Walmart

Walmart
Country
United States
Business Genre
Description

Wal-Mart Stores, Inc.[8] (/ˈwɔːlmɑːrt/), doing business as Walmart, is an American multinational retail corporation that operates a chain of hypermarkets, discount department stores and grocery stores. Headquartered in Bentonville, Arkansas, the company was founded by Sam Walton in 1962 and incorporated on October 31, 1969. As of July 31, 2016, Walmart has 11,539 stores and clubs in 28 countries, under a total of 63 banners.[1][2][9] The company operates under the Walmart name in the United States and Canada. It operates as Walmart de México y Centroamérica in Mexico, as Asda in the United Kingdom, as Seiyu in Japan, and as Best Price in India. It has wholly owned operations in Argentina, Brazil, and Canada. It also owns and operates the Sam’s Club retail warehouses.[10][11]

Walmart is the world’s largest company by revenue, according to the Fortune Global 500 list in 2016, as well as the largest private employer in the world with 2.2 million employees. Walmart is a family-owned business, as the company is controlled by the Walton family. Sam Walton’s heirs own over 50 percent of Walmart through their holding company, Walton Enterprises, and through their individual holdings.[12] It is also one of the world’s most valuable companies by market value,[13] and is also the largest grocery retailer in the U.S. In 2016, 62.3 percent of Walmart’s US$478.614 billion sales came from its U.S. operations.[14]

The company was listed on the New York Stock Exchange in 1972. In the late 1980s and early 1990s, the company rose from a regional to a national giant. By 1988, Walmart was the most profitable retailer in the U.S.[15] and by October 1989, it had become the largest in terms of revenue.[16] Geographically limited to the South and lower Midwest up to the mid-1980s, by the early 1990s the company’s presence spanned from coast to coast‍—‌Sam’s Club opened in New Jersey in November 1989 and the first California outlet opened in Lancaster in July 1990. A Walmart in York, Pennsylvania opened in October 1990, bringing the main store to the Northeast.[17]

Walmart’s investments outside North America have seen mixed results: its operations in the United Kingdom, South America, and China are highly successful, whereas ventures in Germany and South Korea failed.

History

Main article: History of Walmart

1945–69: Early history

Sam Walton’s original Walton’s Five and Dime store in Bentonville, Arkansas now serving as the Walmart Visitor Center

In 1945, a businessman and a former J. C. Penney employee, Sam Walton, purchased a branch of the Ben Franklin stores from the Butler Brothers.[18] His primary focus was on selling products at low prices to get higher-volume sales at a lower profit margin, portraying it as a crusade for the consumer. He experienced setbacks, because the lease price and branch purchase were unusually high, but he was able to find lower-cost suppliers than those used by other stores. He passed on the savings in the product pricing.[19] Sales increased 45 percent in his first year of ownership to US$105,000 in revenue, which increased to US$140,000 the next year and US$175,000 the year after that. Within the fifth year, the store was generating US$250,000 in revenue. When the lease for the location expired, Walton was unable to reach an agreement for renewal, so he opened up a new store at 105 N. Main Street in Bentonville, naming it “Walton’s Five and Dime”.[19][20] That store is now the Walmart Museum.[21]

Original logo, 1962–1964
Logo used 1964–1981
Logo used 1981–1992
Logo used 1992–2008
Logo used 2008–present[22]

On July 2, 1962, Walton opened the first Walmart Discount City store at 719 W. Walnut Street in Rogers, Arkansas. The building is now occupied by a hardware store and an antique mall, while the company’s “Store #1″‍—‌since relocated to a larger discount store and now expanded to a Supercenter‍—‌is located several blocks west at 2110 W. Walnut Street. Within its first five years, the company expanded to 24 stores across Arkansas and reached US$12.6 million in sales.[23] In 1968, it opened its first stores outside Arkansas, in Sikeston, Missouri and Claremore, Oklahoma.[24]

1969–90: Incorporation and growth as a regional power

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 US$44.2 million. It began trading stock as a publicly held company on October 1, 1970, and was soon listed on the New York Stock Exchange. The first stock split occurred in May 1971 at a price of US$47. By this time, Walmart 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 US$340.3 million.[24] Walmart opened its first Texas store in Mount Pleasant on November 11, 1975.[25]

In the 1980s, Walmart continued to grow rapidly, and by its 25th anniversary in 1987, there were 1,198 stores with sales of US$15.9 billion and 200,000 associates.[24] This year also marked the completion of the company’s satellite network, a US$24 million investment linking all operating units with the 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.[26] In 1988, Walton stepped down as CEO and was replaced by David Glass.[27] Walton remained as Chairman of the Board.

Inside the Walmart Supercenter in West Plains, Missouri

In 1988, the first Wal-Mart Supercenter opened in Washington, Missouri.[28] or [29] Thanks to its superstores, it surpassed Toys “R” Us in toy sales in the late-1990s.[30]

1990–2005: Retail rise to multinational status

While it was the No. 3 retailer in the U.S., Walmart was more profitable than rivals Kmart and Sears by the late 1980s. By 1990, it became the largest U.S. retailer by revenue.[31]

Prior to the summer of 1990, Walmart had no presence on the West Coast or in the Northeast (except for a single Sam’s Club in New Jersey which opened in November 1989), but in July and October that year, it opened its first stores in California and Pennsylvania, respectively. By the mid-1990s, it was far and away the most powerful retailer in the U.S. and expanded into Mexico in 1991 and Canada in 1994.[32] Walmart stores opened throughout the rest of the U.S., with Vermont being the last state to get a store in 1995.[33]

The company also opened stores outside North America, entering South America in 1995 with stores in Argentina and Brazil; and Europe in July 1999, buying Asda in the United Kingdom for US$10 billion.[34]

In 1998, Walmart introduced the Neighborhood Market concept with three stores in Arkansas.[35] By 2005, estimates indicate that the company controlled about 20 percent of the retail grocery and consumables business.[36]

In 2000, H. Lee Scott became Walmart’s President and CEO, as the company’s sales increased to US$165 billion.[37] In 2002, it was listed for the first time as America’s largest corporation on the Fortune 500 list, with revenues of US$219.8 billion and profits of US$6.7 billion. It has remained there every year, except in 2006 and 2009.[38][39][40][41][42][43]

In 2005, Walmart reported US$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. Its U.S. presence grew so rapidly that only small pockets of the country remained more than 60 miles (97 kilometres) from the nearest store.[44]

As Walmart rapidly expanded into the world’s largest corporation, many critics worried about its effect on local communities, particularly small towns with many “mom and pop” stores. There have been several studies on the economic impact of Walmart 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 Walmart store opening.[45] 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 Walmart arrives.[45] 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.”[46]

In the aftermath of Hurricane Katrina in September 2005, Walmart used its logistics network to organize a rapid response to the disaster, donating US$20 million in cash, 1,500 truckloads of merchandise, food for 100,000 meals, as well as the promise of a job for every one of its displaced workers.[47] An independent study by Steven Horwitz of St. Lawrence University found that Walmart, The 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.[48] While the company was overall lauded for its quick response – amidst criticism of the Federal Emergency Management Agency – several critics were nonetheless quick to point out that there still remained issues with the company’s labor relations.[49]

2005–10: Initiatives

Solar modules mounted on a Walmart Supercenter in Caguas, Puerto Rico

In October 2005, Walmart announced several environmental measures to increase energy efficiency. The primary goals included spending US$500 million a year to increase fuel efficiency in Walmart’s truck fleet by 25 percent over three years and double it within ten, reduce greenhouse gas emissions by 20 percent in seven years, reduce energy use at stores by 30 percent, and cut solid waste from U.S. stores and Sam’s Clubs by 25 percent in three years. CEO Lee Scott said that Walmart’s goal was to be a “good steward for the environment” and ultimately use only renewable energy sources and produce zero waste.[50] The company also designed three new experimental stores with wind turbines, photovoltaic solar panels, biofuel-capable boilers, water-cooled refrigerators, and xeriscape gardens.[51] Despite much criticism of its environmental record, Walmart took a few steps in what some 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.[52] Walmart also spent nearly a year working with outside consultants to discover the company’s total environmental impact and find areas for improvement. Walmart 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 US$15 million annually and also to lay the groundwork and infrastructure to sell electricity to Texas consumers in the future.[53]

In March 2006, Walmart 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.[54][55] 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 Walmart letters, similar to Neighborhood Market by Walmarts, instead of the blue previously used at its supercenters.

On September 12, 2007, Walmart introduced new advertising with the slogan, “Save money. Live better.“, replacing “Always Low Prices, Always“, which it had used for the previous 19 years. Global Insight, which conducted the research that supported the ads, found that Walmart’s price level reduction resulted in savings for consumers of US$287 billion in 2006, which equated to US$957 per person or US$2,500 per household (up 7.3 percent from the 2004 savings estimate of US$2,329).[56]

The exterior of the Walmart discount store in West Hills, Los Angeles, California

On June 30, 2008, Walmart removed the hyphen from its logo and replaced the star with a symbol that resembles a sunburst, flower, or the star in the star of life. The new logo received mixed reviews from design critics, who questioned whether the new logo was as bold as those of competitors, such as the Target bullseye or as instantly recognizable as the previous company logo, which was used for 18 years.[57] The new logo made its debut on the company’s website on July 1, 2008. Walmart’s U.S. locations were to update store logos in the fall of 2008, as part of an ongoing evolution of its brand.[58] Walmart Canada started to adopt the logo for its stores in early 2009.[59]

On March 20, 2009, Walmart announced that it was paying a combined US$933.6 million in bonuses to every full and part-time hourly worker.[60] This was in addition to US$788.8 million in profit sharing, 401(k) pension contributions, hundreds of millions of dollars in merchandise discounts, and contributions to the employees’ stock purchase plan.[61] While the economy at large was in an ongoing recession, Walmart, the largest retailer in the U.S., reported solid financial figures for the most recent fiscal year (ending January 31, 2009), with US$401.2 billion in net sales, a gain of 7.2 percent from the prior year. Income from continuing operations increased 3 percent to US$13.3 billion, and earnings per share rose 6 percent to US$3.35.[62]

On February 22, 2010, the company confirmed it was acquiring video streaming company Vudu, Inc. for an estimated US$100 million.[63]

2011–present: Current developments

  • Walmart’s truck fleet logs millions of miles each year, and the company planned to double the fleet’s efficiency between 2005 and 2015.[64] The truck below is one of 15 based at Walmart’s Buckeye, Arizona, distribution center that was converted to run on a type of biofuel made from reclaimed cooking grease produced during food preparation at Walmart stores.[65]
Truck converted to run on biofuel
  • In January 2011 Walmart announced a program to improve the nutritional value of its store brands over five years, gradually reducing the amount of salt and sugar and eliminating trans fat. Walmart also promised to negotiate with suppliers with respect to nutritional issues, reduce prices for whole foods and vegetables, and open stores in low-income areas, so-called “food deserts“, where there are no supermarkets.[66]
  • On April 23, 2011, the company announced that it was testing its new “Walmart To Go” home delivery system where customers will be able to order specific items offered on their website. The initial test was in San Jose, California, and the company has not yet said whether the delivery system will be rolled out nationwide.[67] On November 14, 2012, Walmart launched its first mail subscription service called Goodies. Customers pay a US$7 monthly subscription for five to eight delivered food samples each month, so they can try new foods.[68]
  • In August 2013, the firm announced it was in talks to acquire a majority stake in the Kenya-based supermarket chain, Naivas.[69]
  • In June 2014, some Walmart employees went on strike in major U.S. cities demanding higher wages.[70]
  • In July 2014, American actor and comedian Tracy Morgan launched a lawsuit against Walmart seeking punitive damages over a multi-car pile-up which the suit alleges was caused by the driver of one of the firm’s tractor-trailers who had not slept for 24 hours. Morgan’s limousine was apparently hit by the trailer, injuring him and two fellow passengers and killing a fourth, fellow comedian James McNair.[71] Walmart settled with the McNair family for $10 million, while admitting no liability.[72] Morgan and Walmart reached a settlement in 2015 for an undisclosed amount,[73] though Walmart later accused its insurers of “bad faith” in refusing to pay the settlement.[74]
  • In 2015, the company closed five stores on short notice for plumbing repairs.[75] However, employees and the United Food and Commercial Workers International Union (UFCW) alleged some stores were closed in retaliation for strikes aimed at increasing wages and improving working conditions.[76] The UFCW filed a complaint with the National Labor Relations Board. All five stores have since reopened.[77]
  • On October 14, 2015, Walmart saw its stock fall 10 percent.[78]
  • On January 15, 2016, Walmart announced it will close 269 stores in 2016, affecting 16,000 workers.[79] 154 out of the 269 stores earmarked for closure are in the U.S. (150 Walmart U.S. stores, 115 Walmart International stores, and 4 Sam’s Clubs). 95 percent of these U.S. stores are located, on average, 10 miles from another Walmart store.[80] The 269 stores represent less than 1 percent of global square footage and revenue. Walmart Express, of which all 102 locations are included in the closures, had been in a pilot program since 2011. In light of these closings, Walmart plans to focus on “strengthening Supercenters, optimizing Neighborhood Markets, growing the e-commerce business and expanding pickup services for customers”. In fiscal 2017, the company plans to open between 50 and 60 Supercenters, 85 to 95 Neighborhood Markets, 7 to 10 Sam’s Clubs, and 200 to 240 international locations.[80]

On August 8, 2016, Walmart announced a deal to acquire e-commerce website Jet.com for US$3.3 billion [81][82] Jet.com co-founder and CEO Marc Lore will stay on to run Jet.com in addition to Walmart’s existing U.S. e-commerce operation. The acquisition is structured as a payout of $3 billion in cash, and an additional $300 million in Walmart stock vested over time as part of an incentive bonus plan for Jet.com executives.

Growing crime problem

Police reports from dozens of Walmart stores suggest the number of petty crimes committed on Walmart properties nationwide in 2016 will be in the hundreds of thousands. Additionally, more than 200 violent crimes, including attempted kidnappings and multiple stabbings, shootings, and murders, have occurred at the nation’s 4,500 Walmarts as of August 2016, or about one a day, according to an analysis of media reports. The high crime rate is attributable to Walmart’s cost-cutting measures. Walmart has taken steps to ameliorate the problem, but critics say that effective action will require it to spend more on security and employees.[83] In September 2016, employees at a McDonough, Georgia Walmart refused to make a police officer’s “Blue Lives Matter” retirement cake.[84]

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