Wal-mart Case Study

Wal-mart Case Study

Introduction

Chain stores first appeared in the late nineteenth century, but they did not become a significant force in U.S. retailing until the 1920s, when they underwent a substantial growth spurt. In 1900, chain stores accounted for only 3 percent of U.S. retail sales. By 1926, they were capturing 9 percent of sales, and by 1933, they controlled more than 25 percent of the market (www.fundinguniverse.com).

Wal-Mart's Growth

After the period of rapid growth, the chains' market share shrank during the 1930s and 1940s, due in part to widespread concerns about their detrimental effects on local economies, which led to boycotts and legislation to slow their growth. These concerns subsided, and the chains began to multiply again in the 1950s (asms.k12.ar.us). Their expansion was aided by suburbanization and increased automobile ownership, which made freestanding chain stores and shopping malls accessible to larger numbers of people. This shifted economic activity away from downtown shopping districts, which housed many independent merchants and had long served as centers of commerce and shopping (walmartwatch.com).

As chain stores have multiplied, they have captured a larger share of retail sales, and tens of thousands of locally owned businesses have closed. Since 1990, the United States has lost more than 11,000 independent pharmacies; chain drugstores now account for more than half of all U.S. drugstore sales. More than 40 percent of the United States' independent bookstores failed during this decade. Barnes & Noble and Borders Books now capture half of all U.S. bookstore sales. Local hardware stores have likewise declined; Home Depot and Lowe's control nearly 40 percent of that segment in the United States (www.pbs.org).

Three chains—Staples, Office Max, and Office Depot—capture 75 percent of all U.S. office supply sales. Blockbuster and Hollywood Video account for nearly half of all U.S. movie rentals. More than 40 percent of U.S. restaurant spending is captured by the top hundred chains. Perhaps most striking, a single firm, Wal-Mart, captures more than seven percent of all U.S. retail spending. Founded in 1962 when Sam Walton opened a single five-and-dime store in Rogers, Arkansas, Wal-Mart today is the largest corporation in the world, with $220 billion in revenue in 2001 and more than 4,400 stores worldwide (www.managein.org).

Employment Practices at Wal-Mart

Wal-Mart has been accused of a wide range of unethical, unfair, and even illegal business and employment practices. The company has been the subject of a class action suit over gender discrimination (the largest ever certified against a private employer) and has been accused of systemic racial discrimination; predatory pricing aimed at eliminating local competition in order to create effective monopolies; destroying local businesses and economies; encouraging exploitation and massive human rights violations in its dealings with foreign manufacturers (www.managein.org); substantially lowering overall retail wage rates; failing to provide adequate and affordable health care benefits to employees; subsidizing its low wage and benefit rates through publicly funded programs like Medicaid and food stamps programs; actively and aggressively working to prevent unionization of its workforce, including intimidation and store closures; failing to pay ...