A Brief History
On July 2, 1962, the American way of life started to change with the first drop of rain in what was to become a downpour, as the first Walmart store opened in Rogers, Arkansas. Whether that change was for the better or for the worse is a controversy debated fiercely by both sides. (Note: In 2008 the name was changed fro Wal-Mart to Walmart.)
Digging Deeper
Former JC Penney employee Sam Walton decided to go into business for himself in 1945 when he bought a Ben Franklin Five and Dime store. Sam operated on the premise of high volume through lower prices and it worked. Walton bargained hard for lower prices when buying his merchandise wholesale and then sold the goods for lower prices which increased his volume and profit.
After opening his first Walmart in 1962, his success allowed him to expand to 24 stores in Arkansas by 1967. By 1968 he was able to stretch his horizons by opening his first stores not in Arkansas in Oklahoma and Missouri. In 1975 Sam opened his first Texas Walmartand he now had 125 stores. It was time for incorporation. By 1987 there were 1198 stores, and by 1990 Walmart had become the largest retailer in the US, and now had stores overseas. Vermont finally got a Walmart in 1996, the 50th state in Walmart’s constellation of stores.
Walmart now has over 11,000 stores in 27 countries, and well over 2 million employees, making it the largest private employer on the planet. Sales volume is approaching a half trillion dollars per year, with a net profit of over $16 billion. With all this success and providing all those jobs, what is the problem?
The problems, as some people see them, are that the jobs are mostly minimum wage (or close to it) part time jobs without health care or other benefits, and are non-union as well. By opening so many stores and buying in such volume that they can squeeze other retailers out of available wholesale merchandise, and then undercut them in price, competitors cry foul. Experts have estimated a Walmart can push 50% of smaller retailers out of business in a town within 10 years, often replacing unionized decent jobs (especially at grocery stores) with lower wage, lower benefit jobs.
Another criticism is that Walmart’s cut-throat business practices forces manufacturers to move their factories overseas, mostly to China where Walmart buys the bulk of their non-food items. Able to buy up the entire output of some foreign factories, Walmart has entire ships loaded with goods just for Walmart stores. Sam Walton’s philosophy that Walmart is beneficial to society and therefore should not contribute to charities also angers and disappoints critics.
Accused of discrimination against women, homosexuals, employing illegal aliens and slave labor overseas, Walmart is also a target of environmentalists, labor unions, and trade protectionists.
In response, Walmart claims to save American consumers billions of dollars, thus raising the standard of living wherever they open a store. Walmart also points out that since Sam Walton died (1992) charitable donations are now about $1 billion annually.
Question for students (and subscribers) to ponder: Is Walmart good for the US or bad? What are your opinions, and why do you think so?
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Historical Evidence
For more information, please see…
Scott, Roy V., Sandra Stringer Vance, et al. Wal-Mart: A History of Sam Walton’s Retail Phenomenon (Twayne’s Evolution of Modern Business Series). Twayne Publishers, 1994.
