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?
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.
I have a hard time demonizing the most sccessful retailer in the history of the world. If you don't like Wal-Mart, stay away. I've done business with them and made money doing so. I met Sam Walton, an absolute gentleman who, died too young. This article makes much of jobs lost. How about the hundred of thousands of jobs created by Wal-Mart?
Shut up and find somehing newsworthy.
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.
Talk about a one sided article! Who wrote this one sided trash, the CEO of Target!
Maybe all of those mom/pop stores that went out of business did so because they were stuck in the 1960's while the rest of the country was moving into the 21st century?
Geez, did Walmart do anything to help the American public? I think YES!
Wal-Mart had little to nothing to do with the problems and perceived problems you mention.
Drug stores are now big box and that drove local independent pharmacists out of business. Likewise the Lowes and Home Depots caused the local hardware stores to go away, but in both of these cases consumers are better served with a much wider selection and lower prices along with the professional advice they need.
Workers are also better off. With the mom and pop stores they had no benefits and no career path as they were family owned businesses and the family ran them. With the big box businesses they now have an opportunity to advance.
Another reason for the demise of independent retailers is the excessive government regulation we have today. How can a mom and pop pharmacy expect to compete when they have so much red tape to deal with for Medicare and Medicaid and all of the government bureaucracy when it comes to controlled substances?
It wasn’t Wal-Mart, it was the consumers. Wal-Mart is giving its customers what they want. At one time Wal-Mart had a buy American campaign with American made products prominently displayed, but they had to end it because people weren’t buying.
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