February 23, 2003

Wal-Mart around the world

By Thomas Wilson

   Sam Walton opened his first store in Rogers, Ark., 43 years ago. The rest is history.
   In two generations, Wal-Mart has grown from a discount retail store to the largest private employer on the planet. And they show no signs of slowing down.
   "Are we going to try to give customers what they want? Yes!" said Daphne Moore, community affairs manager for Wal-Mart at the company's Bentonville, Ark., headquarters.
   Wal-Mart Stores, Inc. reported record sales and earnings for the quarter ended Jan. 31, 2003. Net sales for the year ended Jan. 31, 2003, were $244.5 billion -- an increase of 12.3 percent over 2001.
   Wal-Mart's 2002 revenues exceed the 2001 gross domestic product of Switzerland, which was $226 billion. The revenue figure is more than the gross domestic products of the six countries that comprise Central America combined.
   Wal-Mart opened its current Elizabethton location in 1988. In addition to individual stores, the company maintains outlets and excess property sites adjacent to many Supercenters, Wal-Mart stores, Neighborhood Markets and SAM's Clubs -- prime retail business locations. The first Wal-Mart Supercenter opened its doors in 1988 at Washington, Mo.
   The reach of Wal-Mart's empire extends to 11 countries on four continents. As of Jan. 31, 2002, Wal-Mart operated 1,647 discount stores, 1,066 supercenters, 500 SAM'S clubs and 31 neighborhood markets in the United States.
   Internationally, the company operated units in Argentina (11), Brazil (22), Canada (213), Germany (94), South Korea (nine) Mexico (597), Puerto Rico (52) and the United Kingdom (258), and, under joint venture agreements, in China (26), according to the company's February 2003 reports.
   Moore said unlike most corporations, Wal-Mart eschewed a "mission statement" approach of most corporations. Instead, the company managed service by three core principles that Sam Walton set forth years ago: Respect for the individual; service to the customer; and to strive for excellence.
   "Those three guiding principles are timeless and they defy borders," said Moore. "It is human nature to want good service, good prices and good nature. It is human nature to want respect and it is human nature to want things to get better."
   When the company chooses to expand from a Wal-Mart to a Supercenter, the success and market of the existing store plays a major factor, said Moore. A Supercenter ranges in size from 140,000 square feet to more than 200,000 square feet.
   "The Supercenter is a more pleasant shopping experience for our customers," she said. "There are wider aisles, better displays."
   Wal-Mart is the top seller of groceries, jewelry and photo processing. It is creating more of its own brands. Some, such as Ol' Roy dog food and Equate vitamins, have become the most popular brands on the market.
   Wal-Mart does not only sell retail merchandise. The company offers the Tire & Lube Express Division for automobile service. Wal-Mart also provides its own team of leasing experts that allow vendors to establish retail, banking, food service, or other type of business inside an operating Wal-Mart Supercenter.
   Moore could not speculate on the average sales revenue for one Wal-Mart Supercenter. As to Wal-Mart's swallowing up of business in a downtown or independently owned businesses in a community, Moore stated there was no evidence that the company wielded that level of power.
   "There's no proof ... you are asking me to disprove a negative," Moore stated. "Competition is dependent on so many factors other than one retailer. A community is made up of so much more than retailing."
   However, Moore also dismissed the notion that Wal-Mart actively blocked employees from working a full 40-hour work week. The threshold to be considered full-time employee was 32 hours per week, she said. That threshold qualified employees for the company's full-time benefit package.
   "It makes no sense," she said of the notion that the company prevented full-time hours. "If you are paying someone full-time benefits why wouldn't you want them to work as many hours as possible?"
   A federal jury in Portland, Ore., in December 2002 found Wal-Mart Stores guilty of forcing its employees to work overtime without pay from 1994-1999.
   The jury issued its unanimous verdict that Wal-Mart violated federal and state wage-and-hour laws in requiring employees to work "off the clock." It was the first of nearly 40 such lawsuits across the country to come to trial.
   When a Supercenter opens its doors in a town with a regular Wal-Mart, the existing store vacates the building. That's when Wal-Mart Realty takes over to market the building for sell or re-lease.
   The Realty division markets vacated buildings ranging in size from less than 10,000 square feet to more than 100,000 square feet. These vacated buildings are also available for purchase.
   The company had 16 buildings available for lease in Tennessee as of Jan. 2, 2003, ranging from a 44,000 square-foot facility in Dayton to a 129,750-square-foot site outside Germantown. The Realty division provides a team of architecture and construction professionals to help plan and build spaces in the Supercenter facility.
   Anyone whose stocks rose in the late 1990s owes Wal-Mart. It alone accounted for as much as 25 percent of the U.S. productivity gains from 1995-99, according to the consultant firm of McKinsey & Co.
   Wal-Mart's market capitalization stood at $215 billion when the stock market closed on Friday. A company's market capitalization -- or market cap as it is frequently called -- is calculated by taking the number of outstanding shares of the company's stock multiplied by the current price-per-share. The higher the market capitalization, the more value the stock and the company.
   Apparently, Wall Street and the global business world have more than taken note of the company's accomplishments.
   In Fortune magazine's annual poll of 10,000 executives, directors, and analysts released last week, Wal-Mart toppled General Electric as the most admired company in America for 2002. That marks the first time in the magazine survey's 21-year history that the nation' largest company is also its most admired.
   The assessment is based scores for social responsibility, innovation, long-term investment value, employee talent, use of corporate assets, financial soundness and the quality of products and management.
   The company had been named as the third most admired company in America in 2001. Wal-Mart was also ranked by Hispanic Business Magazine as one of the Top 25 Diversity Recruitment Programs in 2001 for its aggressive program to hire and promote Latinos
   Yet, despite this success Moore said the company was not content to rest on its laurels.
   "Even though we've reached that status we can still do better," said Moore. "We may have had a good day today, but we will be looking to do better tomorrow."