History Of The Wal Mart Stores Commerce Essay

Published: Last Edited:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

Wal-Mart Stores, Inc branded as WalMart is an American public corporation that runs a chain of large and discounted department stores across the world. The company was founded by Sam Walton a businessman from Newport, Arkansas, on 2nd July 1962 and incorporated in 1969. Wal-Mart publicly traded on the New York Stock Exchange in the year 1972. Currently it is only the private organization having the majority of employees working under them. There are three key people in the company- Mike Duke (CEO), H. Lee Scott (Chairman of executive committee of board) and S. Robson Walton (Chairperson).

Since its establishment then the chain has been growing at an unrivaled rate, starting first with just 9 stores having total sales of US$ 1.4 million as compared to now operating more than 4667 stores in international arena with total sales of US $401 billion. The company consists of Wal-Mart Discount Stores, Wal-Mart Supercenters, Wal-Mart Neighborhood Market and Marketside. The total operating income on the company in 2010 is US$ 23.95 billion and with a net income of US$ 14.33 billion.

Wal-Mart operates stores across the three business segments of retail stores worldwide that offer a wide selection of general merchandise including groceries apparel, electronics, and small appliances. Over 54% of the company's stores are located in the United States, with the majority of international stores located in Central and South America and China.

Wal-Mart's largest business segment is its namesake 'Wal-Mart Discount stores', which accounted for 63.7% of the company's revenue in 2009. The company also earns revenue through its Sam's Club and international business segments which accounted for 11.7% and 24.6% of the company's 2009 net revenue each respectively.

Having written a unique success story in the history of retail industry, thanks to the rousing leadership of Sam Walton, the company internationally came off the ground by opening its first store abroad in Mexico City in 1991. Since then Wal-Mart has extended its international presence across 15 countries. The company is one of the major job generators in the world; it has approximately 2,100,000 employees working under them worldwide.

The main purpose of Wal-Mart is to provide its customers with quality products and at an affordable price. They are able to offer cheap prices because of its efficiency in managing distribution network and negotiation of costs with the suppliers. The major merchandise lines include house wares, consumer electronics, sporting goods, lawn and garden items, health and beauty aids, apparel, home fashions, paint, bed and bath goods, hardware, automotive repair and maintenance items, toys, games, and grocery.

Even after Sam Walton passed away Wal-Mart executives continue to rely on many of the traditional goals and philosophies which were concurrently keeping one step ahead of the ever-changing technology and methods of today's fast-paced business environment. The organization has faced, and is still facing, a major amount of controversy over numerous different issues; nonetheless, not any of these have done much more than scuff the exterior of this gigantic operation. The future also looks bright for Wal-Mart, especially if it is able to strike a comfortable balance between increasing its profits and recognizing its social and ethical responsibilities. (Fast Company, 2010)

2. Competitors

Wal-Mart has its fare shares of competitors and one of its major competitors in the global market is 'Carrefour'. It has also many other competitors in America itself especially in the Northern Region. This includes the primary states such as New Hampshire, Vermont and even New York.

Some of its competitors are departmental stores such as 'K-mart', 'Shopko', 'Meijer' and 'Target'. These are some of the companies that pose to be a potential threat to Wal-Mart. There are also other companies in neighboring countries like Giant Tiger and Mexico's Commercial Mexicana and Soriana. It also has its divisions that are also facing similar threats of competitions. Divisions like Sam's Club have 'Costco' to compete with and they are mainly located in the eastern states. Wal-Mart also opened up its 'Pennies-n-Cents' shops which primarily was set up to defend its home consumer sales stores was a huge success and competitors such as 'Family Dollar' were then finding stiff competition against them.

In 1990, the company decided to go into the grocery business which then again put them in competition against some of the major supermarket chains such as 'Carrefour'. It also had some competitive problems in Europe. For example in Germany, they had to compete with one of the largest supermarkets there known as 'Aldi'. It failed to control the market share over there and in July 2006, they were forced to pull out due to extensive losses and finally decided to sell over their share to another German company known as 'Metro'. However in UK, they are doing quite well with their subsidiary known as 'Asda' which is slightly higher than 'Tesco' another supermarket giant.

Wal-Mart had also ventured out into Asia. However they were facing stiff competition from local supermarkets and also a few global once. In South Korea, Wal-Mart was forced to withdraw and sell all its branches there to 'Shinsegae' a local chain of supermarkets. Later these outlets were renamed 'E-mart'. It had to change its strategies to appeal to the citizens of a country where it planned on investing. For example in China, they decided to place fishes in fish tanks and also their meat to be open for public selection as these had appealed more to the general public over there.

There was also other sort of changes Wal-Mart had to do in China. For example, they had to negotiate with China's labor union for stricter terms of contract and had to take a more organized form of labor. However, customers here favor Wal-Mart more over then that those from Europe like Carrefour which has given the upper edge to America.

3. Consumers

Every week, there are about 100 million consumers, which comprises of almost one-third of the United States population that visit these Wal-Mart's stores. Customers that shop at Wal-Mart normally find prices to be rather lower because at wall-mart stores, the slogan call 'Low Price Always' is a general trademark of the company and has been established since 1962 until the year of 2006, this slogan was the selling point for them as consumers are always looking for a good bargain.

Statistics have shown that the general population of Wal-Mart's consumers are middle-income earners, and analysts recently anticipated that more than one-fifth of them seem to have a lower saving amount in their bank account, which accounts to twice of the country's width rate. A Wal-Mart monetary report in 2006 also indicated that Wal-Mart patrons are perceptive to the recently elevated petroleum and gas prices. Another market research indicated that after the 2004 US Presidential Election, 76% of the constituency members in parliament decided to shop at Wal-Mart once a week as this was designated by then president George W. Bush. (Business Times, 2010)

In 2006, Wal-Mart takes a giant step to prioritize their customers above anyone else by announcing an amendment in its US provisions to form a "One-Size-Fits-All" merchandise line of attack to one premeditated effect to reflect each of six demographic groups ' African-Americans, those born with a silver spoon in their mouth, Empty-Nesters, Hispanics, Suburbanites and Rural residents.

Around six months later, they unveiled another slogan which was "Saving people money so they can live better". This slogan solely reflects to three most imperative groups in which Wal-Mart categorizes its 200 million clientele: "Brand Encouraging" (people with low incomes who are obsessed with names like Kitchen Aid), "Price-Sensitive Effluents" (supplementary affluent shoppers who are accustomed to polite service), and "Value-Price Shoppers" (the larger community which looks for products they can get the best bargain for with prices that is highly affordable.)

Wal-Mart consumers are normally the more value priced shoppers as they tend to be the group of people that is best suited to their new slogan which indicates that buying from them saves money.

4. Distribution

Wal-Mart distributes their products through stores such as 'Wal-Mart Discount Stores', 'Wal-Mart Supercenters', 'Wal-Mart Neighborhood Markets', and 'Market side'. The first Wal-Mart Discount Store was opened in 1962. They sell their products at an affordable price and they focus on buying in bulk at discount prices. Wal-Mart also sells at a cheaper price compared to their competitors. Its big warehouse grocery stores have the ability to expand their product inventory simply because they distribute literally everything. It distributes products ranging from unpreserved eggs, milks, and meat, to bigger items such as bed frames, television sets, and tires. It is not limited to only one market; therefore they have the capability to sell whatever the consumers demand for.

The features for 'Wal-Mart Discount Stores' is that they are wide, clean, brightly lighted aisles, shelves stocked with variety of quality. Here, they distribute family apparels, healthy and beauty aids, electronics, toys, lawn and garden items, jewelleries, automotive products, home furnishings, hardware, sporting goods, pet supplies, and house wares.

Another store that distributes products is the 'Wal-Mart Supercenters'. It was established in 1988 due to the increase in demand for convenient and 'one-stop family shopping' which featured their famous slogan, 'Every Day Low Prices'. It provides full groceries and general commodities under one roof. Not to forget that most 'Wal-Mart Supercenters' have many specialty shops such as vision centre, health clinic, portrait studio and one-hour photo centre, employment agency, hair salon, banks, pharmacy, tire, lube express, and brand-name restaurants.

The third distributing branch 'Wal-Mart Neighborhood Markets' was developed in 1998. This is almost the same as 'Wal-Mart Supercenters'. The only difference is that they do have stationary and paper goods, drive-through pharmacy, and pet supplies.

The fourth branch was opened recently, two years back, in 2008. Marketsides are a small specialized community that distributes fresh meals at reasonable prices. They also have a wide range of wine to be sold. Wal-Mart is well-known as getting everything you want under one roof. It is a very huge corporation; therefore they have branches that helps distribute their products.

5. Suppliers

Wal-Mart has more than 60,000 suppliers across 70 countries in the world. Wal-Mart's control on its suppliers can be felt in the cheap products it sells and the jobs it drives overseas.

To keep the prices low, Wal-Mart sources products from areas of the world where employment standards are relentlessly deficient. In fact, over 80% of Wal-Mart's suppliers come from China. And the rest 20% divided among other countries. It purchases US $27 billion of its merchandise directly from China every year, with many of its other inventory from companies like 'Mattel' coming indirectly from China. According to 'Duke University Professor Gary Gerreffi', 'Wal-Mart and China are a joint venture.'

Classic American businesses like 'Huffy, Mr. Coffee, and Master Lock' have suffered under the weight of Wal-Mart's pressure. With increased sourcing from India, local suppliers will increasingly have to meet unrealistic prices and quotas to satisfy their demands.

Now, Wal-Mart has created a certain code of conduct to its suppliers which is mandatory to follow in order to send its products. Some of the main standards that must be followed by its suppliers are as follows-

1. Compliance with law- Here the suppliers must fully comply with all the applicable national rules and regulations ranging from environment to health and safety.

2. Voluntary Labor- Child, forced, prison labor is not tolerated at all. Suppliers must provide with rest days and working hours should be consistent.

3. Health and Safety- Suppliers must provide its workers with a safe and healthy working environment. They must also take effective measures to prevent workplace hazards.

4. Anti Corruption- Suppliers must not tolerate or engage in any sort of bribery, corruption or any sort of unethical practices. (Wal-Mart, 2010)

6. Public

In the year 2006, in between 30th November and 6th December, Wal-Mart stores Inc. have published a full page advertisement in all newspapers at 336 Midwestern (America). This is how they plan to draw more customers towards them so that their product can become one of the best in the market.

Wal-Mart's has a huge impact in local advertisement, for instance "if one local grocery store goes out, a community newspaper loses at a minimum of one or two full-page of ads, articles or inserts a week," as said by the director of the National Newspaper Association (NNA).

In the early 2005, Wal-Mart published ads in major city newspapers while a public relations firm approaches local papers, hoping to place news stories on Wal-Mart's views. National Newspaper Association (NNA) protest by saying 'local papers are in all but invisible to Wal-Mart, unless the company is searching for some free Public Relation'. NNA who represents editors, publishers and owners of America's community newspapers and with 3,200 newspaper members, are currently the largest newspaper association in the United States.

The latest news this year states that Wal-Mart plans to build a 'Wal-Mart Super Center' just south of Tunkhannock. It marks a big step forward with the company's US$3.6 million acquisition of land. This was recorded Wyoming County Courthouse on June 2, 2010.

According to Bloomberg on May 18, Wal-Mart Stores Inc. is one of the world's largest sellers, said first-quarter profit increased by 10 percent as growth in Mexico, Canada and China and other places helped make up for sales declines at U.S. stores. International sales jumped 8.9 percent on a constant money basis as the retailer expanded abroad to counter the 1.4 percent sales fall at U.S.

'Wal-Mart stores are open throughout a year. They are mainly focused in U.K. , Asia and South America where they still are catering to that lower-income customer, and there is a great worth that they are offering,' as said by Joe Feldman, an analyst at Telsey Advisory Group in New York in an interview. (Bloomberg, 2010)