Wal-Mart Employment Practices and Corporate Sustainability

CASE:  Wal-Mart Employment Practices and Corporate Sustainability

Wal-Mart – Every Day Low Prices, but at what cost?  Wal-Mart’s infamous and community-impacting slogan riddles the world, leading consumers to flood the stores and drive up market sales.  Meanwhile in the employee break room, employees take their lunch breaks scavenging for food, stealing from their co-workers and emptying their pockets in order to combine the means to afford a meal that will be split four ways.

        Wal-Mart (WM) originated as a model built on low prices, on a large measure, at marginal cost.  Throughout the years this model never changed.  Instead the company thrives, building on each achievement, and continuously accumulating power which, in turn, gives rise to even more clout that stipulates their consumers with even lower prices, at an even less expense to itself.  Many individuals wonder, how is this possible?  WM’s operations, strategies and systems are built into this original sustainable model, which continues to present very low prices.  All is made possible due to the enterprise’s colossal volume of sales, their supply chain management system, the minimization of operational costs and of course the leveraging of their bargaining power to force suppliers to lower prices.

        WM’s substantial sales volume derives from their extensive market and operational reach as well as a wide consumer base.  WM has been able to seize a vast market share by retailing virtually everything while being virtually everywhere.  With their extensive research, they have been able to meet the consumer demand of various segments of the market, present a huge band of buying opportunities and compress it all into a single retail location.  Not to mention their convenience in locations, in which Charles Fishman, author of the Wal-Mart Effect states, 90% of American’s live within 15 miles of a Wal-Mart store^[1].  Although having a superstore within reach may seem great to prospective consumers, it has not been great to all of the small and independent retail “mom & pop” stores, like H & H Hardware store of Middlefield, Ohio.  They were in business for 54 years.  Unfortunately, H & H Hardware was forced to close because they were unable to compete with the low prices.  Research from Jerry Hausman, an economist at M.I.T., shows that, when Walmart enters a new market, it drives down grocery prices in general; to compete with Walmart’s low prices, other stores lower their own prices. Low-income families benefit most, because they spend a greater proportion of their wages on food. But Walmart’s presence can also hurt those same families, because it tends to reduce over-all retail employment—perhaps by driving out smaller stores, which typically employ more workers per dollar of sales^[2].  Even though many individuals shunned the opening of a WM, many welcomed them with open arms – as it translates to a larger variety of goods in one location, accrued savings from the low prices and especially the overall growth in their economy due to the various taxes WM is responsible to pay.