By Stacy Mitchell
Sam Walton opened the first Walmart store in Rogers, Arkansas, 50 years ago this month. Sprawled along a major thoroughfare outside the city’s downtown, that inaugural store embodied many of the hallmarks that have since come to define the Walmart way of doing business. Walton scoured the country for the cheapest merchandise and deftly exploited a loophole in federal law to pay his mostly female workforce less than minimum wage.
That relentless focus on squeezing workers and suppliers for every advantage has paid off since July 1962. Walmart is now the second-largest corporation on the planet. It took in almost half-a-trillion dollars last year at more than 10,000 stores worldwide.
Walmart now captures one of every four dollars Americans spend on groceries. Its stores are so plentiful that it’s easy to imagine that the retailer has long since reached the upper limit of its growth potential. It hasn’t. Walmart has opened over 1,100 new supercenters since 2005 and expanded its U.S. sales by 35 percent. It aims to keep on growing that fast. With an eye to infiltrating urban areas, Walmart recently introduced smaller “neighborhood markets” and “express” stores.
While the big-box business model Sam Walton pioneered half a century ago has been great for Walmart, it hasn’t been so great for the U.S. economy.
Walmart’s explosive growth has gutted two key pillars of the American middle class: small businesses and well-paying manufacturing jobs.
Between 2001 and 2007, some 40,000 U.S. factories closed, eliminating millions of jobs. While Walmart’s ceaseless search for lower costs wasn’t the only factor that drove production overseas, it was a major one. During these six years, Walmart’s imports from China tripled in value from $9 billion to $27 billion.
Small, family-owned retail businesses likewise closed in droves as Walmart grew. Between 1992 and 2007, the number of independent retailers fell by over 60,000, according to the U.S. Census.
Their demise triggered a cascade of losses elsewhere. As communities lost their local retailers, there was less demand for services like accounting and graphic design, less advertising revenue for local media outlets, and fewer accounts for local banks. As Walmart moved into communities, the volume of money circulating from business to business declined. More dollars flowed into Walmart’s tills and out of the local economy.
In exchange for the many middle-income jobs Walmart eliminated, all we got in return were low-wage jobs for the workers who now toil in its stores. To get by, many Walmart employees have no choice but to rely on food stamps and other public assistance.
Walmart’s history is the story of what has gone wrong in the American economy. Wages have stagnated. The middle class has shrunk. The ranks of the working poor have swelled. Whatever we may have saved shopping at Walmart, we’ve more than paid for it in diminished opportunities and declining income.
And the worse things get, the more alluring Walmart’s siren call of low prices becomes. While the Ford Motor Co. once profited by creating a workforce that could afford to buy its cars, today Walmart profits by ensuring that Americans cannot afford to shop anywhere else. The average family of four now spends over $4,000 a year at Walmart.
Such market concentration is unprecedented in U.S. history, as is the concentration of wealth it has engendered. Sam Walton’s heirs own about half of Walmart’s stock and have a net worth equal to the combined assets of the bottom one-third of Americans — about 100 million people. This year alone, the Waltons will pocket $2.7 billion in dividends from their Walmart holdings.
They are among the few Americans who have reason to celebrate Walmart’s 50th birthday. As for the rest of us, the milestone offers a good moment to reflect on the company’s business model and where it might lead us if we allow Walmart’s growth to continue full-steam for another 50 years.
Stacy Mitchell is a senior researcher at the Institute for Local Self-Reliance and the author of “Big-Box Swindle.” She lives in Portland, Maine. Distributed via OtherWords.
question says
Walmart—One of those early ‘how we messed up what would have been a perfectly good country’ milestones. Along with others like the Moral Majority/Jerry Falwell embarking on a series of “I Love America” rallies across the country to lure the God & guns crowd onto the right [wing] side of ledger. Made ‘social / none-of-your-business issues’ the basis for a new political powerhouse…unfathomed by facts, truth or that they were destroying / eliminating that uniquely American way of life called the ‘middle class’.
And march in 4th of July parades like we’re not the 99% supporting the top 1% of society today. Great work Walmart & right wing.
RJ says
Let me get this straight…
1) Wal-Mart comes to a thriving town with thriving small business and middle-class workers. Butterflies and unicorns are in abundance, every day is one of roses and dreams…
2) They sell the things people want at lower prices than currently existed, provide greater variety of goods, maintain store hours that are more convenient.
3) They offer jobs at low wages. For some reason that escapes me at this point of the story, people choose to take these jobs and leave their middle class jobs or I would assume, the unemployed people in this wonderful area are now no longer unemployed…? Regardless, I think the point is that they created jobs and this was bad… combined with number 2 Wal-mart has completed the transformation to total evil.
4) Consumers (currently still well off and thriving) CHOOSE to start shopping there and pay less money for the things they want. Consumers ABANDON their home town businesses. Consumers KILL these hard working companies by REFUSING to spend their money there. These people will no longer support in action the Mom and Pop Shops they care for so dearly.
5) Small businesses close, people make less money, but they can still afford to shop at Wal-mart, but can no longer afford to shop at the places they CHOSE not to shop at in the first place creating this whole “problem”
6) Wal-mart is evil, they tricked people, they ruined small businesses, they’re greedy profiteers and it’s not “fair”. They created jobs for those unemployed people who will work for less than minimum wage by choice.
I’m guessing the solution is to tax them heavily because of their wind fall profits, to break them up so that it costs us MORE money to buy these things again and the small businesses and middle class workers will return?
Or do we ban imports? Then they can’t sell stuff so cheap.
Or do we force people not to buy from Wal-Mart? People should have to support small business!
Or maybe we make it illegal to have a business that is able to run this efficiently? Let’s make the incentive for business to shoot for mediocrity. Don’t operate your business TOO good… just make enough money so that you have what I have and the rest of us have… it’s not FAIR for you to go off and start earning things we don’t get…
Can someone please explain this to me? I mean eventually the people you steal from (“tax” I guess is the politically correct term for stealing today, excuse me) will stop working so that YOU can HAVE what they EARNED. What do we do when that happens?
What if Wal-mart went on strike today? Where would these people work then? What would you do if you couldn’t go buy your Gummy Bears and Dulcolax with a 20oz Pepsi at 2 AM Sunday morning? I suppose we would force the next business that comes along to maintain the same services we NEED and DESERVE so that things remain FAIR.
Who will do the work when the producers decide it’s not worth it anymore? Will we force them to work? If they have social responsibility to “share the wealth” then why aren’t YOU doing it? If they can produce that much and society NEEDS it, then I think that YOU have the responsibility to the rest of US to run YOUR business as good as they do and share YOUR profits with ME for doing nothing. To be fair of course, we should expect the same level of PRODUCTION from everyone, just as we expect that everyone have the same NEED.
Happy Birthday Wal-mart… you should be ashamed of yourself.
Magnolia says
Nobody mentioned those $4.00 prescriptions they offer.
NortonSmitty says
The business model Sam Walton is credited with discovering has been copied by many others since in a more insidious and destructive manner for our country. Sam did it initially by cutting costs through the traditional means. Volume sales by reducing the margins on items, and then squeezing his suppliers to sell items to him cheaper than the competition when he became their largest customer. Along with other economies of scale, he could build newer and nicer stores with lower pricing honestly. Other local merchants that couldn’t compete usually went out of business due to this. This wasn’t Sams main goal, Although less competition didn’t hurt. And he did it all with his own money. This is why his heirs, all six of them, are worth over $100 Billion Dollars, or more than the lower 30% of the citizens in America today.
But the heirs of hundreds of thousands of local Red Wing Shoe Stores, Montgomery Wards, 5 & 10’s, Woolworths and others suddenly weren’t able to be the next generation of local business leaders. The sons and daughters of the Kiwanis, Chamber of Commerce and Rotary, the core of leaders every town needs ended up looking for jobs at Walmart themselves.
Sam Walton showed the way, but the MBA’s and Vulture Capitalists followed, and they had a different model. They would buy up a successful chain of whatever retail , it didn’t matter. Drug stores (Walgreens, CVS) Lumber & Hardware (Home Depot, Lowes) Diners (Denny’s, I-HOP) the product didn’t matter, However, instead of expanding on their own dime, they would take over a chain using capital from private funds or go public by selling stock on Wall Street to give them a huge War Chest.
Using this capital they could expand nationwide by flooding one area at a time. They could build dozens of new stores in a given area using this money that did not come from profits. And most importantly, they could open them without having to show a profit on their sales. This advantage allowed them to operate at a loss for years if necessary, until the local drug stores or whatever went out of business trying to compete. And they had If not a monopoly, only one or two other cooperative chains that knew the game. All the locals were bankrupt! And every month they send all the local money to corporate headquarters, where it is piled up and distributed to all the folks on the top of the pyramid.
And the profits and purchases that local businesses used to support their friends, neighbors and workers in the local economy now went to some corporation in New York or somewhere else. And this was called progress, even though all that stayed behind were a handful of minimum wage jobs. The town withers and dies, and the stockholders and financiers get richer.
But we won’t starve for a long time. Not as long as we can buy 6 Packs of Ramen Noodles for .79 cents. What a deal!
“I DO believe in Reaganomics, I DO believe in Reaganomics…”
Riley says
Every word is true!!!!!!!!!!!!!!
tulip says
It all boils down to the price of things. I buy most of my groceries in WM and all paper goods, health and beauty supplies in WM. Much cheaper prices. Clothing, shoes and jewelry I buy in our local department stores because of better quality. If I were forced to buy groceries from the supermarkets, my money would not go nearly as far for food and leave me less money for other things. I know many people who could easily afford to spend more for food in Publix or WD, but don’t. They go to those places when they can’t find what they want in WM which I frequently run into also.
People with little kids can get clothes for them at WM for much less, which is really important because they outgrow them in a wink of an eye. I don’t think WM should be entirely blamed, we do have K Mart, Costco, Big lots, etc. and they also can negatively affect the small retailer.
Again, it all comes down to money–Walmart and the like want to keep their operating costs down and people want the most bang for their buck.
Clint says
What will happen to WalMarts when Obamacare starts up ? Are they going to be “forced” to pay more for their employees government health care ? If so, I would suspect that Walmarts prices will indeed increase, or maybe they will just “closeup” all their stores. By 2014 there will be 30% unemployment in America so the only ones buying from Walmart and other stores will be the “RICH” employed. Leaving all the “POOR” unemployed to fend for themselves……..Better start those vegtable gardens now folks !
John Boy says
Clint, you already paying for the WalMart employees, they get food stamps, medicaid and numerous other handouts so the Walton’s can maintain their position on the Forbes 400 List.
question says
No, it boils down to we had a choice of what kind of country we wanted.
Local communities, predominently made in America products or kill that and work as fast as we can, as hard as we can to kill off every local company and exchange it for maybe 2-3 companies in each major purchasing category using overseas $2 labor. Greed created the top 1% and ignorance created the bottom 99% who let it happen.
Bottom 99%…I give you Walmart…enjoy.
Dave says
I dont care that milk is 5 dollars a gallon, I dont care that bread cost 4 dollars a loaf. I dont care that gas is 6 dollars a gallon as long as the wages for the masses allows for the cost of living. I went from 70,000 a year to 11,000 a year and that surly wasnt my fault………………………………….
gatorfan1 says
total bs…..now if you’re successful and make a profit you’re “gutting” america..typical socialist agenda…nobody makes anybody shop at wal-mart…this is a free country… if you don’t like it don’t shop at wal-mart or move to another country….hopefully another 50 years wal-mart!!..palm coast needs another one in fact!
Clint says
Shopped at Walmart 3 times about 8 years ago. Have never been back. Most disgusting food I have every seen. That can also be said for the lowlifes that shop there. As far as who is “gutting” America, that would be our WORTHLESS GOVERNMENT !
Dave says
Amen !
Grumple says
Enjoy your Made in China life, buddy. Along with the middle class and local shops, they helped kill off American manufacturing, and they made you pay for it.
beachcomberT says
I would like to see more precise research into U.S. retail history. My impression is a lot of small specialty shops closed when suburban shopping malls sapped traditional downtown districts, and that started long before Walmart big boxes arrived, although WM accelerated the trend.
Outsider says
I can afford to shop at Publix, but I choose Wal-Mart for most things. It seems every item in Publix is AT LEAST a dollar more than the exact same item as in Wal-Mart. Publix is better for lunchmeat, meat, fresh breads and the like, but it doesn’t make sense to pay nearly $4.00 in Publix for an item that is $2.50 at Wal-Mart.
question says
btw, this is the same crowd that was told –and dutifully believe despite facts to the contrary– that climate change* is a left wing hoax. Sorta like that evolution hoax.
*Carbon dioxide (CO2) is the primary greenhouse gas emitted through human activities. In 2010, CO2 accounted for about 84% of all U.S. greenhouse gas emissions from human activities.
If only dems weren’t restricted by needing facts in our marketing efforts. Big handicap.
Very low bar for right wing ‘buy in’ :US ranking in education is very un-mensa-like. The Organization for Economic Cooperation and Development places the United States 18th among the 36 nations examined, USA Today reported Wednesday -yr ago. Think this measurement mirrors launch/growth of Fox ‘news’. :)
Think first, act second says
Question, Then you are for more of Obama’s spending on solar companies. More than $700 Millions down the toilet are not enough for you. Where is the factual information on “climate change”. We are in a climate cycle, ever heard of the la nina effect?
Anonymous says
Compare and contrast Publix and Walmart
A Publix manager will see you in the store and say hello may I help you find something.
Try to find the WalMart manager
Publix shelves are always stocked, there are no empty shelves, if they had it last week they have it this week.
WalMart has many holes in their shelves and sometimes they have a food product and sometime they don’t
Publix shopping carts work
WalMart shopping carts are hit and miss
Publix ALWAYS has sanitary wipes to sanitize the shopping carts.
WalMart has them sometimes and sometime not.
WalMart produce is often times seconds.
Publix does not sell produce that is second.
If there are customer lines at Publix I have seen the manager jump in to help.
WalMart has 30 registers with most empty no matter how long customer lines are.
Publix seafood counter has fresh wild caught fish.
I could go on. However I don’t find paying an extra five dollars for a couple of bags of quality groceries.
I know when I go to Publix they will have the product I want, their shelves are stocked, their grocery carts aren’t broken down and if I need a manager he isn’t hard to find.
And they pay the help a decent wage.
What is good service and quality food products worth to you?
Geezer says
Shopping at walmart is like cutting off your nose to spite your face.
More evidence of the dumbing down of America.
anon says
Compare and contrast Publix and Walmart
A Publix manager will see you in the store and say hello may I help you find something.
Try to find the WalMart manager
Publix shelves are always stocked, there are no empty shelves, if they had it last week they have it this week.
WalMart has many holes in their shelves and sometimes they have a food product and sometime they don’t
Publix shopping carts work
WalMart shopping carts are hit and miss
Publix ALWAYS has sanitary wipes to sanitize the shopping carts.
WalMart has them sometimes and sometime not.
WalMart produce is often times seconds.
Publix does not sell produce that is second.
If there are customer lines at Publix I have seen the manager jump in to help.
WalMart has 30 registers with most empty no matter how long customer lines are.
Publix seafood counter has fresh wild caught fish.
I could go on. However I don’t mind paying an extra five dollars for a couple of bags of quality groceries when I shop at Publix and to a lesser extent Winn Dixie.
I know when I go to Publix they will have the product I want, their shelves are stocked, their grocery carts aren’t broken down and if I need a manager he isn’t hard to find.
And they pay the help a decent wage.
What is good service and quality food products worth to you?
Dorothea says
@ question
I agree with your comments. We can also thank Walmart for placing pressure on small organic farmers to go along with WM’s demands, reducing their bottom line to a loss, and not getting their products to markets that can successfully compete with WM. Right now, WM is doing their damnest to get Whole Food stores buried.
But the biggest problem is the stupidity of the American consumer. With the high rate of obesity and unemployment in America, my suggestion would be, eat less and buy American. Walmart, could care less about America, as long as they are reaping in the profits no matter what destruction they cause. If you still insist on cheap, try the Asian markets here in town.
Out of curiosity says
I do not shop at Walmart. I choose not to shop there because of their business practices, because I do not live close to a Walmart and because I do not particularly enjoy going to their stores. Other stores like Publix may be a little more expensive, but what I save in gas, time and my sanity tends to balance out the difference.
question says
Anonymous…what you said! Yeah!…PLUS: would it kill Walmart to:
1. give it’s customers a little air conditioning every now & then when it’s 107 degrees out
2. turn on some tunes while you’re in that god-forsaken place. The silence just acentuates that there was just another horrible 30 minutes you will never get back
3. could you make any place of business more ugly, depressing, drab. If it were’nt for the occasional bird trapped in there like the rest of us…you’d see very little signs of life at all
——————————
The six children of Wal-Mart founder Sam Walton have been on the Forbes billionaires list for several years.
The WashingtonPost By Elizabeth Flock Posted at 12:10 PM ET, 12/09/2011
Wal-Mart heirs net worth equals total of bottom 30 percent of Americans
….and they can’t make their stores better than the average RAT HOLE?!
Liana G says
Shopping at Publix is a pleasure. The isles are spacious, clean, and brightly lit. Very seldom do you find employees stocking shelves during the day, blocking and crowding the isles with large pallets. And if you shop the weekly sales, i.e. buy one/get one free etc., the savings are much greater than WM’s everyday low prices. And Publix is employee owned.
But we shouldn’t bash Wal Mart. After all, the teachers union and other public unions are heavily invested in their stocks so we can’t afford to have Wal Mart fail. And self-interest trumps ideology. Interesting that the Walton sisters spent millions supporting Scott Walker in his recall election, which was brought on by union backlash. I guess their principles are more important than protecting their self interest. Well then, here’s to Wal Mart and another successful 50 years!
I loved shopping at those local Asian market stores. Their fruits and vegetable are locally grown. Even their meat and seafood are from local vendors. And their prices are cheap.
palmcoaster says
I shop in Walmart for items not available in Publix and I have to look really hard for Made in the USA products and I really resent that and discourages me more and more to shop there. My advise to the Walton’s is; be less greedy and start buying more Made in the USA products and if not available, just reopen factories use our idle technology and start rehiring our workers and stock your shelves with their goods instead. They sure have the money to do that and create millions of jobs needed in America. C’mon Walton’s!
Today we were looking at few items at home Made in the USA; a pair of scissors, a can opener and their superior quality and craftsmanship comparing to the cheap “use few times and discard” Made in China…Maybe the only way out of this pathetic economy would be just boycotting from buying what is not Made in America in order to recover our jobs. Is not about the cost of the American worker driving corporations like Walmart out of competition and indeed out of business…that is BS! Reality is the greedy profit they can keep with slave labor, while selling to us at same prices as if were made by American workers.
Dave says
Buy American !!!! Amen
palmcoaster says
I love my Publix. quality, freshness, friendly smiles and always someone available if a question needs to be answered. Also in those dog days of summer, always a cashier assistant offering help with our groceries to our cars with the nicest smile. Worth the extra buck!
johnny taxpayer says
This Publix love fest is astonishing. Do you really believe publix doesnt squeeze suppliers the same way Walmart does? They have very similar business plans the only difference is publix has figured out that some people will pay a little more for the experience so they build in that experience (nicer stores, quicker checkouts, wider isles etc) to their pricing whereas wally world is built on lowest price.
It’s not like Publix is owned by the mom and pop grocerer! Or they dont try to run their competiton out of business (been to a food lion lately???) Theyre a huge evile corporation just like wwally world. Only they tell us shopping there is a pleasure so we believe them.
question says
Johnny,
The difference is:
Wal-Mart billionaire heirs, net worth equals total of bottom 30 percent of Americans, are greedy horders who choose to make a shopping experience in their stores ..worse than the average rat hole…
and Publix decided they didn’t need to be THAT greedy
….and refuse to make their stores resemble depressing, hot, RAT HOLEs. [may be unfairly disparaging rat’s homes.]
Outsider says
I agree with buying made in America; the junk made in China doesn’t last; I could name dozens of items I’ve purchased that were made in China and broke not long after. Most of the groceries in WM are made in America. Chips, chicken, soups, breads, cereals, etc. are the exact same items in Publix, and are made in the U.S. Again, I shop at Publix for things when quality counts like Boars Head meats and fresh breads, but I can’t see paying 4.00 for a box of Cheez Its that cost 2.78 at Wally World.
Aaron says
Why do people still shop here? If you shop at Walmart you are personally liable for helping to destroy our economy. The people who are trying to save $1 on an item by shopping there are just selfish and not looking at the long term effects.
Geezer says
How many of you, who defend Walmart so vigorously actually (past or present) work at Walmart?
Have any of you watched the movie “WAL-MART: The High Cost of Low Price”?
Do you ever converse Walmart employees?
http://www.walmartmovie.com/
I don’t want Walmart to close its doors, but I’d like to see less of these stores.
I hope that someday someone in our government has the gonads to slap large tariffs on Chinese imports.
I wonder what would happen to Walmart if that happened? Don’t worry Walmart fans – it’ll never happen.
If you gather the weekly sales circulars for Winn Dixie and Publix, you’ll find that shopping for sales items
at those stores saves you a lot of money over Walmart. You can buy the remainder in Walmart.
Walmart calls 2-for-1 sales “gimmicks” and doesn’t price-match those items.
Walmart Pharmacy SUCKS. They herd you like cattle on long lines and treat you like an annoyance.
I take a few prescription drugs and discovered that Winn Dixie Pharmacy has more FREE prescriptions than Walmart. In a pinch I use Publix Pharmacy. I’ll stick a pins in my eyes before I use Walmart Pharmacy again.
WALMART SUCKS, figuratively and literally. Walmart is an aggressive cancer on the American landscape. A stage 4 cancer!
Dorothea says
I think that some of you defenders of WalMart missed this paragraph in the article.
“In exchange for the many middle-income jobs Walmart eliminated, all we got in return were low-wage jobs for the workers who now toil in its stores. To get by, many Walmart employees have no choice but to rely on food stamps and other public assistance.”
What that means is that the government, i.e., you the taxpayers, is subsidizing WalMart by providing public assistance to their employees. The cost is $86 billion a year.
http://watchingthegov.wordpress.com/2011/12/14/wal-mart-owners-have-more-wealth-than-30-of-americans-while-their-low-paid-employees-require-86mill-in-government-assistance-annually/
Riley says
This is true. Ninety five percent of all WalMart associates are part-time workers. They are hired as part-time workers. Sick days, personal time and vacation are reduced to 1 or 2 days per year. WalMart also caps your wages. Most of the job classifications are grade 1 thru 4. For these jobs the most an associate can make is $15.00 per hour for a grade one job and $17.00 per hour for a grade 4 job. After you are capped out, you will NEVER receive a penny more for the rest of your employment at WalMart, EVER.
Geezer says
I’m sorry folks, there’s a couple of typos in my comment above.
I must have mistakenly drunk some “Great Value” bottled water.
snapperhead says
Walmart just gives the consumer what they wanted….no different than any other retailer. It’s far easier to blame the government, big box retailers,the wealthy etc etc than to look in the mirror and blame ones self. we’re circling the drain folks and it ain’t changing anytime soon.welcome to the corporate globalized economy. good luck to future generations competing against people willing to work for $100 a week.
palmcoaster says
@snapperhead: you are correct…the division among us is defeating us all. We could be so powerful if we would unite and say …lets do not buy anymore imported garbage!! Demand our factories reopen, our idle technology put back in the assembly line and our unemployed many knowledgeable workers for generations put back to work. Buy only GM, Ford and Chrysler and clothes and appliances only if proven Made in USA. We will become the America we used to be, were a middle class earning decent wages and benefits and spending here, restarts our economic wheel of fortune again. Lets do not drive for a couple of days or maybe more (use our bicycles and legs for healthy exercise) and bring the fraudulent oil barons to their knees. In few words, a peaceful boycott/protest that will work. Until we will get together for that common goal, nothing will change.
Geezer says
Good advice to walk and peddle! Just don’t buy a Chinese-made bicycle.
Both my Trek and Gary Fisher bicycles were made in Milwaukee, Wisconsin.
I have these for about eight years now.
I have noticed that most of these bikes are produced in China now.
These days American-made bikes are mostly high-end articles with big price tags.
That’s why I’ll never sell my bikes.
It’s a shame that China gets to flood our retail markets with their odious cheesey poop.
Really it’s mostly disposable cut-rate, slave labor doody. (made myself laugh)
palmcoaster says
In the family we drive Ford’s or Chevy’s and we read the labels of what we buy. Today we bought a watering can made in the USA ! So ..was the power extension reel and the watering hose reel…every little bit helps. I refuse to buy Made elsewhere…if I can. My small business only exports Made in the USA! Just takes us all to get together and buy only Made at home aka our good old USA, to recover our jobs! Think about it!