Wal-Mart Stores, Inc. is the largest retailer and the largest company in the world based on revenue. Wal-Mart was founded by Sam Walton in 1962. In the fiscal year ending January 31, 2005, Wal-Mart had US$285.2 billion in sales and net income of $10.3 billion (a 3.6% profit margin). Forbes magazine points out that if Wal-Mart were its own economy, it would rank 23rd in the world, with a GDP between Austria and Saudi Arabia. It is the largest private employer in the United States, Mexico, and Canada. It holds a 8.9 percent retail store market share; in other words, $8.90 out of every $100 spent in American stores is spent at Wal-Mart.
History
- 1962 First Wal-Mart store opens in Rogers, Arkansas
- 1969 The company incorporates as Wal-Mart Stores, Inc. on Oct. 31.
- 1970 Wal-Mart opens first distribution center and home office in Bentonville, Arkansas.
- 1972 Wal-Mart listed on the New York Stock Exchange.
- 1975 Sam Walton introduces the "Wal-Mart Cheer" to employees.
- 1983 First Sam's Club opens in Midwest City, Oklahoma.
- 1987 Wal-Mart completes its satellite network, the largest private satellite communication system in the U.S.
- 1988 First Supercenter opens in Washington, Missouri.
- 1990 Wal-Mart becomes nation's No. 1 retailer.
- 1991 The first store outside of the U.S. opens, in Mexico City.
- 1992 Sam Walton receives the Presidential Medal of Freedom from George H. W. Bush, before Walton's death in April.
- 1992 Wal-Mart enters Puerto Rico.
- 1993 The company has its first billion-dollar sales week, in December.
- 1994 Wal-Mart acquires 122 Woolco stores in Canada.
- 1995 Wal-Mart builds three units in Argentina and five in Brazil.
- 1996 Wal-Mart enters China through a joint-venture agreement.
- 1997 Wal-Mart becomes the No. 1 employer in the United States, with 680,000 employees worldwide. It replaces Woolworth on the Dow Jones Industrial Average.
- 1997 Wal-Mart has its first $100 billion sales year.
- 1998 Wal-Mart opens its first Neighborhood Market stores in Arkansas and enters Korea through a joint venture agreement. It also exceeds $100 million in annual charitable contributions for the first time.
- 1999 Wal-Mart has 1,140,000 employees, making it the largest private employer in the world. It acquires the ASDA Group with 229 stores in the United Kingdom.
- 2000 The Walmart.com web site opens, to provide products online.
- 2001 Wal-Mart has its biggest single day sales in history: US$1.25 billion on the day after Thanksgiving.
- 2003 Wal-Mart launches online DVD rental service to compete with Netflix.
- 2004 Wal-Mart buys the Amigo supermarket chain in Puerto Rico for $17 million.
- 2004 In fiscal year ending 2004, Wal-Mart spent over $137.5 billion with suppliers in the U.S.
- 2004 Wal-Mart opens a US Global Procurement office to export U.S.-made goods to Wal-Mart stores internationally.
- 2004 Total charitable contributions total over $170 million.
- 2004 Wal-Mart employees in Jonquière, Quebec, Canada vote in favor of becoming the first unionized Wal-Mart in North America. Five months later, Wal-Mart announces that it would close the store.
Business
Wal-Mart operates discount retail department stores selling a broad range of products such as clothing, consumer electronics, drugs, sporting goods , toys, hardware, CDs and books. It typically stocks basic rather than premium products. Wal-Mart also operates "Supercenters" which include a full line of grocery items. Wal-Mart also operates Sam's Club; these are "warehouse clubs" which, like Costco, require membership dues and sell merchandise in wholesale quantities at wholesale prices.
As of January 2005 Wal-Mart employed 1.3 million people in the United States. Wal-Mart's Home Office is located in Bentonville, Arkansas. Apart from stores and clubs, it also operated 99 Distribution Centers/Transportation Offices in the United States. Internationally Wal-Mart employs over 410,000 people (excluding Japan) for a company-wide total of 1.7 million employees. Wal-Mart is also the largest real estate company in the United States, with an entire division devoted entirely to building new stores, selling old stores, and developing shopping centers around its new and existing stores. In addition to its wholly owned international operations, Wal-Mart owns a 37.8% stake in The Seiyu Co., Ltd. in Japan, with an option to purchase a majority stake in the future.
In the past Wal-Mart has operated dot Discount Drugs, Bud's Discount City, Hypermart*USA, OneSource Nutrition Centers, and Save-Co Home Improvement stores. In 1990 Wal-Mart acquired the McLane Company, a foodservice distributor. In 2003 McLane Company was sold to Berkshire Hathaway.
Wal-Mart stock is publicly traded at the New York Stock Exchange under the symbol WMT. As of March 31, 2004, there were 333,604 shareholders of Wal-Mart's common stock.
Retail Operations
Main article: List of assets owned by Wal-Mart Stores, Inc.
Wal-Mart operates 5 major retail formats under 3 retail divisions:
- Wal-Mart Stores USA
- Wal-Mart Discount Stores — Average 100,000 square feet (9,290 m²) and include a selection of general merchandise, including apparel, electronics, health and beauty aids, toys, sporting goods, and household products.
- Wal-Mart Supercenter — Average 187,000 square feet (17,400 m²) and combine a standard Wal-Mart Discount Store with a full-line supermarket.
- Wal-Mart Neighborhood Market — Average 43,000 square feet (4,000 m²) and include grocery, pharmacy, and limited general merchandise products.
- Walmart.com — Online shopping site that offers merchandise different from that in stores. The walmart.com site also offers digital music downloads, online photo processing, and DVD rental by mail.
- SAM'S CLUB — a membership-only wholesale warehouse club focused mainly on serving small business owners. Clubs average 128,000 square feet (11,891 m²).
- Wal-Mart International — operates various formats internationally, including (but not limited to) SAM'S CLUB, Discount Stores, Supercenters, Supermarkets, and restaurants.
Exterior of a typical Wal-Mart store.
Store Counts & Revenue
Current store counts and revenue for Fiscal Year Ending January 31, 2005 (revenue amounts in U.S. Dollars):
- 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)
ASDA in the United Kingdom is the largest of the international businesses by sales.
Competition
Wal-Mart's chief competitors in the discount retail space nationally include the Kmart Corporation and the Target Corporation, along with many smaller regional chains. Wal-Mart's move into grocery has also positioned it against major grocery chains such as Kroger, Publix, and local grocery chains. In the Sam's Club warehouse business, Wal-Mart's chief competitor is Costco, which is slightly larger than Sam's in terms of sales.
Wal-Mart TV Network
Wal-Mart TV Network is an in-store network in Wal-Mart stores showing soon to be released movies, clips of concerts and news, as well as commercials for products found in the stores. According to a New York Times story, Wal-Mart TV Network is seen by 130 million people a month, making it the fifth largest network in America, behind NBC, CBS, ABC and Fox.
Employees
Wal-Mart refers to its employees as "associates," and encourages managers to think of themselves as "servant leaders." Each shift at every store, club, and distribution center (theoretically) starts with a store-wide meeting where managers discuss with hourly associates daily sales figures, company news, and goals for the day.
All Wal-Mart stores have employees referred to as "People Greeters." They welcome people to the store and prevent shoplifting. At Sam's Club these employees inspect the contents of the shopping carts of every exiting customer and check them off item by item against the printed receipt.
U.S. Senator Hillary Clinton (Democrat, New York) formerly worked as a lawyer for Wal-Mart and also served on its Board of Directors.
Financial Success
Wal-Mart is financially successful by any measure. For example, Wal-Mart is now the top grocery chain in the United States, with 14 percent of all grocery sales in the country, with nearly twice the sales of Kroger ($95 billion vs. $51 billion). Wal-Mart also does 20 percent of the retail toy business. Sam Walton's family's holdings in Wal-Mart if combined would comprise the nation's largest fortune; at $100 billion combined they are significantly ahead of Bill Gates.
Different explanations have been offered for this success:
- Sam Walton's vision was simple: he sought to bring great value through aggressive discounting to customers, he sought to ensure great service by ensuring that staff or 'associates' were empowered to make decisions, and he thought strategically about store location. Using his own small plane, he flew over much of middle America looking for towns which were of sufficient size to host "one and a half Wal-Marts."
- Some stress the economies of scale Wal-Mart brings to manufacturing and logistics; the purchase of massive quantities of items from its suppliers combined with a very efficient stock control system help make Wal-Mart's operating costs lower than those of its competitors. They are leaders in the field of vendor managed inventory—asking large suppliers to oversee stock control for a category and make recommendations to Wal-Mart buyers. This reduces the overhead of having a large inventory control and buying department. Wal-Mart's vast purchasing power also gives it the leverage to force manufacturers to change their production (usually by creating cheaper products) to suit its wishes: a single Wal-Mart order can easily comprise a double-digit percentage of a supplier's annual output.
- One particular aspect of the economy of scale is the aggregation effect, used in other business such as Home Depot and Wells Fargo, whereby Wal-Mart sells as many different items as possible. This allows the company to grow revenue over its fixed cost base (more sales out of the same store). This is why Wal-Mart began to sell low margin groceries.
- Information Systems: Wal-Mart helped push the retail industry to adopt UPC codes and bar-code scanning equipment. Also, Wal-Mart's focus on cost reduction has led to its involvement in a standards effort [1] to use RFID-based Electronic Product Codes to lower the costs of supply chain management. As of June 2004, it has announced plans [2] to require the use of the technology among its top 300 suppliers by January 2006.
- Suppliers: A spokesperson for the company told the Wall Street Journal of Nov. 18 2004 that it imported $15 billion worth of goods from China in the year that ended Jan. 31, 2004. About $7.5 billion were directly imported by Wal-Mart; the other $7.5 came indirectly through suppliers. In the same period net sales reached $256 billlion, with $209 billion coming from U.S. operations. U.S. current account imports from China was reported as $152.4 billion during 2003 ([3]). Mainland Chinese media place Wal-Mart as their 8th largest trading partner in front of Russia and the UK on the top-10 list.
- Cost Control: Wal-Mart watches very closely controllable expenses. No hourly associates are allowed overtime except in extreme circumstances. Employees pay a larger percentage of health-care costs than other retailers. Wal-Mart also squeezes out any inefficencies in the business such as reducing paper used through computerization.
Criticism of Wal-Mart
Main article: Criticism of Wal-Mart
Critics argue that a portion of Wal-Mart's financial success is due to business practices harmful to employees, the community, the economy or the environment. Specific areas of controversy include the company's product selection; treatment of suppliers, competitors and employees; impact on local communities; and effects on world trade and globalization.
See also
Wal-Mart
Other
External links
Wal-Mart Corporate Sites
Articles
Documentaries
Critics
Data
Other resources
Last updated: 05-13-2005 07:56:04
