Wal-Mart has come a long way since Sam Walton opened store No.1 in Rogers exactly 50 years ago Monday (July 2). No one dreamed at the time the venture would eventually become the world’s largest retailer and employer with unprecedented profits for shareholders and values for consumers.
But economists continue to study and question the overall impact the Bentonville-based retail giant has had on the small business sector, its own suppliers, and the core army of “associates” that keep a legion of Walmart stores running around the clock.
Between Friday and Sunday on the eve of the mid-century anniversary, thousands of protestors from Los Angeles to Little Rock to New York staged rallies, handing out cupcakes in honor of Walmart’s 50 years of low wages and alleged gender discrimination. Activist groups like Chicago Jobs with Justice, National Guestworker Alliance, Warehouse Workers for Justice and associate-led OUR Walmart took part in the rallies.
Elce Redman, spokesman with Chicago Jobs with Justice, said the Chicago rally was a success as the protestors set up in front of a new Walmart Neighborhood Market in Presidential Towers, an affluent area of the city.
Redman said residents passing by took cupcakes and had their own varying opinions of the “low road corporation.”
“We had a 50-foot Walmart puppet and took a card and cupcake to the store manager but he called the police,” Redman said. “That didn’t stop our rally. We will continue to ask of Wal-Mart to pay a living wage to its associates and treat them with the dignity and respect that Sam Walton would have required,” Redman said.
Just last month, Wal-Mart executives touted the success of their Chicago stores in both Wrigleyville and Presidential Towers saying the city had welcomed their partnership.
Redman says not the whole city, especially the small business retailers in those neighborhoods.
Courtney Reagan, business analyst with CNBC, said Monday Wal-Mart’s 1.4 million U.S. employees account for 9.4% of the total retail trade workers in the nation.
According to the Bureau of Labor Statistics since 2005, Wal-Mart’s U.S. employee count is up 8%, but overall retail worker unemployment is up 8.7% in the same period. Unemployment in this sector rose from 6.8% in 2005.
Wal-Mart has had a profound impact on the retail sector overtime, despite the fact it was modeled after Gibson’s Stores - a regional discounter that didn’t survive past the1990s.
“Walmart’s overall impact on the retail industry and beyond has changed the way business is conducted globally, and increased the consumer benefits - regardless of where they shop,” according to Walmartstores.com
That impact is both good and bad, depending on who you ask.
A 2004 study out of the University of Missouri, Sam Walton’s alma mater, found for every 100 jobs created by a new Walmart store, 50 retail and 30 wholesale jobs are lost over the next five years.
In 2007, another study by the University of California Berkley Labor Center revealed “When a state has 50 Walmart stores, the average wages for retail workers were 10% lower, and their job-based health coverage rate was 5% less than they would have been without Wal-Mart’s presence.”
The study concluded that nationally, the retail wage bill in 2000 was estimated to be $4.5 billion less in nominal terms due to Wal-Mart’s presence. The low wage concerns drew a few dozen protestors out Friday evening (June 29) in Little Rock.
“We had a nice rally with representatives from the AFL-CIO, Interfaith Coalition, OUR Walmart, United Commercial Food Workers Union and Methodist Assembly who set up in front the Walmart at 8801 Baseline Rd. Our core message is ‘share the wealth’ and pay your associates a fair living wage of a minimum $25,000 annually,” said Zach Bledsoe, union representative for the UCFW #2008 in Little Rock.
He said the assembly was peaceful and the store management did not come outside, but law enforcement did patrol the area.
The company says its average hourly pay is $12, which along with competitive benefits many times exceed what other unionized employers provide.
“Last quarter we also paid out $200 million in bonuses to eligible stores and their associates,” said spokesman Lorenzo Lopez. “That was 88% of our stores that met their performance goals.”
Lopez said hourly associates are eligible for bonuses, including those who may work part-time.
Shareholders and consumers who save from “everyday low prices” are the clear winners from Walmart’s exponential growth. A $1,000 investment in Wal-Mart shares on the original offering in 1970 would net $1.8 million today.
Wal-Mart shares flirted with the $70 mark Monday ticking up to $69.95, a new high, before settling back to close at $69.33, down 39 cents.
Shares have been on a tear since April despite bribery allegations in Mexico that implicate top management in a cover-up. Shares have risen 33% in value in 2012 after a decade of flat performance.
Deborah Weinswig, retail analyst with Citigroup, said her firm looked at the bribery news very carefully, but found that Wal-Mart’s aggressive investment in price is paying off in higher ticket and traffic volume which is driving solid improvements in U.S. same store sales.
Citigroup recently raised its target price on Wal-Mart shares to $78 from $71 and thinks the second quarter “back to school” sales will be a barometer of sorts for the rest of the economy.
Consumers do win from lower prices as it provides more cash that can be spent for things like entertainment and vacation. Over the next two years Wal-Mart has pledged to cut $2 billion out of its pricing formula - but critics wonder how much of that will be shouldered by its suppliers.
The amount customers save shopping at Walmart overall, is also still being debated.
Lopez said in 2009 the company studied the issue and found consumers saved $330 billion when they shopped at a Wal-Mart or at a competitor located nearby.
“That annual savings equated to $2,800 per household or $1,800 per person,” he said.
Critics admit Wal-Mart was the first pharmacy to enact $4 generic prescriptions in 2006, with numerous other retailers following suit. And last year in the midst of high gas prices Walmart unveiled a 10-cent per gallon price rollback when consumers purchased fuel with a Wal-Mart gift card.
In the spirit of community, the company and its foundation gave $958.9 million in cash and in-kind contributions to charities and community efforts during the fiscal year ending Jan. 31.
According to Reagan, Wal-Mart is loved and hated by many from it’s suppliers who repeatedly say it’s tough doing business with them but tougher without. Also, customers who love the savings but complain about lack of service.