America - Andrew Stephen sees Wal-Mart get bigger and bigger
At Wal-Mart, "a cult masquerading as a company", you can buy everything from apples to car parts and
There was only one choice of venue when Ford Lund and Rae Bauer got married earlier this month: in front of their local Wal-Mart store in Missoula, Montana. That is where they met, after all, serving in the garden department. Their wedding cake was bought from the same store, and the rings came from the jewellery department. Photos of the happy couple were taken at the store's portrait studio. Their colleagues were given a short break to attend the ceremony and cheer on the newlyweds before returning to work.
The lives of the new couple revolve around Wal-Mart, and their wedding demonstrated the hold the conglomerate has over people - no wonder BusinessWeek magazine has described it as "a cult masquerading as a company". It is, in fact, the world's biggest company, three times larger than the next biggest (Carrefour in France). It employs more than a million people at its 3,474 stores in the US, of which 1,397 are "supercenters" (the equivalent of European hypermarkets), which sell everything from apples to car parts. It is also the biggest retailer in Mexico and Canada, running hundreds of stores across nine countries other than
the US. It demonstrates succinctly the best
and the worst of monopolistic power.
"Always low prices" is Wal-Mart's motto, and the company's better side is that it saved shoppers $20bn last year. In household staples such as toothpaste, shampoo and paper towels, it has 30 per cent of the nation's market; it sells 32 per cent of America's disposable nappies. It is so powerful that its decision not to stock CDs, videos and DVDs with parental warning stickers has forced producers to modify their output. The company sells 15 per cent of the nation's books. Every week, 138 million people make a purchase at Wal-Mart, and last year 82 per cent of American households bought at least one item from its shelves. Its turnover in the year ending January 2003 was $245bn. Consultants say that its prices are, on average, 14 per cent lower than all its rivals'; they also predict that Wal-Mart's grocery and drug sales will double in the next five years, reaching $162bn. This year alone, Wal-Mart plans to open another 335 new shops.
The company is determinedly anti-union, and the United Food and Commercial Workers union has managed to make inroads at only 45 Wal-Mart sites. Staff earn $8.23 an hour on average, or $13,861 per year, according to documents filed in a pending lawsuit (the official federal poverty line for a family of three is $14,494). It charges employees $200 per month for health insurance, plus a yearly $1,000. The average wage in unionised supermarkets is $13 an hour, making wages and benefits roughly double those of Wal-Mart workers.
This is bad enough, but it is the knock-on effect that is most ruinous for other workers and consumers. It has been estimated that for every Wal-Mart supercenter that opens, two other supermarkets shut down. In the past decade, 13,000 old-style supermarkets have been forced to close, making many thousands of workers jobless and obliging consumers to travel further for their food and household staples. Just inside Wal-Mart's headquarters in Bentonville, Arkansas, is a huge banner that asks: "Who's taking your customers?", followed by a "Wanted" poster listing other, smaller supermarket chains. In an attempt to compete with Wal-Mart, those chains cut wages - what economists call (not entirely accurately, in this case) the law of "unintended consequences".
There is no stopping Wal-Mart, though. It has a five-year plan to introduce 40 new supercenters in California, the first due to open in February; and it is likely to take $3.2bn in sales from the state's existing chains. The current wage for a unionised supermarket worker with two years of experience is $17.90 an hour in California. But some chains, anticipating Wal-Mart's assault, have imposed a two-year wage freeze for existing workers, lower pay for new employees and higher contributions for health coverage. As a result, 70,000 workers at 859 supermarkets have been on strike in California. There was also a 12-day strike in Missouri and similar protests in Kentucky, Ohio and West Virginia. Already, at least two dozen supermarket chains are thought to have been forced into bankruptcy by Wal-Mart's charge towards a monopoly in retail sales.
Wal-Mart was founded by one of America's first billionaires, the late Sam Walton, who boasted about the products being "Made in America". But now the tags are much more likely to read "Made in China": Wal-Mart bought $12bn worth of goods from that country last year. The company's lobbying power in Washington is such that it has successfully opposed import tariffs and quotas, and has been able to promote unregulated trade with the third world. Thus thousands of textile and other workers in America, including those in the cotton industry in the south, have been replaced by workers in Asian sweatshops earning a few pennies per hour. Shoppers at Wal-Mart enjoy savings at the expense of thousands of US workers and untold numbers of workers in the third world.
Wal-Mart is able to make exclusive deals with Asian suppliers, which means, for example, that it can sell the George brand of jeans for $7.85 while other US retailers charge $26.85. This also helps to squeeze Wal-Mart's competitors out of the market. But there is a backlash against all this, not only from other supermarket chains, but also from trade unionists and political activists. Last month, a federal judge in California began considering a class-action case brought on behalf of the 1.8 million women who have worked for Wal-Mart since 1998, alleging discrimination against women in pay and promotion. In San Francisco, there could be a referendum over whether a retail outlet can have more than 90,000 square feet of city property - a move aimed to stall Wal-Mart's assault on California.
Wal-Mart hits back by insisting that its sales blitz will bring lower prices for Californian consumers, and by pointing out that 600,000 people take jobs at the company's shops every year - the cult status that made Ford Lund and Rae Bauer get married at their local store is certainly a peculiarly powerful magnet. Wal-Mart management works notoriously hard, too. There is a story about how the firm's analysts were mystified why sales of anti-cockroach powder were high in the south but low in, say, Minneapolis - a contrast that could not be explained merely by different climates. They found that, whereas in the south cockroaches were a way of life and consumers were not embarrassed to be seen buying anti-cockroach powder, in the north the bugs were considered a sign of a dirty house and something to be ashamed of. Wal-Mart's solution was to introduce more discreet packaging in the north.
So, at your local Wal-Mart, you can not only get married with all the trimmings, but also buy anti-cockroach powder without losing face - and at much cheaper prices, too. But only at the great expense of others.