Wal-Mart

Wal-Mart is the world’s largest retailer. With more than one million workers, it is in a size category of itself. From its home markets in the United States, the company is expanding aggressively to other parts of the world.

An obsessively anti-union company at home and abroad, Wal-Mart builds its competitive advantage on low wages, poor benefits and a squeeze on producers. Through predatory pricing, it can force both large and small competitors out of business. World-wide, Wal-Mart is the most serious danger for employment, wages and working conditions in commerce.

Wal-Mart started its international expansion in 1991, when it opened a SAM’s Club discount market in a suburb of Mexico City. An international division was created in 1994.

Outside the United States, Wal-Mart is now (August 2002) present in the following countries (number of store units in brackets):

Mexico, since 1991 (572)
Puerto Rico, since 1992 (18)
Canada, since 1994 (196)
Argentina, since 1995 (11)
Brazil, since 1995 (22)
China, since 1996 (20)
Korea, since 1998 (12)
Germany, since 1998 (95)
United Kingdom, since 1999 (255)
Japan, since 2002 (participation in Seiyu)

Sales (in millions of U.S. Dollars) by operating segment for the three fiscal years ended January 31, were are as follows:

Fiscal Year	Wal-Mart Stores	SAM’S Club	International	Other	Total Company	Total Company Increase
2002	139,131	29,395	35,485	13,788	217,799	14%
2001	121,889	26,798	32,100	10,542	191,329	16%
2000	108,721	24,801	22,728	8,763	165,013	20%
1999	95,395	22,881	12,247	7,111	137,634	17%
1998	83,820	20,668	7,517	5,953	117,958	12%
1997	74,840	19,785	5,002	5,232	104,859	12%

The net income of Wal-Mart in the fiscal year ending in 2002 was 6.671 billion U.S. Dollars (6,671,000,000 USD).

Wal-Mart has 1.3 million workers world-wide. Of these, 303,000 were outside the United States.

In the United States, Wal-Mart continues to expand. It has also entered the smaller supermarket sector and is increasingly moving into areas, where there is traditionally a stronger trade union presence than at home the southern parts of the country. This has added to the risks that the company can come to influence negatively the overall wages and benefits developments in American retailing, using its unfair competition advantage which is largely based on low labour costs.

It is not surprising that Wal-Mart has emerged as a model of an aggressively anti-union employer. At home, in the United States, the company goes to great lengths to keep its workers away from trade unions. Uni Commerce affiliate UFCW has nevertheless succeeded in making the first inroads at its home turf, which despite involving small groups of workers are important signs that also Wal-Mart can be unionised.

Increased attention has been focused on Wal-Mart’s European operations. Price wars are regularly waged by the American giant both in Germany and United Kingdom, aimed at taking market shares from large and small competitors. Both retailers’ associations and trade unions have warned that this will inevitably lead to closures and unemployment. Leading European retailers, who have had to respond to the challenge, point out that the Wal-Mart attack will mean an unreasonable focusing on price and compromising the quality of both goods and services.

In the United Kingdom, Wal-Mart continues operating under the Asda name and with much of the concept of this British company. Only the new superstores get a more marked wal-Mart identity. The first real Wal-Mart superstore was opened in Bristol in July 2000.

In Germany, the first years have failed to give the results that the American multinational had hoped for. The annual losses have continued to be counted in hundreds of millions US dollars. The quality of the German operation has not been up to standards, it has been said.

All through year 2000, there was much speculation about a continued Wal-Mart expansion in Germany. The company had declared that it wants to add another 50 hypermarkets to its German store network, but an attempt to lay hands on Metro'’ Real hypermarket chain failed when the major shareholders refused to sell.

Both in Germany and the United Kingdom, competitors have, however, been successful in responding to Wal-Mart's challenge. German hard discounters such as Aldi and Lidl and hypermarket chains such as Metro's Real have held their ground whereas Wal-Mart has had to resort to personnel and store closings, in order to cut its losses.

Also labour relations have deteriorated. In July 2000, Wal-Mart workers in Germany were on strike to force the company to join the collective agreement for commerce. Wal-Mart may want to stay outside the agreement to give it a possibility to cut benefits to help pay for its poor performance in 1999.

Union action including strikes have continued, and in the summer of 2002, Germany's largest trade union ver.di once again warned the company that it will not give up before a collective agreement has been signed.

In 2002, Wal-Mart entered the Japanese market, buying a minority share in supermarket operator Seiyu. This followed an unsuccessful attempt to take an even larger retailer, Mycal.

For trade unions all over the world, the Wal-Mart challenge is a unique one. Its large size gives it the power to impose conditions on producers, which competitors can hardly match. The logistics system is efficient and allows Wal-Mart to benefit from this size. But above all, personnel costs are kept down, including by denying workers the salaries and benefits granted by collective agreements in other parts of the industry. Employers who are bound by collective agreements, employing workers with proper wages and working conditions are under increasing pressure as they try to respond to Wal-Mart’s predatory pricing.

Also consumers and governments should be aware of the danger in allowing Wal-Mart to continue its expansion and growth. Services will deteriorate and unemployment will increase as competitors lose out to the supercentres. Industry will not be spared as the powerful customer dictates pricing. Product quality is compromised if low costs are the only priority. Socially unacceptable working conditions, child labour and forced labour will be harder to abolish in production. In the long term, the quality of commerce personnel can come to deteriorate as the industry does not offer competitive wages and conditions.