Wal-Mart By Taylor Boveington

For the past few years The United States has been in a recession. Many people have been out of work fighting for jobs that are very limited. Numerous people in our country will work just about anywhere to support their family with an average or below income. There is not just one reason for the downfall in our economy. Actually there is never ending criticism on why the U.S is facing these problems. Some critics believe a lot of our issues come from over sea retailing. One store well-known for buying and selling over sea is Wal-Mart.

Today Wal-Mart is known as the largest retailer store in the World. Wal-Mart has more than 3,800 stores just in the United States (Anderson 2006). Plus many more other stores around the world. Ninety percent of American households are within 15 minutes from a Wal-Mart store (Anderson 2006). Some households are not even located 15 minutes away from a gas station. These statistics may seem powerful enough to take over the world, but not in some cases. Wal-Mart is very successful in one place like the United States does not necessarily mean it has power in other nations overseas. Wal-Mart struggled 8 years in Germany trying to expand and never succeeded for many reasons (Hancock 2006). Wal-Mart is huge today and most likely always will be, but not everywhere due to the obstacles of expansion. This paper will inform about the power and success of Wal-Mart, the expansions of Wal-Mart including the difficulties, the problems people find today with the world-wide company, and the problem alone caused by Wal-Mart dealing with over sea retail.

If Wal-Mart's more than 8,500 stores were put in one place, they would take up more than 32 square miles (Business Insider 2010).Wal-Mart parking lots alone take up roughly the size of Tampa, Florida (Business Insider). It is crazy to think a retailer’s parking lot alone, can take over a city. Wal-Mart is the largest overall employer in the USA (Business Insider). Wal-Mart compares to Home Depot, Kroger, Target, Costco, Sears, and Kmart combined (Anderson 2006). Wal-Mart sells more by St. Patrick's Day, March 17th, than Target sells all year (Anderson 2006). Target may be considered Wal-Mart's biggest rival and nearby competitor, but no comparison (Anderson 2006). Just in 3 months work, Wal-Mart already beats out their closest competition. It is amazing how a store with such low prices can rule over another popular store that makes more profitable products. This year, everyone in the world will make an average of 1.1 purchases at a Wal-Mart store (Business Insider 2010). Every seven days nearly one third of the country shops at this nation-wide company (Anderson 2006). Each year, ninety-three percent of American households shop at Wal-Mart at least one time (Anderson 2006). Only 7 percent of people in the United States, if that, do not buy a product from Wal-Mart a year. The most common destination typed into GPS device is Wal-Mart (Business Insider 2010). The GPS probably shows many different locations also because of the masses of stores around each other. The company’s sales in the United States are a bit more than $2000 per household which only comes out to a $75 dollar profit in the end for the store (Anderson 2006). The dollar amount of profit is not a lot. Wal-Mart is notorious for its everyday low prices. Many people choose to buy low price items rather than expensive products. The company is growing despite lowering prices (Anderson 2006). Wal-Mart promotes one single idea: sell merchandise at the lowest price possible (Anderson 2006). This idea was promoted by a man of the name Sam Walton, the founder of Wal-Mart (Anderson 2006). This plan stimulated from their company to their suppliers as they asked them to be as frugal as possible (Anderson 2006). The cheaper the better was their intuition. As the company grew in size, they began looking for every way to spare every last penny of savings from materials such as, packaging, labor, transportation, and display (Anderson 2006). The retailer continued to succeed in these savings. The result was "the Wal-Mart effect”, as a store moves into a community bringing lower prices, it drives down prices in other stores (Anderson 2006). This effect not only closes down competing stores, but also adjusts the shopping habits of those in the society. Some thought this was a great outcome and many disagreed.

"The Wal-Mart effect", also brings argument. A number of people believe it is a negative effect. It can cause fear to the economy (Anderson 2006). Hesitation caused on social and economic costs which later can be paid for as consequences for these everyday low prices (Anderson 2006). Wal-Mart has been recognized with labor issues numerous times (Wilbert). The workers of Wal-Mart did not always agree with the smile they were suppose to show on the clock. There may be a somber side to the thrifty society. Near the end of 2005, the company faced masses of lawsuits across the country for supposedly not paying workers overtime (Wilbert). Critics talk about sex discrimination, low wages, minimal benefits, and small chance for career improvement (Anderson 2006). Wal-Mart was sued 4,851 different times which is about once every 2 hours in 2000 (Business Insider 2010). Women have also accused Wal-Mart of discrimination, and employees have said that it inhibits efforts to unionize and does not offer proper healthcare (Wilbert). Wal-Mart is facing an $11 billion law suit dealing with controversy of 1.6 million employees, in the largest class action of sex discrimination (Business Insider 2010). Wal-Mart’s national average wage of $11.75 an hour is 2.5 percent lower than the average wage of $12.04 an hour for retail workers, the leading retail industry profession (Wake-Up Wal-Mart 2006). Wal-Mart’s average wage of $11.75 an hour translates into yearly pay of $20,774 which is approximately 6 percent under the Federal Poverty Level of $22,050 for a family of four (Wake-Up Wal-Mart 2006) Due to Wal-Marts anti-union policy, labor law violations range from illegally firing workers who dare to organize a union to unauthorized surveillance, threats, and intimidation of associates who have the courage to speak out (Wake-Up Wal-Mart 2006). The companies’ forceful campaign to avoid union formation also creates an atmosphere of apprehension at its stores (Wake-Up Wal-Mart). The Walton family gives about 2% of its net value to charity, when other wealthy people like Bill Gates gives away 48% of his net worth and Warren Buffet gives 78% (Business Insider 2010). A quantity can argue the Walton family is not only cheap with their prices, but also with their fortune. Even though many critics have their doubt about Wal-Mart, it still continues to expand around the world.

Wal-Mart operates internationally under 55 different names, including Walmex in Mexico, Asda in the UK, Seiyu in Japan, and Best Price in India (Business Insider 2010). The year of 2006 marked a major cutback for Wal-Mart (Hancock 2006). Wal-Mart admitted defeat in its long-standing effort to penetrate successfully the German retail market (Hancock 2006). On July 30th the Wal-Mart Corporation announced that it was selling its operations in Germany to a German retailer Metro AG (Lichtenstein 2010). Wal-Mart had been trying to make its German stores profitable for eight years (Lichtenstein 2010). Eight long years over sea that never succeeded. Wal-Mart announced a pre tax loss on the sale of $1 billion (Lichtenstein 2010). Wal-Mart underestimated the intensity of German competitors (Lichtenstein 2010). Germany had other stores, like Wal-Mart, that satisfied the countries needs. The Germans did not agree with Wal-Mart’s regulations and cultural differences (Lichtenstein 2010). German discount retailers put forward very low prices just like Wal-Mart (Lichtenstein 2010). Wal-Mart was famous for their low prices. The retailer was not used to other stores of Germany matching their great deals. Germans are also willing to divide their shopping activities among an assortment of retailers (Lichtenstein 2010). Unlike the U.S, German shoppers do not mind going one place for groceries and another place for clothes as long as they are receiving the best deal and quality. The splitting of shopping locations takes away the advantages Wal-Mart has to offer with their “superstores”. Superstores are created to give customers one location for all their shopping needs. Location is not necessarily important in this case of expansion.

Employees of the Wal-Mart in Germany filed a lawsuit against the retailer's policy against romantic relationships between employees and supervisors (Lichtenstein 2010). Also, German regulations restricted Wal-Mart's ability to offer extended and weekend hours (Lichtenstein 2010). Employment in Germany was very different than U.S employment which was a struggle for Wal-Mart. Germany does not allow stores to sell merchandise below cost in an effort to attract consumers (Lichtenstein 2010). In the U.S sales are used to bring in costumers. Sturdy unions also limited the firm's ability to hold operating costs (Lichtenstein 2010). Some examples of cultural differences is that Germans are accustomed to putting their own groceries in shopping bags, German shoppers were disturbed by clerks who bagged groceries at Wal-Mart (Hancock 2006). People in America would feel disrespected if asked to bag their own items. Wal-Mart's German operations had four presidents in only 8 years (Lichtenstein 2010). The inconsistency of people in charge was also a reason for failure. The German economy, with its moderately high unemployment and low consumer spending did not make victory easy (Hancock 2006). Wal-Mart is not the only one who struggled finding success in the Germany’s market. Nestle and Unilever are among the huge multinational retailers that had to alter the way they do, or did, business in Germany (Lichtenstein 2010). France's Carrefour, Wal-Mart's largest competitor worldwide, attentively avoided Germany (Lichtenstein 2010). With the removal from the German and also South Korean markets, Wal-Mart is at this time operating in 11 countries (Lichtenstein 2010). Carrefour of France is operating in 29 countries and Metro of Germany operates in 30 (Lichtenstein 2010). Germany’s retail discount setting is extremely competitive, with relatively small stores like Aldi and Lidl that offer good-quality groceries at below-average prices already (Hancock 2006). Metro, the German retail group that acquired the Wal-Mart stores, operates a quantity of victorious chains that offer discount prices on everything from electronics to groceries to department store goods (Hancock 2006). Wal-Mart was mainly not capable to demean its competitors, particularly when it came to the grocery business (Hancock 2006).

Wal-Mart's international ambitions are now preoccupied in Asia and Latin America, with India and China the firm's most powerful growth markets (Lichtenstein 2010). However, Wal-Mart may experience related growth obstacles in these countries (Lichtenstein 2010). For example, India does not authorize foreign firms to establish stores unless they retail only one brand (Lichtenstein 2010). In late 2006, Wal-Mart settled with China's state-run union to situate unions at its 60 stores in that country (Lichtenstein 2010). However, China is restraining the size of large-scale retail outlets, which is possible to limit Wal-Mart's campaign to launch the superstore notion (Lichtenstein 2010). Every new country can be a challenge.

As for Wal-Mart's enormous size, it manages incredible power. It has forced smaller retailers out of business; required manufacturers to be more efficient, often leading these suppliers to move manufacturing jobs overseas; and changed the way that even well-known industries perform business (Wilbert). A new Wal-Mart in town can cause much panic for local pharmacies, grocery stores, sporting goods stores, and electronic stores (Wilbert). A study from Economist Emek Basker, Ph.D., explains when a Wal-Mart opens, three other retailers close within two years and four close within five years (Wilbert). While the powerful retailer might employ 300 people, another 250 people working in retail other than Wal-Mart lose their jobs within five years in that county (Wilbert). This is a huge problem with unemployment in the U.S, but Wal-Mart can’t be the only cause. Wal-Mart has life or death decisions over nearly all the consumer goods industries that occur in the United States (Wilbert). People believe Wal-Marts past campaign of "Buy America" is officially false advertising due to their large over sea retailing and manufacturing today (Wilbert). In 1985, Walton based a foundation on "Bring it Home to the USA" program, contributing to suppliers as much as 5 percent more for products equipped in the United States (Wilbert). In spite of that campaign, the viewpoint quietly disintegrated in the 1990s, as Wal-Mart joined other retailers in an expedition to discover the cheapest sources of production available throughout the world (Wilbert). Working together with other retailers can bring more opportunity to our economy. 10 years later experts estimated that Wal-Mart imported about 60 percent of their merchandise (Wilbert). The large masses of imports cause the argument of over sea retailing every day. There is and always will be an intense debate regarding Wal-Mart. The question is whether or not it benefits the American economy. Well-respected economists firmly believe on both ends of the debate (Wilbert). Some may say it is better for the economy because it keeps prices low not only at its own stores, but at other retailers (Wilbert). Others argue that Wal-Mart is horrible for the economy because it pushes away competing retailers causing them to go out of business and force manufacturers to relocate jobs overseas to keep expenses low (Wilbert). Critics say that around the country Wal-Mart stores are beginning to overload and they can only drive prices so low, also that the company may have already reached that maximum (Wilbert). But in the end Wal-Mart will probably continue to be a success because of their everyday low prices, convenient store hours, and smiling faces. Not everyone will agree on how to make our economy perfect, but everyone will continue to criticize. Wal-Mart is a very successful international business whether or not they have many law suits, imported products, and failure overseas.