Wal-Mart Stores, Inc. (formerly branded as
Wal-Mart, branded as
Walmart since 2008) (
NYSE:
WMT) is an American
public multinational corporation that runs a chain of large discount department stores and a chain of warehouse stores. In 2010 it was the world's largest public corporation by revenue, according to the
Forbes Global 2000 for that year.
[6] The company was founded by
Sam Walton in 1962,
incorporated on October 31, 1969, and publicly traded on the
New York Stock Exchange in 1972. Wal-Mart, headquartered in
Bentonville, Arkansas, is the largest majority private employer
[7] and the largest
grocery retailer in the United States. In 2009, it generated 51% of its US$258 billion sales in the U.S. from grocery business.
[8] It also owns and operates the
Sam's Club retail warehouses in North America.
Wal-Mart has 8,500 stores in 15 countries, with 55 different names.
[9] The company operates under its own name in the United States, including the 50 states. It also operates under its own name in
Puerto Rico. Wal-Mart operates in Mexico as
Walmex, in the United Kingdom as
Asda ("Asda Wal-Mart" in some branches), in Japan as
Seiyu, and in India as
Best Price. It has wholly owned operations in
Argentina,
Brazil, and Canada. Wal-Mart's investments outside North America have had mixed results: its operations in the United Kingdom, South America and China are highly successful, while it was forced to pull out of Germany and South Korea when ventures there were unsuccessful.
History
Sam Walton's original Walton's Five and Dime store in
Bentonville, Arkansas, now serving as the Wal-Mart Visitor's Center
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.
[10]
Walton was extremely successful in running the store in Newport, far exceeding expectations.
[11] 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.
[12]
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 an antique mall. Within five years, the company expanded to 24 stores across
Arkansas and reached $12.6 million in sales.
[13] In 1968, it opened its first stores outside Arkansas, in
Sikeston, Missouri and
Claremore, Oklahoma.
[14]
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, 1970, 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.
[14] Wal-Mart opened its first Texas store in
Mount Pleasant on November 11, 1975.
[15]
Logo used from 1992-2008 (
2001-
2009 in
Canada, 1992-2009 in Mexico, although Mexico used the current logo in December 2008). It is still used in Mainland China. Still seen on many American locations, even though a majority of Canadian locations have this logo rather than the 1994-2001 Wal-Mart Canada logo with a hyphen.
In the 1980s, Walmart 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.
[14] 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.
[16] In 1988, Sam Walton stepped down as CEO and was replaced by
David Glass.
[17] Walton remained as Chairman of the
Board, and the company also rearranged other people in senior positions.
In 1988, the first
Walmart Supercenter opened in
Washington, Missouri.
[18] Thanks to its superstores, it surpassed
Toys "R" Us in toy sales in the late 1990s.
[19] 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.
[20]
In 1998, Walmart introduced the "
Neighborhood Market" concept with three stores in
Arkansas.
[21] By 2005, estimates indicate that the company controlled about 20% of the retail grocery and consumables business.
[22]
In 2000,
H. Lee Scott became President and CEO, and Walmart's sales increased to $165 billion.
[23] 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.
[24][25]
In 2005, Walmart 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.
[26]
As Walmart 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 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 Wal-Mart store opening.
[27] 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.
[27] 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."
[28]
In the aftermath of
Hurricane Katrina in September 2005, Walmart 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.
[29] 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.
[30] 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.
[31]
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.
[32] 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.
[33] 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.
[34] 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.
[34] 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 $15 million annually and also lays the groundwork and infrastructure to sell electricity to Texas consumers in the future.
[35]
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.
[36][37] 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 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 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 Walmart'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).
[38]
On June 30, 2008, Walmart unveiled a new company logo, featuring the non-hyphenated name "Walmart" and in place of the star, a symbol that resembles a sunburst or flower. The new logo received mixed reviews from some design critics, who questioned whether the new logo was as bold as competitors, such as the
Target bullseye or as instantly recognizable as the former company logo, which was used for 18 years.
[39] The new logo made its debut on the company's
walmart.com 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 overall brand.
[40] Wal-Mart Canada started to adopt the logo for its stores in early 2009.
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.
[41]
On July 16, 2009, Wal-Mart announced plans to develop a worldwide sustainable product index.
[42]
On February 22, 2010, the company confirming it was acquiring
video streaming company
Vudu, Inc. for an estimated $100 million.
[43]
Healthy foods initiative
In January, 2011, at the urging of
Michelle Obama and her staff, Wal-Mart announced a program to improve the nutritional values of its store brands over the next five years, gradually reducing the amount of salt and sugar, and eliminating trans fat. Wal-Mart also promised to negotiate with suppliers such as
Kraft with respect to nutritional issues. Reductions in the prices of whole foods and vegetables were also promised as well as efforts to open stores in low-income areas, "food deserts", where there are no supermarkets.
[44]
Operating divisions
Wal-Mart's operations are organized into three divisions: Wal-Mart Stores U.S.,
Sam's Club, and Wal-Mart International.
[45] 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.
[45]
Wal-Mart Stores U.S.
Map of current Wal-Mart stores in the U.S.
Wal-Mart Stores U.S. is Wal-Mart's largest division, accounting for $258 billion, or 63.8% of total sales for financial year 2010.
[45] 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 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.
[46] While it's little known outside of the drug industry, many of Walmart’s low cost generics are imported from India and made by drug makers in that country including
Ranbaxy and CIPLA.
[47]
On February 6, 2007, the company launched a "beta" version of a movie download service, which sold about 3,000 films and television episodes from all major studios and television networks.
[48] The service was discontinued on December 21, 2007 due to low sales.
[49]
Walmart Discount Stores
Walmart Discount Stores are
discount department stores with size varying from 51,000 square feet (4,738.1 m
2) to 224,000 square feet (20,810.3 m
2), with an average store covering about 102,000 square feet (9,476.1 m
2).
[45] They carry
general merchandise and a selection of
groceries. 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.
[50]
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.
[13][51]
As of October 2010, there were 750 Walmart Discount Stores in the United States. In 2006, the busiest in the world was one in
Rapid City, South Dakota.
[52]
Walmart Supercenter
Wal-Mart Supercenters are
hypermarkets with size varying from 98,000 to 261,000 square feet (9,104.5 to 24,247.7 m
2), with an average of about 197,000 square feet (18,301.9 m
2).
[45] 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 (newer locations have
Woodforest National Bank branches), and
fast food outlets — usually
Subway, but sometimes
Dunkin' Donuts,
McDonald's or
Blimpie. 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").
[50]
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 October 2010, there were 2,843 Wal-Mart Supercenters in the United States.
[52] The largest Supercenter in the United States, covering 260,000 square feet (24,154.8 m
2) and two floors, is located in
Crossgates Commons in
Albany, New York.
[53]
Since the introduction of the new Wal-Mart logo in 2008, the company has been phasing out the "Supercenter" portion of the name on these stores, simply referring to these stores as "Walmart."
Neighborhood Market by Walmart
Neighborhood Markets by Walmart are
grocery stores that average about 42,000 square feet (3,901.9 m
2).
[45] They are used to fill the gap between Discount Store and Supercenters, offering 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.
The first Neighborhood Market opened in 1998 in
Bentonville, Arkansas. As of October 2010, there were 181 of them in the United States.
[52]
Neighborhood Market by Walmart 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.
Supermercado de Wal-Mart
Wal-Mart opened "Supermercado de Wal-Mart" locations to appeal to Hispanic communities in the United States.
[54] The first one, a 39,000 square feet (3,600 m
2) store in the
Spring Branch area of
Houston, opened on Wednesday April 29, 2009.
[55] The store was a conversion of an existing Wal-Mart.
[56][57] Wal-Mart also planned to open "Mas Club," a warehouse retail operation patterned after
Sam's Club.
[58]
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. As of October 2010, there were four Marketside stores, all within the state of
Arizona.
[52] Each of these stores is open from 7 a.m. to 10 p.m.