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Wal Mart De Mexico, S.A. De C.V. Business Information, Profile, and History
Blvd. Manuel Avila Camacho 647
Colonia Periodistas
11220 Mexico, DF
Mexico
Company Perspectives:
We are the most important retailer in Mexico. Wal-Mart Stores, Inc., our majority shareholder, is the largest retailer in the world. Our leadership is the result of a series of operating and commercial practices aimed at a timely and efficient satisfaction of our customers' needs, thus creating value for them and for our shareholders.
History of Wal Mart De Mexico, S.A. De C.V.
Wal-Mart de Mexico, S.A. de C.V., formerly known as Cifra, S.A. de C.V., is the largest retailer in Mexico, operating 460 units under a number of different banners. Wal-Mart de Mexico's two principal retail chains--in terms of their contribution to the company's annual sales totals&mdashe Sam's Club stores and Bodega Aurrera stores, both of which operate as warehouse-style concepts. Combined, the two chains account for 49 percent of the $6.4 billion the company collected in sales in 1999. Aside from the 34 Sam's Club stores and the 69 Bodega Aurrera stores, the company's business formats include: 27 Wal-Mart Supercenters, 38 Superama supermarkets, 51 Suburbia discount apparel stores, 38 medium-sized, general merchandise Aurrera stores, and 205 Vips restaurants. Wal-Mart Stores, Inc. owns 60 percent of Wal-Mart de Mexico.
Origins
Cifra, Wal-Mart de Mexico's predecessor, was founded in 1958 by Jerónimo Arango. The son of a Spanish immigrant to Mexico who prospered in the textile business, Arango spent his youth studying art and literature at several American universities and traveling in Spain, Mexico, and the United States. While in New York City he saw a crowd waiting patiently for the opportunity to enter E.J. Korvette, then a pioneering Fifth Avenue discount department store. Impressed by Korvette's success, he persuaded his father to lend him the equivalent in pesos of $240,000 so that he could organize a similar venture with his two brothers, Placido and Manuel. Called Aurrera Bolívar, this discount store was opened in downtown Mexico City in 1958.
Like the Korvette store, Aurrera Bolívar immediately drew the public, and--also like Korvette's--it attracted the hostility of established retailers, who felt threatened by competition engendered by Aurrera Bolívar's low prices. In fact, the store was selling household goods and clothing at 20 percent below manufacturers' list prices, while established retailers were marking them up by 40 to 45 percent. Soon the brothers had to locate alternate sources of goods as far away as Guadalajara and Monterrey because the Arangos' suppliers were threatened with boycott by angry rivals. Nevertheless, Aurrera reportedly won sympathy by publicizing its competitors' tactics during its sponsorship of the popular television show, 'The 64,000 Peso Question.' By 1965 eight Aurrera stores were in existence, drawing $16 million in sales. The company's first Superama supermarket opened in 1960 and the first Vip restaurant opened in 1964.
In 1965 Jewel Cos. of Chicago organized a joint venture with the Arango brothers to start new stores, and a year later Jewel acquired a 49 percent stake in the business for about US $20 million. While Manuel and Placido Arango took their part of the money and left the business to establish other enterprises, Jerónimo studied modern retailing at Jewel headquarters in Chicago. In 1970 he opened the first of the firm's Bodega Aurrera discount warehouse stores and Suburbia department stores. Aurrera S.A. became publicly owned in 1976, the year it opened its first hypermarket, and was so successful that by 1981 Jewel's Mexican operations accounted for nearly one-third of its income. Jewel's stake had dropped to 41.7 percent of the outstanding shares by 1980 and eventually would fall to 36.1 percent.
Hard times came in 1982, when the peso collapsed because of huge foreign debt, touching off an inflationary crisis and a severe recession that lasted for years. But Arango was confident enough of the future to buy back Jewel's share in the business (which he renamed Cifra in 1984) from its successor, American Stores Co., for about $53.4 million. He kept all existing stores open and retained the employees, although they were expected to work longer hours and those who left were not replaced.
Cifra's emphasis on discounting helped sustain the company during these dark years. Located in the poorer neighborhoods of Mexico City, the Bodega Aurrera stores, for example, stocked all types of nonperishable goods to the ceiling and offered prices as low as half those of other retailers. By the end of 1989 Cifra was in its best financial shape ever. It had grown in sales by 20 percent or more in every year of the decade. Its sales in 1989 were about $550 million, and its stock more than tripled in value during the year.
Joint Venture and Subsequent Expansion: Early 1990s
In 1990 Cifra's sales grew by 26 percent, and between 1990 and 1991 its stock shot up almost fivefold. At the end of 1991 there were 38 Almacenes Aurrera self-service department stores, selling general merchandise, clothing, and supermarket items. The high-income Superama chain consisted of 34 freestanding community supermarkets. Next came the 29 Bodega Aurrera discount warehouse stores and the 29 Suburbia family-oriented department stores, selling discount clothing and dry goods. The Vips restaurant operations consisted of 59 cafeterias, 15 El Porton restaurants (initiated in 1978), and four more specialized restaurants. Gran Bazar was the name for Cifra's hypermarkets, and Sigla for its real estate interests in opening new shopping centers.
In May 1992 Cifra announced that it intended to invest $211 million to open 12 new stores during the year and another $68 million to renovate 78 existing ones. The restaurants were modernized to attract new and younger customers. In addition, an investment of $80 million was to be made in such technological developments as information and point-of-sale systems, satellite-based communications, and complex data processing units. By this time, the implementation of a computerized inventory-control system had made the company the leader in the industry for inventory management. Its point-of-sale systems allowed it to collect, analyze, and make use of vast amounts of data concerning consumer preferences and the effects of price changes. Cifra's sales per square foot were almost twice as high in 1992 as those of its competitors, and its liquidity in cash and equivalents as well as its inventory turnover were the highest in the industry.
Cifra's growth remained impressive in 1992. A total of 23 units were built that year. Sales rose by 20.7 percent to $3.7 billion. Operating profits increased by 32 percent during 1992. As much as 31 percent of the company's earnings came from interest income on its considerable cash surplus. An investor buying $1 of Cifra B shares at the start of 1988 had seen his investment reach $39.46 at the end of 1992. Sales in fiscal 1993 rose to $4.6 billion and were the best per square foot in Mexico.
Cifra formed two joint ventures with Wal-Mart in 1991. One, Commercializadora Mexico-Americana, promoted trade between Mexico and the United States. The other, Club Aurrera, was directed at small businesses and their employees and was patterned on Wal-Mart's Sam's Club. In fact, after a short period of time the Club Aurrera stores were renamed Sam's Club. The first Club Aurrera opened late in 1991 and three more were opened in 1992. This joint venture was serving many customers wishing to buy in quantity. Like Sam's Club, Club Aurrera members-only stores typically offered just one brand of an item stacked to the rafters in cartons. The customer base was expected to include restaurants, discos, and clubs.
In May 1992 the joint venture of Cifra and Wal-Mart was expanded to oversee all of the new Almacenes Aurrera, Superama, Bodega, and Gran Bazar stores. The rationale behind this move was that Wal-Mart's technology and marketing know-how would fuel Cifra's growth to otherwise unattainable levels. One analyst also noted that it precluded the prospect of Wal-Mart forming links with another Mexican retailer or opening stores in Mexico on its own.
By June 1994 there were three Almacenes Aurrera stores, 18 Bodega stores, three Superama Supermarkets, two Suburbia stores, 11 Vips restaurants, ten Sam's Clubs, and three Wal-Mart Supercenters combination stores. Wal-Mart had built three Supercenters in 1993 and early 1994, one of which, with 244,000 square feet, became the largest Wal-Mart Supercenter in the world. In addition, a revision of the agreement added the field of collaboration to Cifra's restaurant and clothing store divisions, previously excluded.
Wal-Mart's expertise was considered especially important in the creation of regional distribution centers. Because Cifra had concentrated on the Mexico City metropolitan area, it was relatively inexperienced in the efficient delivery of supplies to other cities, including Guadalajara, León, and Monterrey to the north and west and Villahermosa and Mérida to the south and east. During this time, the collaboration between Cifra and Wal-Mart was managed primarily by Mexican nationals in Mexico. Wal-Mart was contributing a few dozen Mexican expatriates to help out, but their roles were shifting increasingly to Mexican citizens as skills were passed on to local personnel, according to Bob Martin, president and chief executive officer of Wal-Mart International.
A prototype Almacenes Aurrera was erected in the Mexico City suburb of Las Auguilas. Executed by Fitch Inc. of Worthington, Ohio, the store featured white walls and color codes for the major merchandise categories. New fixtures allowed more prominent opportunities for display and highlighting than in the past, with red--Aurrera's signature color--drawing attention to new merchandise, sales items, and other promotions. Freestanding archways in the back corners were intended to draw customers to the perimeter. The parqueteria, an outside bottle return, bag check, and security checkpoint standard in Mexico, was sheltered to shield shoppers from the elements.
The creation of the North American Free Trade Agreement (NAFTA) at the beginning of 1994 deepened the collaboration
1958:The first Aurrera store opens in Mexico City.
1960:Superama retail concept is launched.
1964:Vips restaurants are established.
1970:Two more retail concepts, Suburbia and Bodega Aurrera, begin operating.
1977:The company, then known as Cifra, completes initial public offering of stock.
1991:Cifra and Wal-Mart Stores, Inc. sign joint venture agreement.
1997:Wal-Mart Stores acquires majority interest in Cifra, creating Wal-Mart de Mexico.
In late 1994 Cifra was reportedly planning to invest heavily in the expansion of its store and restaurant chains. By that time the Cifra empire, by itself and in combination with Wal-Mart, consisted of 35 Almacenes Aurrera, 58 Bodegas Aurrera, 36 Superamas, 33 Suburbias, 22 Sam's Clubs, and 11 Wal-Mart stores, in addition to 114 Vips cafeterias and restaurants.
The mid-1990s presented some challenges for Cifra. The company's financial reportings for 1993 proved disappointing to many analysts, and the company's stock was trading at about 28 times estimated 1994 earnings, although a cost-cutting campaign helped the company's operating profits to climb 23 percent during the first quarter of 1994. A blow was then dealt to all publicly traded Mexican companies in 1994, when the value of shares on the Bolsa stock exchange experienced a sharp drop. Mexican stocks ended the year down by 44 percent. Finally, the devaluation of the peso in December 1994 triggered a financial panic, and during the first half of January 1995 Mexican stocks dropped another 28 percent. Wal-Mart and Cifra announced during the month that plans to open 24 new stores in Mexico during 1995 were 'temporarily on hold' due to the country's economic conditions. Cifra representatives noted, however, that this decision did not affect the long-term growth strategy of the joint venture, nor did it change the level of commitment by both partners in the association. Moreover, analysts noted that one point in favor of Cifra's future was its lack of foreign currency debt.
Wal-Mart Stores Majority Shareholder in Cifra in 1997
Any suspicions that the mid-1990s economic crisis in Mexico might weaken the partnership between Wal-Mart and Cifra were thoroughly eliminated during the latter half of the 1990s. From Wal-Mart's perspective, the Mexican market ranked as one of the company's fast-growing international markets during the late 1990s, a segment of the company's business that was becoming increasingly important as domestic markets began to suffer from an oversaturation of stores. Wal-Mart's commitment to expansion in Mexico was evinced in a landmark transaction in 1997, one that marked a turning point in the history of Cifra. In June 1997, Wal-Mart announced that it was acquiring a 51 percent interest in Cifra in a $1.2 billion deal. The merger agreement was completed in September 1997, giving the $105 billion discount chain control over the stores formerly controlled by the six-year-old joint venture and the stores and restaurants owned solely by Cifra. The new entity was renamed Wal-Mart de Mexico, S.A. de C.V.
With all of the businesses consolidated under one corporate banner, Wal-Mart's expansion efforts in Mexico became decidedly more aggressive. The merger allowed Wal-Mart to use the cash flow produced by Cifra's other businesses to finance the expansion of Sam's Club and the company's supercenters in Mexican markets. In addition, the union strengthened Wal-Mart's ability to expand into smaller markets and broaden its operating territory beyond central Mexico. By the end of the decade, Wal-Mart de Mexico consisted of approximately 460 units, with 34 Sam's Club warehouse stores and 69 Bodega Aurrera stores accounting for 49 percent of the company's $6.4 billion in annual sales. As the company formulated plans for the future, with the massive consolidation efforts under way until the conclusion of the 1990s, expansion was expected to continue throughout Mexico. Supported by the considerable financial resources of Wal-Mart Stores, which increased its stake in Wal-Mart de Mexico to 60 percent in April 2000, the company figured to be the dominant retailer in Mexico during the 21st century.
Principal Subsidiaries: Controladora de Tiendas de Descuento; Cifra-Mart; Wal-Mart Holding Company Mexico; Comercializadora Mexico-Americana.
Principal Competitors: Controladora Comercial Mexicana, S.A. de C.V.; Grupo Gigante, S.A. de C.V.; Organizacion Soriana, S.A. de C.V.
Related information about Wal-Mart
(Canada) |
foundation = Rogers, Arkansas (1962) |
location = Bentonville, Arkansas, USA |
key_people = Sam
Walton (1918–1992), Founder
H. Robson Walton,
Chairman
Thomas Schoewe,
CFO|
industry = Retail |
num_employees = 1.6 Million (2006) |
products = Discount
stores, grocery
stores, and hypermarkets |
revenue = profit$315.654
billion USD
(2006)|
net_income = profit$11.231 billion USD (2006)|
homepage = www.walmartstores.com}}
Wal-Mart Stores, Inc. , an American public corporation, founded by Sam Walton in 1962, first incorporated on October 31, 1969, and listed on the New York Stock
Exchange in 1972. It is
the largest retailer in
the world and the second largest corporation in the world, behind
Exxon Mobil, based
on revenue as of 2006.Staff
Writer. Retrieved on July
25, 2006. For the
fiscal year ending
January 31, 2006, Wal-Mart reported net income of $11.2 billion on $316
billion of sales revenue
(3.5% profit
margin)."Wal-Mart Reports Record
Fourth Quarter Sales and Earnings." Retrieved on July 25, 2006. It is the largest private employer in the United States and Mexico.Wal-Mart Corporate
Facts." Wal-Mart. Retrieved on August 12, 2006.
Wal-Mart is the largest grocery retailer in the United States, with an estimated
20% of the retail grocery and consumables business,Ortiz, John.
"Can Kroger slow
Wal-Mart?" Deseret Morning News. October 26, 2005. Retrieved on July 25, 2006.
and is also the largest toy seller in the United States, with an
estimated 22 percent of the retail toy business, having surpassed
Toys "R"
Us in the late-1990s.Byrnes, Nanette; Retrieved on July 25, 2006.
Internationally, Wal-Mart operates in Mexico as Walmex, in the United Kingdom as ASDA and in Japan as The
Seiyu Co., Ltd.. Retrieved on July 26, 2006.
Wholly-owned operations are located in Argentina, Brazil, Canada, South
Korea, Puerto
Rico, and the United Kingdom. Retrieved on August 15, 2006.
Wal-Mart has been widely criticized for its policies and business practices
by community groups, grassroots organizations, labor unions,Kabel, Marcus. "Who Calls the Shots in
the Global Economy?" PBS.
Retrieved on July 31,
2006.
History
Sam Walton's
retailing career began when he accepted a job offer at a JC Penney
store in Des
Moines, Iowa on June
3, 1940 where he
remained for eighteen months. In 1945, Walton met with Butler Brothers, a regional retailer that owned a chain of
variety stores
called Ben
Franklin. Retrieved on July 24, 2006.
In 1962, Walton opened the
first Wal-Mart store, Wal-Mart Discount City, in Rogers,
Arkansas."The Wal-Mart Timeline."
Wal-Mart (published on walmartfacts.com). Retrieved on July 24, 2006. Within five years the the company expanded
to 24 stores across the state of Arkansas and reached $12.6 million in
sales. In 1968 the company
opened its first stores outside of Arkansas in Sikeston, Missouri
and Claremore,
Oklahoma.
The company was incorporated as Wal-Mart Stores, Inc. on
October 31, 1969, and in 1970, opened its home office in Bentonville,
Arkansas, as well as its first distribution center.
The company began trading stock at this time as a publicly-held company on
October 1, 1972, and was listed on the
New York
Stock Exchange shortly thereafter. The first stock split occurred in
May, 1971 at a market price of $47. By this time,
Wal-Mart was operating in five states: Arkansas, Kansas, Louisiana, Missouri and Oklahoma, and entered Tennessee in 1973, and Kentucky and Mississippi in 1974. As the company moved into Texas in 1975, there were 125 stores with 7,500 employees, and
total sales of $340.3 million.
Wal-Mart grew rapidly during the 1980s and 1990s.
Subsidiaries
Wal-Mart's operations are comprised primarily in three retailing
subsidiaries: Wal-Mart Stores Division U.S., SAM'S CLUB, and
Wal-Mart International. Wal-Mart does business under nine
different retail formats: supercenters, food and drugs, general merchandise stores, bodegas (small
markets), cash and carry stores, membership warehouse clubs, apparel stores, soft discount stores and
restaurants.
Wal-Mart Stores Division U.S.
Wal-Mart Stores Division U.S. is Wal-Mart's largest
business subsidiary, accounting for 67.2% of fiscal 2006 net sales.
This segment consists of three traditional retail formats: discount
stores, supercenters, and neighborhood markets, all of which are
located in the United
States, as well as Wal-Mart's online retailer, walmart.com.
Wal-Mart Stores operates retail department stores selling a range
of non-grocery products, though emphasis is now focused on the
supercenters, which include more grocery items. Many Wal-Mart
Discount Stores also feature a garden center, a pharmacy, Tire & Lube
Express, optical center, one-hour photo processing lab, portrait
studio, as well as a fast
food outlet.
The first Wal-Mart store opened in 1962 in Rogers, Arkansas.
As of August 31,
2006, there were 1,135
Wal-Mart Discount Stores in the United States."Corporate Profile."
Wal-Mart. Retrieved on July 26, 2006.
Wal-Mart Supercenter
Wal-Mart Supercenter is a chain of hypermarkets that range in
size from 99,000 square ft. (17,000 m²). They carry everything a
Wal-Mart Discount Store does in addition to a full-line supermarket (including
meat, bakery, deli, frozen foods, dairy, produce and seafood). Many Wal-Mart Supercenters also feature a
garden center, a pharmacy, a Tire & Lube Express, optical center,
one-hour photo processing lab, portrait studio, and numerous alcove
shops such as a SunTrust personal finance center, a cellular phone
store, hair and nail salons, video rental by either Movie Gallery or Hollywood Video, a
family fun center, a branch of a local bank, and possibly a
fast food
outlet.
The first Supercenter opened in 1988 in Washington, Missouri.
As of August 31,
2006, there were 2,121
Wal-Mart Supercenters in the United States.
Wal-Mart Neighborhood Market
Wal-Mart Neighborhood Market is a chain of supermarkets that average
about 42,000 square feet (3,900 m²). They offer a variety of
products including a full-line of groceries, pharmaceuticals, health and beauty
aids, photo developing services, and a limited selection of
general
merchandise.
The first Neighborhood Market opened in 1998 in Bentonville, Arkansas.
As of August 31,
2006, there were 108
Neighborhood Markets in the United States.
SAM'S CLUB
Wal-Mart operates SAM'S CLUB, a chain of warehouse clubs that
sells groceries and
general
merchandise, often in large quantities or volume, to customers
who pay an annual fee for the privilege of shopping there.
Competitors of Wal-Mart's Sam's Club division are Costco, and the smaller BJ's Wholesale
Club chain operating mainly in the eastern United States.
As of August 31,
2006, there were over 567
Sam's Clubs in the United States.
Wal-Mart International
The operations of Wal-Mart International comprise 2,700
stores in 14 countries outside the United States."Wal-Mart Announces Sale
of German Business." Retrieved on August 15, 2006. According to Wal-Mart's 2006 Annual Report,
International accounted for approximately 20.1% of fiscal 2006
sales. Wholly-owned operations are located in Argentina, Brazil, Canada, South Korea, Puerto Rico and the United Kingdom.
Wal-Mart has operated in Canada since their acquisition of the
Woolco division of Woolworth Canada, Inc."Company Profile."
Wal-Mart Canada. Retrieved on September 12, 2006. Today, they operate 278 locations employing 70,000
Canadians, with a local home office in Mississauga,
Ontario.
Fiscal 2006 for Wal-Mart's United Kingdom subsidiary, ASDA, were
42.7% of the International segment sales. Retrieved on July 26, 2006. Additionally, Wal-Mart owns 51% of the
Central American Retail Holding Company (CARHCO) formed from more
than 360 supermarkets and other store formats, operating in 5
Central American countries: Guatemala, El
Salvador, Honduras,
Nicaragua and Costa Rica.
In 2004, Wal-Mart bought the Bompreço supermarket chain, comprised
by 116 stores. With the acquisition of Bompreço and Sonae, Wal-Mart
is currently the third biggest supermarket chain in Brazil, only
behind Carrefour and
Pão de Açúcar.
In July 2006, Wal-Mart announced its withdrawal of operations from
Germany because of
sustained losses. Retrieved on July 31, 2006.
The sale is subject to regulatory approval.
Corporate affairs
Wal-Mart's business model is based on selling a wide variety of
general merchandise and marketing, "always low prices." The company
refers to its employees as, "associates." Retrieved on August 3, 2006.
Unlike many other retailers, Wal-Mart does not charge a slotting fee to suppliers
for their products to appear on the store.Nelson, Emily. Retrieved
on August 1, 2006. Alternatively, they focus on
selling more popular products, and often pressure store managers to
drop unpopular products in favor of more popular ones, as well as
manufacturers to supply more popular products.
Governance
Wal-Mart is governed by a thirteen-member Board of Directors,
which is elected annually by shareholders. Robson Walton, the eldest son of founder
Sam Walton, serves as
Chairman of
the Board, and H.
Retrieved on August
3, 2006. and Tom Coughlin
(2003-2004), who also served as Vice Chairman. Retrieved on
August 3, 2006. On August 11, 2006, he was sentenced to
twenty-seven months of home confinement, five years of probation,
and ordered to pay $411,000 in restitution.Staff Writer. Retrieved on
August 11, 2006.
Competition
In the United
States, Wal-Mart's chief competitors in low-end general
merchandise include Sears Holdings Corporation's Kmart chain and Target. Wal-Mart's
move into the grocery business has also positioned it against major
grocery chains such as HEB,
Kroger, Albertsons, Publix, Giant Eagle, By focusing on a small number of
low-cost products, dollar store retailers such as Family Dollar and Dollar General have
successfully competed head-to-head with Wal-Mart for home consumer
sales. Business
Week. May 10,
2004.
In Canada, Wal-Mart
competes with the Hudson Bay Company's low-cost department store
Zellers, which is
the second largest chain of discount
department stores in Canada after Wal-Mart. Wal-Mart also
competes with Canadian department stores Sears Canada, Winners, Giant Tiger, and various
other regional chains. class=ilnk>Safeway, Sobeys, Loblaw Companies which
operates under various names such as Loblaws, No Frills, Zehrs Markets, Real Canadian
Superstore, Fortinos, and various other Canadian grocery store
chains. Retrieved on July
27, 2006.
In July 2006, Wal-Mart announced its withdrawal of operations from
Germany because of
sustained losses. Retrieved on July 27, 2006.
In May 2006, Wal-Mart withdrew from the South Korean market when it
agreed to sell all 16 of its South Korean outlets to Shinsegae, a local retailer,
for $882 million. Retrieved on July 27, 2006.
In the United
Kingdom, Wal-Mart's Asda subsidiary is the second largest chain
in the UK after Tesco.Fairlamb, David with Laura Cohn "A Bumpy Ride in
Europe." Retrieved on July 27, 2006.
Specifically, ASDA is a distant second to Tesco in the UK grocery market, and as of 2006 the
gap is widening, based on market share figures published by
TNS Superpanel.
Financial results in 2006
have indicated Wal-Mart customers are sensitive to higher utility
costs and gas prices.Wal-Mart Reports Second
Quarter Sales and Earnings Walmart Press Release
In the United States, it has been reported that eighty percent of
residents of the United States shop at Wal-Mart at least once a
year.Wal-Mart CEO Lee Scott
appears on the Charlie Rose ShowThe Charlie Rose
Show And each week, 100 million customers visit Wal-Mart's U.S.
stores - "more than one-third of the U.S. population."Wall Street Journal
article Managing Wal-Mart: How U.S.-Store Chief Hopes to Fix
Wal-Mart
Frequent Wal-Mart customers show some demographic trends. Analysts
have estimated that more than one-fifth of Wal-Mart's U.S.
customers have no bank accounts, twice the national rate.Liz
Pulliam Weston National Bank of
Wal-Mart?MSN Money
Polling Data reported by John Zogby suggests there is a correlation between how
often consumers shop at Wal-Mart and how conservative they are.
August 17 2006 Page 9 US edition This also
roughly correlates with the geographic distribution of Wal-Mart
stores, as the company has yet to significantly penetrate major
urban areas, which tend to be less conservative than suburban and
rural areas, where most of Wal-Mart's stores can be found.
Wal-Mart has recently taken actions to expand its U.S. customer
base. On September 7, 2006, the Wall Street Journal
reported that Wal-Mart was modifying its U.S. stores from a
one-size-fits-all merchandising strategy to a custom-fitting
merchandise assortment designed to "reflect each of six demographic
groups -- African-Americans, the affluent, empty-nesters,
Hispanics, suburbanites and rural residents."Reuters article
Wal-Mart to drop one-size-fits-all approach: WSJ
An example of the company's efforts to broaden its U.S. customer
base include a focus on gay and lesbian customers including a
December 2005 internal seminar and the August 2006 joining of the
corporate advisory council of the National Gay and Lesbian Chamber of Commerce in what is
described as a "pragmatic" effort "to broaden its appeal as it
tries to expand into new territories, particularly in the more
liberal and union-friendly urban and coastal regions". It's noted
that Wal-Mart rejected the American Family
Association's recommendations by carrying the movie "Brokeback Mountain,"
a love story about two cowboys in Wyoming.Abigail Goldman Wal-Mart Reaches Out,
Gets SlappedLos Angeles TimesAugust 252006Frazier, Mia Wal-Mart Partners With Gay and Lesbian
Group Advertising Age August 242006
Private label brands
Wal-Mart's private
label store
brands include: Great Value, Equate, and Sam's Choice. Retrieved on August 23, 2006.
Criticism
Wal-Mart has been the subject of criticism from community
groups, grassroots
organizations, trade
unions, and environmental groups. According to the AFL-CIO,
"Wal-Mart is the single largest importer of foreign-produced goods in the United
States", their biggest trading partner is China, and
their trade with China
alone constitutes approximately 10 percent of the total US trade
deficit with China as of 2004.
While Wal-Mart highlights its US suppliers, 60% of its products are
imported from other countries as of 2004, compared with 6% in
1996."Is Wal-Mart Good for
America? PBS. Retrieved on July 31, 2006.
Other Wal-Mart goods have been manufactured and imported from such
places as South
Korea, Philippines, Malaysia, Cambodia, Thailand, and Vietnam. (article archived on Global Exchange). Further, Wal-Mart spends an
average of $3,500 per employee for health care, 27% less than the
retail-industry average of $4,800. Wal-Mart CEO Lee Scott acknowledged
benefits could improve by claiming Wal-Mart employees can get
better value from taxpayer funded health care than from Wal-Mart's
own health plans, "In some of our states, the public program may
actually be a better value - with relatively high income limits to
qualify, and low premiums." On April 17, 2006,
Wal-Mart announced that it was making a health care plan available
to part-time workers after only 1 year of service, instead of the
prior 2 year requirement, as well as extending the coverage to
include children.Freking, Kevin. Retrieved on August 7, 2006. The company estimates that
this new change could add 150,000 workers to health coverage plans,
if all eligible choose to take part. However, there is concern that
since the new plan provides a benefit only after a $1,000
deductible is paid ($6,000 for a family), many workers will be
unable to afford the coverage and will opt not to participate in
the plan.
The State of Maryland
passed a controversial bill in January of 2006 requiring that all
corporations with more than 10,000 employees in the state spend at
least 8% of their payroll on employee benefits, or pay into a state
fund for the uninsured. Retrieved on July 26, 2006. In countries that require unions or the option to
join a union, such as Germany and China, Wal-Mart allows them. In
August 2006 Wal-Mart announced that it will allow workers at all of
its Chinese stores to become members of trade unions. Wal-Mart workers in
China form first union AFP July 29,
2006"Wal-Mart SEC Form
10-Q." Retrieved on July
31, 2006.
In August, 2006, the company announced that it
would roll out an average pay increase of 6% for all new hires at
1,200 Wal-Mart and Sam's Club locations nationwide, and at the same
time would institute pay caps on veteran workers.Goldman, Abigail.
Retrieved on August
24, 2006. While
Wal-Mart claims the measures are necessary to stay competitive,
critics claim the salary caps are primarily an effort to push
higher-paid, veteran workers out of the company.
Wal-Mart's United Kingdom subsidiary, ASDA, was voted a top ten UK employer by the UK
newspaper Sunday Times Top 100 Best Employers Survey in 2003, 2004
and 2005.Staff Writer.
Additional topics
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