The world’s largest retailer wants to grow larger still, to increase sales and maintain earnings. However, in the process it is also driving resentment and hostility among a multitude of groups. Manufacturers, retailers, unions and even governments are all forced to bend to the will of price driven Wal-Mart and, for now, most have little choice.
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Wal-Mart employs a massive 1.1 million workers in 1,494 stores in the US alone and currently its only notion of cutting back is in reference to its retail prices. Indeed, Wal-Mart has plans for an additional 1,000 superstores in the US over the next five years and the one problem causing vice chairman Thomas M Coughlin the most sleepless nights is how to staff the thousands of new positions to be created.
However, for manufacturers, retailers and labour unions, Wal-Mart’s relentless progress is particularly worrisome. Its enormous power to dictate product prices and size, specify delivery dates, and control the wages of a non-unionised workforce, is exercised daily. A whopping 23-28% of each of Dial, Del Monte Foods, Clorox and Revlon’s total sales are made via Wal-Mart. Overall, about 30% of US household staples, such as shampoo and paper towels, are sold through the mammoth company, as are approximately 25% of all US food sales.
Nevertheless, not everyone is complaining. Struggling Levis Strauss has credited its long awaited business turnaround to a new low cost brand, Levi Strauss Signature, sold primarily through Wal-Mart stores. Other suppliers too have the potential to find Wal-Mart one of their most profitable customers, if they are of the right sort, that is – large, sophisticated and heavily data-focused.
Wal-Mart’s impact beyond its immediate business partners is enormous too. Its effect on the national economy is ever increasing, as are the implications of its lobbying efforts in Washington. These touch everything from international tariffs, to quotas and free-trade pacts. Can anything hold Wal-Mart back? It seems not. Although cultural challenges remain ahead for the company, particularly as it expands into urban America, low prices are a lure likely to win the hearts and money of most consumers across the world.
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