, Ontario. Wal-Mart Canada’s first three Supercentres (spelled as in Canadian English) opened on November 8, 2006, in Hamilton, London, and Aurora, Ontario. As of October 31, 2008, there are 39 Wal-Mart Supercentres in Canada, and 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 June 2006, Wal-Mart was excluded from the investment portfolio of The Government Pension Fund of Norway, which held stock values of about US$ 430 million in the company, due to a social audit into alleged labor rights violations in the company’s operations in the US and worldwide.Although Wal-Mart did not respond to questions from the fund’s auditors, the company later claimed the decision “don’t appear to be based on complete information”.
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 2008, Wal-Mart named German retailing veteran Stephan Fanderl as the president of Wal-mart Emerging Markets-East in an effort to, “explore retail business opportunities in Russia and neighboring markets.” The market is estimated to be worth more than $140 billion per year in food sales alone.
In January 2009, the company acquired a controlling interest in the largest grocer in Chile, Distribucion y Servicio D&S SA.
Private label brands
Main article: List of Wal-Mart brands
About 40% of products sold in Wal-Mart are private label store brands, or products offered by Wal-Mart and produced through contracts with manufacturers. Wal-Mart began offering private label brands in 1991 with the launch of Sam’s Choice, a brand of drinks produced by Cott Beverages exclusively for Wal-Mart. Sam’s Choice quickly became popular, and by 1993 was the third beverage brand in the United States. Other Wal-Mart brands include Great Value and Equate in the US and Canada, and Smart Price in Britain. A 2006 study talked of “the magnitude of mind-share Wal-Mart appears to hold in shoppers’ minds when it comes to awareness of private label brands and retailers.
www.walmart.com