Wal-Mart marks 50 years of growth, damage

The retail giant has a big birthday this month. But should we celebrate how the company has changed American business?

By MSN Money Partner Jul 2, 2012 12:44PM
By Stacy Mitchell

Sam Walton opened the first Wal-Mart (WMT) store in Rogers, Ark., 50 years ago this month. Sprawled along a major thoroughfare outside the city's downtown, that inaugural store embodied many of the hallmarks that have since come to define the Wal-Mart way of doing business. Walton scoured the country for the cheapest merchandise and deftly exploited a loophole in federal law to pay his mostly female workforce less than minimum wage.

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That relentless focus on squeezing workers and suppliers for every advantage has paid off since July 1962. Wal-Mart is now the second-largest corporation on the planet, taking in almost half a trillion dollars last year at more than 10,000 stores worldwide.

Wal-Mart captures one of every four dollars Americans spend on groceries. Its stores are so plentiful that it's easy to imagine that the retailer has long since reached the upper limit of its growth potential. It hasn't. Wal-Mart has opened more than 1,100 supercenters since 2005 and expanded its U.S. sales by 35%. It aims to keep on growing that fast. With an eye on infiltrating urban areas, Wal-Mart recently introduced smaller neighborhood markets and express stores.

While the big-box business model Sam Walton pioneered half a century ago has been great for Wal-Mart, it hasn't been so great for the U.S. economy.

Wal-Mart's explosive growth has gutted two key pillars of the American middle class: small businesses and well-paying manufacturing jobs.

Between 2001 and 2007, 40,000 U.S. factories closed, eliminating millions of jobs. While Wal-Mart's ceaseless search for lower costs wasn't the only factor that drove production overseas, it was a major one. During those six years, Wal-Mart's imports from China tripled in value from $9 billion to $27 billion.

Small, family-owned retail businesses likewise closed in droves as Wal-Mart grew. Between 1992 and 2007, the number of independent retailers fell by more than 60,000, according to the U.S. Census.

Their demise triggered a cascade of losses elsewhere. As communities lost their local retailers, there was less demand for services like accounting and graphic design, less advertising revenue for local media outlets and fewer accounts for local banks. As Wal-Mart moved into communities, the volume of money circulating from business to business declined. More dollars flowed into Wal-Mart's tills and out of the local economy.

In exchange for the many middle-income jobs Wal-Mart eliminated, all we got in return were low-wage jobs for the workers who now toil in its stores. To get by, many Wal-Mart employees rely on food stamps and other public assistance.

Wal-Mart's history is the story of what has gone wrong in the American economy. Wages have stagnated. The middle class has shrunk. The ranks of the working poor have swelled. Whatever we may have saved shopping at Wal-Mart, we've more than paid for it in diminished opportunities and declining income.

And the worse things get, the more alluring Wal-Mart's siren call of low prices becomes. While Ford (F) once profited by creating a workforce that could afford to buy its cars, today Wal-Mart profits by ensuring that Americans cannot afford to shop anywhere else. The average family of four now spends more than $4,000 a year at Wal-Mart.

Such market concentration is unprecedented in U.S. history, as is the concentration of wealth it has engendered. Sam Walton's heirs own about half of Wal-Mart's stock and have a net worth equal to the combined assets of the bottom third of Americans -- about 100 million people. This year alone, the Waltons will pocket $2.7 billion in dividends from their Wal-Mart holdings.

They are among the few Americans who have reason to celebrate Wal-Mart's 50th birthday. As for the rest of us, the milestone offers a good moment to reflect on the company's business model and where it might lead us if we allow Wal-Mart's growth to continue full steam for another 50 years.

Stacy Mitchell is a senior researcher at the Institute for Local Self-Reliance and the author of Big-Box Swindle. She lives in Portland, Maine.
Tags: FWMT

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194Comments
Jul 2, 2012 6:00PM
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WALMART....KEEPING THE CHINESE IN BUSINESS FOR 50 YEARS.
Jul 2, 2012 2:30PM
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Yeah...it's Wal-Mart's fault that manufacturing jobs leave this country, small businesses cannot afford to remain open, and the middle class is shrinking. It has nothing at all to do with our government and its policies.

Brilliant analysis!
Jul 2, 2012 5:50PM
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Exactly what should people be celebrating here?

The fake savings at the store is more than made up for in higher taxes, insurance, environmental degradation, urban blight and an overall increase in poverty in any community there's a store through the loss of local, family owned business and local jobs.
And for all those thousands given in charities each year by these stores, millions more are lost by family-owned businesses who were thriving before the Walmart went in. They run their store like a revolving door with hiring.
As for the groceries? Anything that comes from a box or bag doesn't qualify as food. Read the ingredient lists and you'll quickly discover why millions of Americans are in such poor health, which in turn costs you more for health insurance and less in coverage, which is what Walmart promotes and lobbies for.
I like to call it junk affluence.
Jul 2, 2012 6:16PM
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I did my grocery shopping at the local wal-Mart this week, trying to save a few dollars.  After I got home, 1) a WHOLE BAG of avocados was brittle and rotten (the bag had been handed to me by a produce clerk because he was blocking the aisle), 2) two of the three zucchini in a plastic bag were cut and damaged and had mold growing out of them, 3) the bananas I bought went from green to hard as a rock...they never ripened.  I didn't bother to return these items because Wal-Mart is clear across town.  I would have done better just shopping at my local Raley's.
Jul 2, 2012 4:31PM
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My problem with Wal-Mart is now that they have taken over I don't find the good deals today as I did when they were just getting going. Very few things cheap there anymore. Can find cheaper prices at different places today. Couldn't when they first started out.
Jul 2, 2012 4:30PM
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No, we shouldn't celebrate 50 years of Wal-Mart.  They are one of the worst companies on the planet and have helped destroy the economy along with the livlihoods of thousands of famillies.  There is nothing to celebrate in that.  I hate this company and everything they stand for.  They are nothing but greedy whoremogers!!!!
Jul 2, 2012 2:39PM
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walmart should change their name to CHINAMART, I challenge any of you to find any non-food item not made in china.we used to shop there nut we got sick of returning all the defective products that are made in china that fail with in days of bringing them home.STAY AWAY FROM CHINAMART, PAY A LITTLE EXTRA FOR NON CHINESE MADE ****
Jul 2, 2012 6:06PM
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I have come to the conclusion that WAL-MART has become the enemy of the workers of America because of the founder's anti-union belief and the connection with CHINA'S slave wage workers under the COMMUNISM system. 
Jul 2, 2012 4:29PM
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I will not buy from a corp that puts China workers above ours and that all their produce is GMO..I buy local to reall help this country..Walmart things are crap and not worth the time going there..
Jul 2, 2012 4:53PM
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Walmart is no longer the low priced leader.   So many other places have lower prices if you shop around.   You can even often times get a better deal at Target than Walmart plus avoid the mile long lines!
Jul 2, 2012 5:54PM
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Target is just cleaner and better stocked.
Jul 2, 2012 6:02PM
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Sam Walton is spinning in his grave. His moto was MADE IN AMERICA.now nothing is being sold with the American sticker on it. The employees were not on food stamps and government medical programs.Walmart is what is wrong wih this country a monopoly that cares only about profit. No wonder the  GOP Loves the walmart family billionaires campaign money.  
Jul 2, 2012 5:53PM
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Sam Walton would turn over in his grave to see how they have ruined his company's image. All for the god all mighty dollar. Prices keep going up but quality is going down. Have not been able to get decent produce in the last 8 months. Have heard similar reports from friends about their local WM!
Jul 2, 2012 5:49PM
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I refuse to shop there. They are evil to everyone. If they could sell the entire planet to make a buck they'd do it. The company is greedy. They make bribes to Mexican authorities and get away with it. The guilty cannot investigate themselves. I'll stick with Target. At least Target isn't run by passive aggressive out of touch rude idiots. Not a single manager in WalMart smile and say hello. The very last time I shopped WalMart, I heard a manager yelling at an employee about smiling at people. This manager walked away from the employee and gave me a very cold hateful look as she walked by. THIS is NOT what I want to hear or see when I shop. Unprofessional at every end.
Jul 2, 2012 5:47PM
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walmart killed our economy  cheap **** from china  hope you all enjoy earning $12.00 per hour with no insurance. go america   hard to believe their are that many stupid people in the us  what a shame
Jul 2, 2012 6:08PM
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Made anywhere but America. Killing the little guy is big business. enuff said.

Jul 2, 2012 4:05PM
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Wally World can also thank China for getting where it is today as can China thank Wally World for all that money they have been making as well. We might as well start buying direct from the Chinese and aviod the middle man called Wal-Mart.

 

I have found I much rather buy groceries from stores like Aldi if I want to save money. I never cared for Wal-Mart.

Jul 2, 2012 4:43PM
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In the perfect future as seen by Walmart we will all work for Walmart, we will all do all our shopping at Walmart, and everything will be made in China.  In most communities that Walmart has invaded several thousand jobs previously occupied by  small business owners and their employees have been replaced by a few hundred, low income, no future, sub par standard of living. jobs.  Not to mention the manufacturing jobs lost to the third world.  Sam is spinning in his grave at fifty miles an hour.  And the worst part good companies that have treated their people great for years are having to adopt the Walmart system to compete.
Jul 2, 2012 5:52PM
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Since Walmart causes so much damage to local economies while making millions for the chinese and a few rich profiteers who pay no taxes it would be hard to celebrate anything about them. this has been proven beyond a doubt by a University study and is why upstate New York wouldn't let a store built there. The sad part is when Sam Walton first made it a big retailer he prided himself on having almost all USA made products, google it and you'll see him in front of a banner declaring such.
Jul 2, 2012 6:04PM
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I never shop at Walmart............so WHO CARES!
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