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Walmart

Walmart Inc (US)

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In the retail universe, there are retailers and then there is Walmart. Normal rules do not apply to this US colossus, whose annual revenues of over $500bn are roughly equal to those of the next four global retail groups combined. With Walmart, all the numbers are big. The company is the world's largest non-governmental employer, with around 2.2m associates. Approximately 275m people visit Walmart's stores every week, and 78% of American households shop there at least once a year. But America is by no means the only market to experience the Walmart effect. The group is also a force in the international arena with operations in 27 other countries in Latin America, Europe and Asia. Yet the business is only a little over 50 years old, and virtually all its extraordinary growth in the US since the first Walmart store opened in 1962 has been generated organically, rather than as a result of acquisition.

Advertising

Who handles Walmart's advertising? Click here for agency account assignments for Walmart. Including unmeasured media, the group declared total advertising expenditure of $3.1bn for the year to Jan 2018.

Competitors

See Retail Sector index for other companies

Analysis

Walmart's size insulates it to some extent from the more serious challenges faced by its competitors. For example, no other physical retailer is ever going to be able to challenge Walmart on prices of everyday items because its ability to negotiate a bulk discount could never be equaled. (Ecommerce rival Amazon, with no store estate to maintain, is another matter altogether of course). The group also faces a certain amount of competition in the US for better-off shoppers from its biggest discount rival Target, which set out to cultivate a more stylish image. Walmart has attempted to address this problem with more sophisticated marketing, emphasising the range and quality of "beyond basics" items. There are also more selective rivals, like Aldi and more recently in the US Lidl, which can arguably match Walmart on discounts but only on a much smaller range of products.

In fact, the greatest threat facing a company of Walmart's size is actually complacency, or a lack of focus, but this seems unlikely to occur while the group remains under the control of the Walton family, who take their responsibility as custodians of the company their father built from next to nothing very seriously indeed. Also, further significant growth can only come from the group's international operations, and this is where Walmart's biggest challenges now lie. Buying local businesses is one thing. Replicating the same organic growth Walmart has managed in the US is quite another thing altogether, and so far the group's performance in this area has been patchy at best.

Here are some other Walmart numbers to grapple with. Walmart records approximately 10.4bn transactions with customers each year, a number significantly higher than the entire world population. Its annual revenues for 2019 were bigger than the gross domestic product of Belgium, Austria or the United Arab Emirates. If it was a country, it would be one of the world's 25 richest. Walmart is the world's largest employer, with 2.2m "associates", including 1.4m in the US. At least another 4m people have jobs that depend directly upon purchases by the group. It is the single biggest customer for virtually every American packaged goods manufacturer. Medium-sized corporations such as Dial, Clorox, Revlon and Hershey already derive more than a fifth of their annual revenues from Walmart. In the case of many smaller companies the percentage is even higher, even as steep as 80% of revenues.

As a result, clearly, Walmart's size brings with it considerable influence. Any significant change in Walmart's buying patterns can make or break suppliers, and the group has for many years warned companies against becoming too dependent on its custom. In some cases it has even attempted to limit the percentage of business it gives to smaller suppliers in order to avoid turning them into dependents. Walmart's purpose, after all, is to turn a profit and to pass on a large part of that bonus to its customers in the form of price savings, and the company is not afraid to squeeze suppliers, ruthlessly if necessary, in order to achieve those goals.

A telling example of Walmart's influence at even the most mundane level is provided by Charles Fishman's book The Walmart Effect. Until the 1990s virtually all deodorants - one of the most common fast-moving packaged goods, shifting about a billion units a year - were sold inside a paperboard box. Walmart decided that the boxes were a waste of space, adding nothing to the product but costing a few pennies each time to produce. It gave instructions to suppliers to drop the box, and agreed to split the resulting savings, letting the manufacturers keep half, while passing the remainder on to customers in the form of a discount. Now, not a single deodorant product is sold in a box by any major retailer. Huge savings all round, even for the forests from which the paperboard boxes were made and for the landfill sites where they would be disposed of. But what about all the companies which manufactured those one billion paperboard boxes a year? How did they cope with the sudden and phenomenal drop in their business? Several simply went out of business.

Even the most apparently insignificant decision made by Walmart has major lasting effects elsewhere. Big decisions, such as Walmart's move into food retailing, had a huge impact on existing US supermarket groups such as Kroger and Albertson's, who saw their market share decimated. A key factor in Walmart's power has been its refusal to allow union representation for its massive workforce. In many areas, Walmart employees are paid less than half the wages and benefits negotiated by unions from other retail groups. As a result, those unionized competitors, especially in the grocery sector, have struggled to cut costs to match Walmart's discounts.

Compare another example of the effect of Walmart's move into groceries, cited in The Walmart Effect. In 2005, around two-thirds of the fresh salmon sold in the US came from the country of Chile. Not only is Atlantic salmon not native to Chile (which borders the Pacific), but less than ten years earlier, the country had no salmon farming industry whatsoever. However Walmart's requirement for low-cost farmed salmon created a need which the Chilean government was pleased to support by creating an entire industry from scratch. Other high-volume US retailers, including Costco, jumped on the same bandwagon. Within just five years between 2000 and 2005, salmon went from zero to being Chile's second biggest export, worth $1.5bn a year, and has transformed the economy of the country, providing employment for thousands of people.

Walmart USA

In North America, Walmart operates four main retail divisions, each promising the company's long-established mantra of Every Day Low Prices. Although the principle remains, that slogan was dropped as the company's headline motto in 2007 in favour of "Save Money. Live Better." Walmart is America's biggest seller of most products, even guns (although it took a decision in 2006 to stop selling rifles and shotguns in around a third of its stores because of a lack of demand). The US is home to around 4,756 outlets. Core of the business are the original Walmart Discount Stores, around 376 medium or large general merchandise outlets spread across the country. Averaging 105,000 sq ft, each store sells a wide selection of clothing, health and beauty products, home furnishings, electronics, toys, sporting goods, pet supplies, jewellery and housewares.

However, Walmart has gradually expanded many of those traditional stores into the enhanced Supercenter format, which averages over 178,000 sq ft per store. The Walmart Supercenter concept was introduced in the late 1980s, initially as Hypermart*USA, a joint venture with Cullum Companies. (Walmart bought Cullum out in 1989). Open 24 hours, these one-stop family shopping superstores offer all the same general merchandise as the main stores brand, but also a huge range of foods and beverages. As a result, the company effortlessly surpassed Kroger as the country's biggest grocery supplier in 2002, and groceries now account for more than half of US sales. There are now 3,570 Supercenters in the US. Most also offer specialist pharmacy, automotive or photo centre services, managed separately through the group's Specialty Division. Inhouse brands include carcare unit Tire & Lube Express, eyecare specialist Walmart Optical, and travel agency Walmart Vacations. In 2006 the group began testing walk-in health clinics at several of its stores. In 2008, it announced a dramatic scale-up of the service, with plans for as many as 300 such clinics, staffed by qualified nurses trained to deal with minor procedures. The facilities are owned and run by regional healthcare groups or hospitals, but share an administrative system, including standardised electronic medical records, which has been developed by Walmart. The cost to patients and insurers is considerably lower than for a trip to a regular doctor or hospital.

Finally, the group operates a growing portfolio of smaller supermarket-style outlets. There are around 700 Neighborhood Markets and other similar formats in smaller town locations. Averaging around 42,000 sq ft, these are roughly equivalent in size to traditional US supermarkets, and offer a smaller range of groceries, pharmaceuticals and general merchandise. In 2008, the group began testing an even smaller grocery format under the name Marketside. Pilot stores averaging 20,000 sq ft launched in Arizona, with an emphasis on fresh foods. The new format was seen as an attempt to mount a defence against UK giant Tesco which opened its first convenience-format stores in the US at the end of 2007. However, the subsequent failure of these left a question mark over Walmart's equivalent units, of which only 20 were open as of January 2013. Most Marketside outlets were closed later that year. Another experiment was Walmart Express, designed to complete with dollar stores and discounters. This trial was also abandoned, in early 2016, with all 100 or so outlets shuttered. Around 35 small outlets remain, including Walmart on Campus university shops.

The group markets numerous private label products of its own, many of them by virtue of Walmart's size the best-selling brands in their sector. The group's single biggest private-label brand is Great Value, the badge for more than 5,250 different products in 100 categories ranging from sliced bread to light bulbs. Sales are estimated at around $10bn a year. In many cases Walmart's Great Value products sell for as little as half the price of equivalent third-party brands. Sam's Choice is another multi-category brand, positioned as the store's premium line. Other important products include Ol' Roy dogfood, Ultra laundry detergent, even bathroom tissue and paper towel brand White Cloud. The latter was originally owned by Procter & Gamble, until it was discontinued in 1993. The trademark was acquired by entrepreneur Tony Gelbart who offered it exclusively to Walmart as a private-label brand. It now covers a range of products with sales estimated at around $400m a year. Durabrand is the group's private label consumer electronics range, while GE Housewares is a range of smaller household and kitchen appliances made by General Electric and available only from Walmart.

Traditionally the haunt of blue collar shoppers, Walmart has more recently been pushing more firmly into more affluent markets to counter strong competition from Target. (It also updated its name and brand from the original Wal-Mart to plain Walmart in 2008). However attempts to develop more stylish product lines have so far generally been disappointing. A key area of attention has been the apparel sector, where Walmart has introduced several new lines with comparatively little success. A funky women's apparel line introduced in 2006 under the Metro 7 label generated a tepid response from buyers, and was scaled back substantially, as was a designer range introduced in 2007 under the banner of George, the label originally developed in the UK by group subsidiary Asda. A range of men's clothing under the Exsto label has proved more popular with buyers, although it is still sold in only around one in six of the company's US stores.

In 2003 the group introduced a brand new jeans line, Levi Strauss Signature, which was initially available only through Walmart's US stores. (Levi's had previously declined to sell its clothing in Walmart or other discounters). A similar deal was struck with Nike to begin marketing a specially created sports shoe from 2005 under new brandname Starter. However Signature was subsequently rolled out to other retailers and Nike took the decision to sell off Starter. New for 2008 were an exclusive relaunch of casual beachwear label Op (previously more widely available under the Ocean Pacific name) and a new womenswear line by designer Norma Kamali. The group has also moved into home decor, launching a new range of holiday-themed houseware in 2006 in partnership with celebrity designer Colin Cowie under the C Squared brand name. In 2007, it became the first third-party retailer to begin selling Dell computers in-store, as a result of an exclusive partnership in North America with the struggling PC manufacturer.

The group began offering low-cost financial services such as payroll check-cashing for the first time in early 2003, as well as the Walmart Credit Card in partnership with General Electric. This was seen by many as the first step as a wider move into banking. The group has tried several times to acquire banking businesses since 2000, each time without success, and in 2005 applied for a license to launch its own bank. However that application was opposed by a consortium comprising numerous other organisations, and appeared unlikely to be approved. As a result, Walmart officially withdrew its application in early 2007. Instead the retailer launched a pre-paid payments card targeting low income customers without a bank account, as well as around 1,000 in-store "Moneycenters" which serve as a point of focus for the various financial services it offers.

Walmart also operates a substantial ecommerce business, Walmart.com. In 2004, the group muscled into both the online music download sector in competition with Apple's iTunes, Napster and others; and also into mail order DVD rental and movie downloads. However it eventually quit that sector in 2008, handing over its subscribers to internet service Netflix. Two years later, in what could be seen as something of a turnaround, Walmart snapped up digital movie distributor Vudu, which delivers high-definition entertainment content directly to broadband-ready TVs and Blu-ray players. The company has licensing agreements with almost every major movie studio and dozens of independent and international distributors to offer a catalogue of approximately 16,000 ready-to-rent movies. In 2020, the group called it quits in streaming, and agreed to sell on Vudu to Comcast's Fandango subsidiary.

In August 2016, Walmart agreed to acquire two-year-old online retailer Jet.com for $3.3bn in cash and stock, the highest price paid to-date for any ecommerce business. A key attraction of Jet.com to Walmart is its "smart items" technology, which offers on-the-fly savings to shoppers on certain items if they are bought and shipped together. Sales are about $1bn this year, though Jet.com has yet to make a profit. The deal positions Walmart as the clear #2 in global ecommerce behind Amazon. However it lags far behind the leader with only around 3% share of US ecommerce sales in 2016, to Amazon's 43%. Walmart has continued to strengthen its online operations with additional purchases, especially in fashion retail, including ShoeBuy.com at the end of 2016 (for $70m from IAC), followed by Moosejaw.com, Modcloth and Bonobos in 2017.

Sales from the main Walmart operations in the US topped $300bn for the first time in the year to Jan 2017, and have continued to rise, reaching $341bn for ye 2020. However, operating income was flat at $17.4bn. Grocery is the group's biggest line, accounting for 56% of sales. General merchandise contributes another 3% and health & wellness the remaining 11%.

Sam's Club

Walmart's discount stores, "Supercenters" and markets are joined in the portfolio by Sam's Club, one of the two leading members-only warehouse clubs in the US (the other is CostCo), with 600 outlets and around 46m members, each of whom pays around $40 a year in subscription dues. It offers a broad selection of general merchandise and large-volume items at value prices for sale in bulk, primarily to small business owners. The chain caters its offer to specific business segments including convenience stores and retail stores, restaurants, offices, maintenance and repair contractors, schools, churches and religious organizations, beauty salons and barber shops, motels and vending companies. Even by US standards, this is a mammoth business in its own right, with sales of $58.8bn in ye 2020. However growth has been weak for the past few years as a result of competition from other retail channels. There are a further 50 Sam's Club outlets in Latin America and China.

Until 2003, the group owned McLane, one of the biggest distribution and logistics companies in the US, delivering goods to all Walmart stores as well as to a vast customer-base of other retail outlets ranging from convenience stores to restaurants, including Yum Brands' KFC, Pizza Hut and Taco Bell. Walmart sold the business in 2003 to Warren Buffett's Berkshire Hathaway investment group for just under $1.5bn.

International

Having conquered groceries, there is realistically not much very much further Walmart can go in the US in traditional retail, unless it pursues financial services more aggressively. However the group is continuing an ambitious store expansion drive, pointing out that even at this mammoth level it still only accounts for around 10% of the entire US retail industry. Instead, the international market has become a major focus for attention. As of Feb 2020, Walmart controlled 6,150 international outlets in 26 other countries. Although this segment currently contributes less than a quarter of the group's total revenues, Walmart International is in its own right one of the world's top three retailers by sales. However, the international arena has also been considerably more challenging in recent years, with revenues falling from a high of $136.5bn in ye 2015 to a low of $118.1bn for ye 2018. There has been a modest rebound since then, despite currency headwinds. Topline for ye 2020 was $120.1bn, with operating income of $3.4bn. The latter figure slumped by 30%.

Early attempts to transfer the Walmart culture into other markets, especially in Europe for example, were unsuccessful. Walmart established a presence in Germany in 1997 with the acquisition of troubled retail groups Wertkauf and Interspar, but the takeover did not go smoothly. Both chains were rundown, requiring a mammoth refurbishing program. Culture conflicts also loomed large. Early attempts to transplant Walmart's US style signally failed to charm German customers. (Among other problems, German shoppers were unhappy about bag boys handling their fresh grocery produce and even complained that staff smiled too much). The US group clashed repeatedly with local managers as well as government regulators and rival chains, especially fast-expanding hard discounters Aldi and Lidl. Despite growing sales, the German business continued to lose money. The group had rolled out its "Supercenter" format in all 85 outlets by the beginning of 2006, but called it quits later in the year, selling all its German stores to rival Metro.

Learning from these mistakes, the acquisition of Asda in the UK was handled more sensitively, although it has not delivered the seismic shock initially feared by rivals. Indeed, Asda was initially plagued by a series of high-level management defections. However it overtook long-established Sainsbury's in 2003 to become the UK's second largest supermarket chain behind Tesco, and is now the group's only European retail subsidiary, accounting for more than a third of non-US sales from more than 640 outlets. (See separate profile). However, like all UK supermarkets, Asda's performance has been badly dented since 2012 by the price war initiated by German discounters Aldi and Lidl. It has arguably been slower to find its balance than its rivals, and in 2016 it lost its second-place position, slipping back behind Sainsbury's.

Walmart took its first steps into Japan in 2001 with a 6% stake in Seiyu, one of the country's leading supermarket groups. A year later, it took an option to increase its stake to almost 38%, giving the US group management control. It has steadily acquired further shares since then, accumulating 53% by the end of 2006. In 2007 it offered to acquire the shares it didn't already own for around $875m. Seiyu now has around 340 retail outlets in the country. However, the business struggled to turn a profit for several years, before finally turning positive in 2008 as recessionary forces persuaded Japanese shoppers to come around to the idea of discount pricing. It now has 333 stores.

Despite its presence in Japan, Walmart's biggest market in Asia is now China. With 170 Supercenters already in that country by 2006, it raised its game with a $1bn deal to acquire a 35% stake in the Chinese operations of Taiwanese-owned Trust-Mart. As a result, there are almost 440 large outlets in the world's most populous country. In 2012, the group acquired a majority stake in Chinese ecommerce business Yihaodian, and bought out the remaining shares in 2015. A year later, the group folded Yihaodian into its much larger local competitor JD.com in return for a 5% stake in that business, the second largest ecommerce portal in China after Alibaba, with more than 100m registered customers. It subsequently acquired additional shares to increase its holding in JD.com to almost 11%. For several years, the group also had a presence in South Korea, before selling its stores there in 2006 to local market leader Shinsegae.

Another important frontier in Asia is India. It agreed a deal towards the end of 2006 with Indian conglomerate Bharti Enterprises, with the intention to launch a chain of "several hundred" franchised stores operating under the Bharti Walmart banner between 2007 and 2012. To get around local legislation, these stores would not directly target ordinary consumers, but instead sell on a wholesale basis to smaller retailers and other trade customers. However the partnership never really gelled, and it was eventually terminated in 2013. Walmart ended up with control of around 30 Best Price wholesale stores. In a major expansion of its presence in India, the group agreed in 2018 to acquire 77% of India's biggest online retailer Flipkart for $16bn, opening a new battle front against arch-rival Amazon, currently #2 in India. Flipkart had sales of $4.6bn for the year ended March.

In the Americas, Walmart is also the leading retailer in Canada with 408 stores, and in Mexico where Walmart de Mexico operates more than 2,570 Walmart, Sam's Club Mexico and Suburbia general outlets, as well as Bodega and Superama supermarkets. The Vips restaurant chain was sold in 2014 for $671m. The group owns a 69% stake in "Walmex", with the remaining shares publicly quoted. The Mexican division's revenues of over $29bn a year are higher than those of the country's entire tourism industry, and its food sales are more than every other food retailer in the country combined. However, that business has come under intense scrutiny since 2012 following a New York Times article which alleged that Walmart's rapid growth in Mexico in the late 1990s and early 2000s had been enhanced by routine bribery of local government officials, allowing the group to bypass traditional zoning and development laws. Investigation is still underway by US and Mexican regulators. A bribery lawsuit was dimissed by a Mexican court in 2016, and by the end of that year US regulators had offered to end the investigation in return for a settlement of $600m. Walmart refused to pay that amount and negotiations continued. A deal was eventually reached in 2019 for $282m.

Until recently, the group was also a major force in Brazil. In early 2004 it acquired from Ahold Bompreco, the biggest supermarket group in Brazil's north-east region with sales of around $800m. In 2005, it expanded its presence further with the purchase for $635m of Sonae, whose retail brands in Brazil include Big, Nacional, Mercadorama and Maxxi. That gave it 465 stores across the country, as well as additional outlets in Argentina and Puerto Rico. In 2005 it acquired Ahold's 33% stake in Central American Retail Holding Company (CARHCO), which operates supermarkets and other stores in Guatemala, Costa Rica, El Salvador and Nicaragua, and built that stake to more than 51% in early 2006. It now has almost 780 stores across Central America. At the end of 2008 the group launched a $2.7bn offer to acquire Chile's biggest grocer, D&S, and had built its presence to almost 380 outlets by the beginning of 2018. However, Latin America has been a challenging region, and in 2019 Walmart sold 80% control of its entire Brazilian business to private equity firm Advent at a large loss. It retains a minority stake in the business, which rebranded in 2020 as Grupo BIG. Walmart retains its operations in Argentina, Chile, Costa Rica, Guatemala, Honduras and Nicaragua. Chile is the biggest with 367 stores.

In 2005, the group had identified Poland, Hungary and Russia as other markets in which it was considering developing a presence. So far, though, there have been no moves into Eastern Europe. In fact, its most recent expansion has come from a different region altogether. In 2010, the group made an offer to acquire a controlling stake in South Africa's Massmart retail group for around $2.3bn. Brands include Game general merchandise stores, Dion consumer electronics outlets, Builders home improvement stores and the local operation of wholesale warehouse Makro. It also controls several large wholesaling subsidiaries. There are now around 440 stores that division, the majority - 383 stores - in South Africa but also spread across 12 other countries on that vast continent.

Financials

Despite its already mammoth size, Walmart showed little sign of slowing down until the most recent recession. For several years until 2006 it delivered double-digit growth in sales every year. Despite withdrawal from several international markets since then, the group has continued to deliver an uplift each year, albeit now generally in single digits. For the year to January 2009, Walmart broke through the $400bn barrier for the first time with sales rising 7% to $401.2bn. But for the following year, to January 2010, revenues rose only 1% to $405bn, held back in part by currency fluctuations. For the year to January 2011, there was a further 3% increase to $422bn, but retail sales in the main Walmart US business rose by just 0.1%. In the year to 2012, the group total rose 6% to just under $447.0bn, including $3.1bn from Sam's Club memberships. Some of the gain was generated by acquisitions and currency, but organic growth was still just under 4%. The year to 2013 saw another 5% increase to $469.2bn. The biggest improvements came from the international business, up over 7%, but Walmart US managed a 4% improvement to $274.5bn. Net income for the year ending Jan 2013 rose 8% to just under $17.0bn.

Total revenues to Jan 2014 grew at the slowest rate since 2010, rising just 1.6% to $476.29bn, including Sam's Club memberships of $3.2bn. However net income dipped almost 6% for the year (and by as much as 21% in the final quarter) to $16.02bn. Reported sales across all three segments was weak, but comparable same store sales for the main Walmart US chain slipped by 0.6% for the year, offset by 0.7% growth at Sam's Club. Revenues for ye 2015 hit a high of $485.65bn, with net income of $16.36bn.

The strong dollar, challenges in several international markets and at home from Amazon weighed on Walmart's results for the year ended Jan 2016. For virtually the first time in the company's history revenues fell year-on-year, slipping 0.7% to $482.13bn, while consolidated net income slumped 9% to $14.69bn. US main store revenues were up 4% but were undercut by a 2% decline at warehouse division Sam's Club, largely as a result of much lower fuel prices. (Same store sales at Sam's ex fuel were marginally higher). Similarly, e-commerce sales were up 8% in the holiday quarter, but that was less than a third the growth enjoyed by Amazon over the same period, and almost half what Walmart achieved in the first quarter of the year. International revenues dipped 9% on a reported basis, but were up 3% at contant rates, and all three divisions reported a fall in profits.

Currency headwinds remained a challenge in the year to 2017, offsetting solid domestic growth. Combined revenues edged up 0.8% to a new high of $485.87bn. However higher costs resulted in a 7% decline in net income to $13.64bn, the lowest level since ye 2009.

Walmart's financial results for the year to 2018 were dented by missteps within its ecommerce division over the holiday period. The company over-anticipated demand for items like toys and TVs, and reconfigured warehouse space accordingly. As a result, it ran out of stock on everyday items like toilet paper. One notable achievement, though, was that sales topped $500bn for the first time, up 3% year-on-year. In the US, same-store comps excluding fuel rose 2% for the year. However profits were dented by a higher increase in costs and expenses, and a whole collection of impairments and restructuring charges against Sam's Club and international operations. Even with a one-off tax benefit in the final quarter, net income slumped 28% for the year to $9.9bn, the first time since 2004 - when revenues were half their current level - it has been below $10bn.

Comparable US retail sales rose by more than 4% over the holiday quarter, one of the chain's biggest quarterly gains since the 2008 crisis. Full year revenues for ye 2019 rose almost 3% to $514.4bn, while operating income jumped by over 7%. However, profits were dented by exceptional losses of $8.4bn against the sale of a controlling stake in Walmart Brazil as well as the group's investment in Chinese ecommerce giant JD.com. Net income slipped by almost another third to $7.2bn. There was also another weak performance from warehouse division Sam's Club, where sales slipped by another 2% last year.

For the year to Jan 2020, revenues hit a new high of $524.0bn. Without the previous year's Brazilian losses, as well as a sizeable gain relating to its investment in JD.com, net income more than doubled to $15.2bn

Management

The Walton family still own bnetween them around 54% of the company. Sam's children and their families have a combined wealth estimated at $156bn in 2019. That's still some $25bn more than Amazon's Jeff Bezos - the richest individual in 2019. Eldest son Robson Walton became chairman in 1992 following his father's death. He stepped down in 2015, to be succeeded by his son-in-law Greg Penner, but remains a director. Rob's brother Jim Walton also sits on the board, along with his son Steuart Walton. Rob and Jim's sister Alice Walton has an equal shareholding to her two surviving brothers but plays no direct part in the business. A third brother, John, died in a flying accident in 2005, and his wealth was inherited by his son Lukas and widow Christy. Sam Walton's widow Helen passed away in 2007. Nancy Walton Laurie and Ann Walton Kroenke, daughters of Sam Walton's brother and co-founder, also hold large shareholdings. Former Google executive and Yahoo CEO Marissa Mayer is among the group's other directors.

There have been a series of changes in top management since the beginning of 2014. Mike Duke stepped down as group president & CEO in January, although he retains a seat on the board. He was succeeded by Doug McMillon, previously CEO, Walmart International. Greg Foran took over from Bill Simon as president & CEO of Walmart USA. However he announced his departure in Ov 2019, and was replaced by John Furner, previously CEO of Sam's Club. Furner was in turn replaced in due course by Kathryn McLay. David Cheesewright, a former head of Asda, took over from McMillon as CEO, international, but was in turn replaced by Judith McKenna (another alumnus of Asda) at the beginning of 2018. Marc Lore is CEO, eCommerce USA. Lore joined the group in 2017, following its purchase of his online retailer Jet.com.

See Account Assignments for Walmart marketers

Background

Despite its vast size, Walmart is a comparative spring chicken compared to many other US retail groups. The first Wal-Mart Discount City store opened in Rogers, Arkansas in 1962, but founder Sam Walton was no novice when it came to retailing. He had trained at JCPenney before taking over the lease in 1945 on a local dime store, part of the Ben Franklin chain. As the original store prospered, Walton added several other Ben Franklin franchises until he was operating around 15 stores under the Walton Five & Dime name by the start of the 1960s.

In 1962, aged 44, he struck out on his own, founding his first Wal-Mart discount store as a partnership with brother James (known as "Bud"). Seeking out areas where other chains had yet to establish themselves, Sam and Bud opened a string of 18 stores over the next eight years. The company's philosophy was simple, summed up as "Every Day Low Prices". Sam Walton believed in making a better lifestyle available to everyone by selling good quality merchandise at low prices. He regarded his staff as part of one big family, insisting on calling them associates, not employees. Customers were part of that family too. This belief was enshrined in the company methodology in various working rules. The Wal-Mart "10 Foot Rule", for example, was inspired by the promise Sam Walton always demanded from his associates: "That whenever you come within 10 feet of a customer, you will look him in the eye, greet him and ask if you can help him." Another company bye-law is the Sundown Rule, under which the stores strive to deal with all customer requests or enquiries by sundown on the day they receive them.

In 1970, Wal-Mart Stores went public, and the company expanded rapidly over the following decade. On a trip to Korea in 1975 to source low-cost merchandise, Sam Walton was impressed by a tennis ball factory where the workers performed callisthenics and a company cheer together every morning. On his return he instigated what is now the famous Wal-Mart cheer, spelling out the company name, and ending "Who's number one? The Customer! Always!". It is still shouted by staff every morning in every Wal-Mart outlet. In 1977 the group made its first acquisition, 16 Mohr-Value stores in Michigan and Illinois. A year later Wal-Mart acquired the Hutcheson Shoe Company, and introduced pharmacy, auto service and jewellery divisions. By 1979, the business had sales of over $1.2bn.

In 1983 Wal-Mart launched a separate chain of members-only warehouse outlets, selling bulk goods at low cost, under the Sam's Club brand. The same year, the group absorbed the Woolco chain in the US, and introduced greeters at all stores to welcome shoppers. In 1985, the group acquired Grand Central Stores, followed by the Supersaver chain in 1988. That year Sam Walton, now 70, stepped down as CEO, appointing David Glass as his successor.

In 1990, with the acquisition of Western Merchandisers of Texas and distribution company McLane, Wal-Mart became the US's biggest retailer. A year later, the group took its first step into the international market, opening a Sam's Club outlet in Mexico as a joint venture with local retailer Cifra. Sam Walton died the following year, before he was able to see just how big his business would become. With son Robson now named chairman, Wal-Mart embarked on mammoth international expansion over the next few years. The group acquired Woolco's 122 Canadian outlets in 1994, and established operations in Argentina and Brazil a year later. In 1996 the group established a joint venture in China, and invaded Germany in 1997, acquiring 21 Wertkauf stores. The group's presence in Germany was strengthened a year later with the purchase of 74 Interspar hypermarkets. That same year, the group made its debut in the UK, snatching fast-growing supermarket group Asda away from an agreed merger with British group Kingfisher. In 2003, the company said it would consider bidding for Safeway, a rival UK supermarket to Asda. However any such deal was quickly ruled out by local regulators.

In recent years, as is perhaps inevitable for a company of its size, Walmart has found itself embroiled in a series of legal disputes and PR crises. The following year, around 1.6m former Wal-Mart employees brought a class-action lawsuit against the group, claiming that it customarily denied female employees equal pay and promotion. That case is continuing to drag its way through the US justice system. The Supreme Court eventually dismissed the original lawsuit in 2011, ruling that it could not be prosecuted on a national basis. As a result, the female employees group began filing new suits on a state-by-state basis.

In 2005, in a separate case, group vice chairman Thomas Coughlin was dismissed, and the company subsequently launched a fraud lawsuit against him, alleging misappropriation of corporate assets worth around $500,000 over a period of 10 years to pay for personal expenditure. Later, he also pleaded guilty to federal charges of tax-evasion and wire fraud, and was eventually sentenced to 27 months' home confinement.

At the end of 2006, Wal-Mart provided the marketing industry with one of the biggest stories of recent years. Earlier the same year, the group had appointed Julie Roehm, formerly the outspoken marketing communications chief at Chrysler, as SVP global marketing communications. Roehm kicked off a full review of the company's creative and media accounts, and eventually awarded the business to Carat and the newly merged DraftFCB in October. Less than three months later, Roehm and an assistant from her department were abruptly dismissed; days later, DraftFCB and Carat were also sacked, and the accounts put back into review. Wal-Mart revealed that its decision was prompted by what it said were flagrant breaches of Wal-Mart's strict code of employee conduct by Roehm and her deputy. Not only were Roehm and her deputy - both already married to different partners - apparently conducting an affair against company rules, but they were perceived to have shown favouritism towards DraftFCB during the course of the agency review process, and were also accused of negotiating to join that company after it was appointed as Wal-Mart's agency. A bitter legal battle ensued when Roehm sued Wal-Mart for breach of contract. The two sides issued lengthy submissions detailing their respective cases, but Roehm's case, filed in her home state of Michigan, took a serious blow in August 2007 after a judge dismissed it, ruling that it should be heard instead in Wal-Mart's home state of Arkansas. Roehm was told to refile if she wished to pursue her battle. In the end, however, she decided instead to abandon her fight and withdraw her case. Wal-Mart in return suspended its own case.

The latest hot potato is the New York Times' allegations that the group conducted a widespread campaign of bribery to underpin the expansion of its Mexican operations. That case has potentially serious ramifications for the business, especially since current group CEO Mike Duke was previously vice chairman and president & CEO of Walmart International Division. Eduardo Castro-Wright, vice chairman with responsibility for global sourcing, and the former head of Walmart de Mexico, announced his retirement in 2011, shortly before publication of the NY Times' allegations of corruption at that division.

Last full revision 17th April 2018


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