Preparation Resources for Class Discussion Sections and Position PaperAddressing the Question:

Is Wal-Mart Good for America?

Name: ___________________________________________

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Below, you will find six relatively current articles about Wal-Mart and its business practices. Please be sure to answer ALL of the following questions:

Here is a closer look at how Sam Walton's focus on the "opening price point" and Wal-Mart's successful high-stakes technological bets -- including developing its own distribution network and software system -- revolutionized the relationship between suppliers and retailers.

Wal-Mart founder Sam Walton believed in having an alluring and unbeatable "opening price point" item in each category -- whether TV sets or bathing suits. The low price functioned to catch the consumer's eye and create the perception of value across the higher price points further up the aisle.

"The opening price point is clearly a foundation of who we are and how we interact with our customers," Ray Bracy, Wal-Mart's vice president of international corporate affairs told FRONTLINE.

The focus on low cost also had the effect of forcing Wal-Mart to look inward and find innovative ways to take costs out of the supply chain...

1. What purpose does the “opening price point” serve?

…And so, the cornerstone of Wal-Mart's increased efficiency was its trend-forecasting software, which tracked consumer behavior. In 1985, Walton and his chief lieutenant, David Glass, began developing a program called Retail Link. The software, and the hardware that went along with it, took years to perfect, eventually costing $4 billion. This revolutionary system delivered sophisticated information on consumer behavior, drawn from the data imbedded in the barcodes that passed through checkout counters.

2. Why did Wal-Mart invest so much in this technology? What did the company gain from it?

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Article 1: Always Low PricesBy Sam Hornblower

Wal-Mart shared this revolutionary software with suppliers at no cost, in order to help them meet the retailer's needs more efficiently. In the early years, many Wal-Mart suppliers were American firms with factories in the U.S., and so sharing the Retail Link system dovetailed with Sam Walton's "Buy American" campaign, which focused on using domestic manufacturers. But Walton also insisted on ruthless efficiency. As he wrote in a letter to his suppliers in 1985, he was committed to buying U.S. goods whenever possible, but they would have to upgrade their operations and improve productivity to "fill our requirements."

At the heart Wal-Mart's offer to share its software program was a Faustian [done with eye on present gain and not on potential future consequences] bargain for suppliers: Use our Retail Link program, play by our new rules and we will be your gateway to sales beyond your wildest dreams. Or refuse, and be shut out of America's dominant retail chain. In fact, by sharing Retail Link, Wal-Mart gained command over its suppliers and effectively penetrated their executive decision-making. It drew them into what Sam Walton liked to call a partnership: Wal-Mart was plugged into the supplier and the supplier was plugged into Wal-Mart.

But Wal-Mart had the upper hand: By gaining access to its supplier's books, the company was in a position to virtually dictate the terms of its contracts on price, volume, delivery schedule, packaging, and quality. And it allowed the giant retailer to set the profit margin each supplier would get. It turned the supplier-retailer relationship upside-down.

3. What did sharing this new software do for Wal-Mart’s relationship with its suppliers?

If vendors wanted their products on Wal-Mart's shelves, they had to implement Wal-Mart's "customized business plans." Each year, the big retailer handed its suppliers detailed "strategic business planning packets." Wal-Mart would grade them on weekly, quarterly and annual report cards. And when it came to discussions of price, there was no real negotiation, even for household brands.

"It was a cultural change between retailers and manufacturers," said Bobby Martin Jr.,

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the Wal-Mart executive who developed and managed the Retail Link software system. "Part of process people went through was fear that Wal-Mart would know their business better and run their business. Some of them were not even as computer literate or capable as Wal-Mart… But the impetus behind it is the low cost commitment. This is divine discontent with cost."

Thus, Wal-Mart used its buying power and its information about consumer buying habits to force vendors into squeezing their costs and keeping their profit margins low. Over time, some suppliers -- especially middle-sized and smaller firms -- were bankrupted; and major firms moved production overseas, and increasingly to China.

4. What affect did Wal-Mart’s policy of low prices eventually have on American business?

5. On American consumers?

Background

Wal-Mart, a chain of discount stores started by Sam Walton in 1962, has become a central figure in scores of social, economic and political debates, from health care to immigration to gun control.

Supporters contend that the chain's legendary low prices have democratized consumption, allowing low-income households to afford flat-screen televisions and nine-layer lasagna. Critics say those low prices have depressed domestic wages and exported manufacturing jobs to foreign countries, hurting Americans more than helping them.

6. Explain what is meant by “democratized consumption”.

7. What do critics say about such low prices offered by Wal-Mart?

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Article 2: Frontline: Always low wages, always more greed at WalmartOpinions of the editorial board | Posted: Tuesday, January 15, 2013 8:05 am

Save money. Live better. This is the slogan for Walmart, an international superstore chain that sells everything from ammunition to zucchini. But who is saving money, and who is living better because of this corporate giant? The Walton family has owned Walmart since the 1950s and since then has amassed an enormous sum of money. They control a fortune larger than the combined wealth of the poorest 48.8 million families living in the U.S. according to the Economic Policy Institute, a nonpartisan, nonprofit think tank.

The Waltons are profiteers of the economic recession. As the American public struggles to pay the bills, the Walton family gets richer and richer off their cheap products, the only products the 48.8 million families, or 41 percent of the entire U.S. population, can afford to buy anymore.

1. Why does this article call the Waltons “profiteers”?

Walmart presents competitive prices that undersell not only local stores, but other big box stores like Target and Fred Meyer as well. Suffering families flock to Walmart to feed their families and fill prescriptions. Not only does Walmart profit from the problem, they cultivate it. Walmart pays their employees a wage below poverty levels, creating the victims they feed off of. Walmart is offering more organic options, but this is irrelevant when considering what they could be doing to create socioeconomic change. If Walmart were to increase their wages for workers to a minimum of $12 per hour, a 200 percent increase for many low-wage workers, it would cost them $3.21 billion, according to a study done by the Center for Labor Research and Education at UC Berkeley.

2. How, according to this author, does Walmart cultivate this economic problem?

If Walmart passed this cost on to the consumer, the average Walmart shopper would only have to pay an extra 46 cents per shopping trip for executives to keep making the same profits.Even starving college students can afford to spend an extra 46 cents, especially if it means creating a better life for people with fewer economic options.

Or, perhaps, Walmart executives could bite the bullet and take the cut in profit. Yes, the Waltonfamily may not be able to live their lavish lifestyle anymore, but they could sleep at night knowing they paid their workers a fair wage. We should not support a business that encapsulates stereotypical corporate greed so perfectly.

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Walmart learns its lesson in social justice, take your shopping elsewhere.When you hold a Walmart product in your hand, think of why it is so cheap. We can all afford an extra few dollars for a box of cereal or a new CD if it means a more equitable work force.

3. What is the suggestion that the author is making with regard to Walmart executives?

4. Do you agree or disagree with this article’s perspective on Walmart?

5. Explain your opinion.

Until2/13/13 Frontline: Always low wages, always more greed at Walmart - The Western Front: Opinion: opinion, frontline, editorial board, walmart, wageswww.westernfrontonline.net/opinion/article_5dd2a0f0-5f2d-11e2-986b-001a4bcf6878.html?mode=print 2/2

The editorial board is made up of Editor-in-Chief Samantha Wohlfeil, Managing Editor

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Article 3: The Anti-Walmart: The Secret Sauce of Wegmans Is People - Business - The Atlantic

http://www.theatlantic.com/business/print/2012/03/the-anti-walmart-the-secret-sauce-of-w... 3/25/2012

Privately owned by the Wegman family, the chain employs 42,000 people - 20 times the number who work for Facebook - and defies quarterly-driven Wall Street wisdom. Executives say their most important resource is their workers."Our employees are our number one asset, period," said Kevin Stickles, the company's vice-president for human resources. "The first question you ask is: 'Is this the best thing for the employee?' That's a totally different model." Yet the company is profitable. Its prices are low. And it is lauded for exemplary customer service. "When you think about employees first, the bottom line is better," Stickles argued. "We want our employees to extend the brand to our customers."

1. How is the Wegmans model different from the Walmart model?

The Wegmans model is simple. A happy, knowledgeable and superbly trained employee creates a better experience for customers. Extraordinary service builds tremendous loyalty. Where, though, is the profit? High volume, according to company executives. The chain's stores are enormous - usually 80,000 to120,000 square feet - larger than a typical Whole Foods and roughly double the size of a traditional supermarket. And they feature a dizzying array of 70,000 products, nearly twice the number available in a standard grocery store. Across the East Coast, Wegmans supermarkets have the highest average daily sales volumes in the industry.Employees are omnipresent in stores and do seem knowledgeable. With little prompting, they launch into exhaustive but friendly accounts of where the meat, fish or produce they sell hails from, what each item tastes like and how best to prepare it. A fish salesman raved about the exhausting standards of the company's distributor in Alaska. A butcher said he had visited the ranch where a steak came from in Montana. And Maria Benjamin, a 38- year Wegmans veteran, started running a store bakery after managers loved her homemade Italian cookies ."They let me bake whatever I want," said Benjamin, one of 1,015 people employed at the company's 135,000-foot flagship store in Pittsford, New York. "They're really down-to-earth, wonderful people."

Executives say the company is also able to invest in its employees and focus on steady, strategic growth because it is not publicly traded. They said cutting jobs or shipping them overseas was, in part, the product of having to relentlessly please the stock market. "Some of that is that public mentality,"

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said Stickles, who has an MBA and once planned to be a stock broker. "The first thing they think about is the quarter. The first thing is that you cut labor."

2. What is the philosophy the Wegmans runs on?

The Wegman family, which grants few interviews, has owned and run the company since 1916. Robert Wegman, whose father and uncle opened the first store, dramatically expanded the business in the 1970s by being one of the first chains to vastly expand store size, include pharmacies and use bar codes.Today, the chain is run by Robert's son, Danny, 65, and his two daughters, Colleen, 41, and Nicole, 38. Mary Ellen Burris, a 78-year-old senior vice-president and family confidant, said the owners refuse to open more than three stores a year because "we cannot continue to be the best if we try to go at a faster pace." She said the family has no interest in taking the company public. "No, absolutely not," Burris said. "It takes away your ability to focus on your people and your customers." Like other companies, Wegmans has made mistakes. Over the years, it has had to close nine stores that failed to generate adequate revenues. And critics have accused it of moving stores out of poor urban neighborhoods and focusing its operations on wealthy suburbs. And while the benefits are generous, its pay rates are good, not extraordinary.

3. What are some criticisms made against Wegmans?

Wegmans has also clearly benefited from being based in Rochester, a small but historically prosperous area in upstate New York that was the birthplace of Western Union, Kodak, Xerox, Bausch & Lomb and other companies. Wegmans treats its employees well in part to keep them from gravitating to other firms.Competition has also forced the company to change. The arrival of Walmart-owned supermarkets caused a sharp reduction in prices in 2004. "It was clear that people were gravitating to the discount stores," said Jo Natale, the company spokeswoman. "And so we completely changed the way we did our prices."

But she and other executives insisted that Wegmans' real advantage was the company's happy, high quality workforce. It sends butchers to Colorado, Uruguay and Argentina to learn about beef. It sends deli managers to Wisconsin, Italy, Germany and France to learn about cheese. Last year, it awarded $4.5 million in college scholarships to employees.

The company has half the turnover of its peers. In February, Fortune magazine declared it the fourth best company to work for in America in

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2012. In 2005, it was number one. "What some companies believe is that you can't grow and treat your people well," Burris told me. "We've proven that you can grow and treat your people well." Wegmans is a model. It shows that companies can train, innovate and profit at the same time.

4. Why is Wegmans able to compete with Walmart, even though Walmart has some better prices?

This article also appears on Reuters.com, a partner site. This article available online at:http://www.theatlantic.com/business/archive/2012/03/the-anti-walmart-the-secret-sauce-ofwegmans-is-people/254994/Copyright © 2012 by The Atlantic Monthly Group. All Rights Reserved.

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Article 4: Peter Suderman drops a truth-bomb on Walmart criticsDecember, 2012

Peter Suderman @petersuderman

Really enjoyed talking Walmart and Black Friday on @upwithchristhis morning. I'm going to add a few stray observations on twitter.

1. Walmart’s customer base is heavily concentrated in the bottom income quintile, which spends heavily on food.

2.The bottom income quintile spends about 25 percent of income on food compared to just 3.5 percent for the top quintile.

3.So the benefits of Walmart’s substantially lower prices to the lowest earning cohort are huge, especially on food.

4. Obama adviser Jason Furman has estimated the welfare boost of Walmart’s low food prices alone is about $50b a year.

5.Walmart’s wages are about average for retail. Not amazing. But not the worst either.

6. Paying Walmart’s workers more would mean the money has to come from somewhere. But where?

7. Erase the Walmart CEO's entire salary, and you can raise average hourly wages by just a penny or so.

8. Erase the entire Walton family fortune and you get an average $1/hour boost to Walmart workers.

9. Raise prices to pay for increased wages and you cut into the store’s huge low-price benefits for the poor. It’s regressive.

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10. But what about Costco? They pay more, right? Yes, but it’s a different, smaller market.

11. Walmart’s average customer earns roughly $35k. Costco’s average customer earns about $75k.

12. Costco only has about half as many employees as Walmart. What would happen if Walmart adopted a Costco model and shrank to Costco size?

13. Not at all clear that the remaining half of Walmart workers would be better off. Many would almost certainly be worse off. Unemployed.

14. Obama econ adviser Jason Furman did a lot of the work on Walmart's progressive benefits. His case: slate.me/R3bkc2

15. Finally, as someone who's actually been a regular, small-town Walmart shopper, I'd like to argue for its community benefits

16. Yes, some small stores close when Walmart opens. But in small towns, Walmart can become real community hubs - more so, because of size.

17. As for Walmart workers getting health benefits thru Medicaid, that's due in part to a policy liberals argued for: wapo.st/axXXNE

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Article 5: Has Wal-Mart been good or bad?By Ezra Klein , Updated: November 24, 2012There’s lots to agree with in Peter Suderman’s 17-part Twitter defense of Wal-Mart (which was inspired by this discussion on Saturday’s “Up With Chris Hayes”). Wal-Mart’s low prices do primarily benefit low-income consumers. Wal-Mart’s low wages are not really that low, at least when compared with the prevailing wages in the retail sector. Wal-Mart’s executive class does make a lot of money, but not enough to move the dial on employee pay. But Wal-Mart’s effect on its own employees pales in comparison to its effect on its supply chain’s workers, and its competitors’ workers. As Barry Lynn argued in his Harper’s essay “Breaking the Chain,” and as Charles Fishman demonstrated in his book “The Wal-Mart Effect,” the often unacknowledged consequence of Wal-Mart is that it has reshaped a huge swath of the American, and perhaps even the global, economy.Wal-Mart has become so big and so pervasive that it effectively sets prices for everyone who sells to it, and everyone who competes against it. It has lowered prices for American workers — even those who don’t shop at Wal-Mart — even as it has done much to destroy the American labor movement and to encourage the offshoring of American jobs. It has changed how goods are shipped, packaged and produced. It has, at different times, encouraged devastating environmental practices and admirable ones. Any accounting of Wal-Mart’s effect on workers has to go far beyond a simple look at the wages they themselves pay to their direct workforce. See, for instance, this Wall Street Journal article on what happened in Thailand after Wal-Mart demanded higher standards from its shrimp suppliers.Back in 2006 and 2007, I spent quite a bit of time reporting on the Wal-Martization of the economy, and I never came across an accounting I found sufficient. Whether Wal-Mart has been, on net, “good” or “bad” is a complicated question to frame and a devilishly tough one to answer. Soon, I’m sure, the question will be whether Amazon.com has been good or bad. I wish I had a definitive answer. All I’m certain of is that Wal-Mart has been — and Amazon.com will be — economically transformative. If anyone knows of useful, recent research on the topic, please leave a link in the comments.

© The Washington Post Company

Compare the arguments put forth in Articles 4 and 5---List 3 of the most compelling pieces of evidence you found:1.

2.

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3.

Which perspective do you agree with more?

Explain.

Article 6: After Sales Plummet, Walmart Realizes It Can’t Run Stores On Temps AloneBy Aviva Shen on September 24, 2013 at 9:54 am

After cutting employees’ hours so deeply that stores could not keep their shelves stocked, Walmart is adding more full-time workers in time for the holiday shopping season. The retail giant has been shedding customers recently due to disorganized stores and empty shelves.

Walmart started aggressively cutting staff during the recession. Over the past five years, its total American workforce dropped by 120,000, even as the company opened more than 500 new U.S. stores. The result is longer check-out lines, backlogged inventory, and poor customer service — not to mention employee protests all over the country. Now, amid plunging sales and massive strikes, even Walmart has conceded it can’t run a business on a skeleton crew. Over the next few months, the company will move 35,000 part-time workers to full-time, and another 35,000 temporary workers will become part-time staff.

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1. Why did Walmart hesitate to increase its full-time staff? Why rely so heavily on temp workers?

2. What’s changed that is causing Walmart to start hiring full time and part-time staff again?

After the Affordable Care Act kicks in January 1, Walmart’s new full-time employees will be eligible for health insurance after 90 days, a vast improvement on the retailer’s usual 6-month waiting period. To qualify for benefits, part-time staff must work an average of 30 hours a week for a year — no small feat at a company known to abruptly cancel shifts, cut hours, and lay off workers at any moment.

While most stores will hire an army of temporary workers to handle the holiday season rush, Walmart has been relying almost exclusively on temps year-round. A Reuters survey of 52 stores in June found that most were hiring only temps, who must re-apply for their jobs after 180 days. Meanwhile, existing long-time employees have seen their hours reduced drastically.

Walmart, as the nation’s largest private employer, exerts a powerful influence on other large companies. As Walmart slashed employees’ hours, jobs report after jobs report showed the biggest gains in a part-time, low-wage workforce.

3. How will the Affordable Care Act (aka Obamacare) impact Walmart and Walmart employees?

4. What is the potential problem with workers seeing any improvement from the Affordable Care Act?

Not only is the Walmart model bad for workers and business, it’s also terrible for the taxpayer. The company’s refusal to pay a living wage and benefits forces most of its

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employees onto public benefits like food stamps and Medicaid. Each store’s workforce consumes as much as $1.75 million in public benefits each year.

Walmart defends its poor labor practices as necessary to keep prices down. But as Walmart’s sales dropped with its payrolls, other retailers have proven that treating workers well is not mutually exclusive to a good deal. Walmart’s competitor, Costco, offers its employees an average wage of $21.96 an hour, about 40 percent more than Walmart employees make. Costco enjoyed a 19 percent increase in profits last quarter as Walmart sank, generating much more revenue and profit per worker. WinCo, a smaller grocery chain based in Idaho, boasts full health benefits for anyone working over 24 hours a week and retirement accounts for more than 400 workers — while maintaining prices even lower than Walmart’s.

5. According to this author, are Walmart’s hiring practices good for America?

6. Why or why not? What’s the author’s argument?

Inside the World’s Largest Company, from Frontline PBS

Use the following document as a supplement for the documentary, as much of this information was presented in the documentary. You are to read, underline/highlight, and use this information in the Socratic Seminar and in your position paper. You will be graded on how well you analyze (underline/highlight/notes in margins) this document.

During the last two decades, Wal-Mart has been able to take advantage of the rise of information technology and the explosion of the global economy to change the balance of power in the business world. Here, Edna Bonacich, professor of sociology; Jon Lehman, a former Wal-Mart store manager; Nelson Lichtenstein, professor of history; Ray Bracy, Wal-Mart's vice president for federal and international public affairs; Gary Gereffi, professor of sociology; and Alan Tonelson of the U.S. Business and Industry Council offer details on how Wal-Mart exploited these to forces to become the world's largest company.

Professor of Sociology, University of California, Riverside

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… What are the secrets of Wal-Mart's success?

There are many secrets, but let me just focus on one issue; that is, their control of logistics. So their leadership, particularly their post-[Sam] Walton leadership ... had the wisdom to hire logistics people who are very, very competent. And basically, they gained control over the supply chain. That was their goal, and they put in information technology that enabled them to collect it and disperse this information. They have the largest commercial satellite system in the

world. They have satellites that are collecting information and beaming it down to their vendors. ...

So the idea is to master the process of production, movement of the goods, warehousing of the goods, making sure that it arrives at the right place at the right time. That's what Wal-Mart is so good at. And they're very good at squeezing the price out of that. So they insist that it be done cheaply, it be done accurately, it be done quickly.

And they determine what it is they want and when they want it?

Yes, I believe they do. ...

What is it that enables Wal-Mart to know what it wants, when it wants [it] and where it wants it?

The bar-coding revolution… That little bar code that you see [has] everything [on it]: which company it is and exactly what product [it] is; a shirt of a certain size, a certain color, short sleeves, with pockets, every little detail -- a precise description of the product.

When they scan that in when you buy it, that information is immediately collected. So they know where you bought it; they know the brand name and so forth. All of that is put into the information system. And then, if you have a good partnership with your vendor, that [information] is beamed down to them, and they know [what] has sold. They know, "We need to reproduce this." …

Why does it give Wal-Mart power, if it's dealing with the shirt makers, or with Procter & Gamble making hairspray or soap or whatever? You talk about a revolution and changing relationships. …

Part of Wal-Mart's power lies in its sheer size. There's a kind of building effect that

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occurs. ... They form a monopsony: in other words, a single buyer for a number of major products. So they are the major buyers. They don't control 100 percent of the market, but they may control 38 percent of the market for [several] goods. They are the largest toy seller. They are the largest grocer. So there are large products that they control. And then the manufacturers are basically stuck having to sell to them. If they don't sell to [Wal-Mart], then they're in deep trouble. So there's a big volume effect. ...

Wal-Mart's big, but is that really the only source of its power? I mean, what gives Wal-Mart the incredible leverage it has in the marketplace?

Wal-Mart's leverage lies in the fact that they are at the end of the supply chain: in other words, that they front with the consumer, and the transaction of selling the goods is under their control. Therefore, they know what is being sold, and they're able to use that information to tell the producers what needs to be made, when, where. They also know what prices are popular, so they are able to say: "We want to sell this at a certain price. You make it at a certain price, or we're not going to work with you."

So the manufacturers are dependent on Wal-Mart for knowledge of the market?

That's right. And the manufacturers are dependent on Wal-Mart for being able to sell their goods at all. … And the shelf space is absolutely critical to their power. In other words, there are some industries that don't depend on large retailers, like the automobile industry, which still controls its dealers. The dealers are small and don't have power, and it's General Motors and Ford that control them.

But in these mass consumer-merchandise [industries], the retailers are the ones that have grown in power and have become enormous and incredibly wealthy. And you can see that shift in the way that the Fortune 500 has changed. In other words, it used to be General Motors and Exxon that dominated the Fortune 500 for years. Now Wal-Mart is number one. It shifted in 2002, I believe, and they now are the largest corporation in terms of sales in the world, let alone in the United States, and they're growing at something like a 15 percent clip. So there's no hope of anybody catching them up, unless they have a large consolidation of some kind.

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Former Wal-Mart store manager

... What do you get from a bar code when you're running Wal-Mart or a Wal-Mart store?

Well, the amount of merchandise now that you can get through the computer systems and bar codes, universal product codes, is -- believe it or not, you can track sales on specific items, specific weeks, specific days, specific hours of the day, when you sell merchandise the most. You can find out what size of toothpaste is your best seller, what times of the year you sell that toothpaste. You can track sales spikes during

the year, during certain seasonal periods and --

Clothes.

It's incredible.

Sizes of clothes.

Clothes, sizes, colors, flavors -- all of those things. It's really incredible.

So what does that mean? ... Step back and describe how this thing operates. ... What happens when a sale is made?

OK. Well, let's talk about [cat food]. Let's say you have a cat, and your cat likes tuna-flavored 9 Lives or something. So you go to the counter, and you pick up some tuna 9 Lives. And maybe you pick up some chicken- and some beef-flavored as well, and you take all that to the cashier. ...

Well, as soon as that cashier picks up the cans of cat food and scans it, then the cat food is recorded by the computer. The sale's recorded, and then an order is generated. An order is automatically generated that evening at midnight, when the home office pulls that information through their data ports. Then that order goes to the distribution facilities throughout the company, and that distribution facility, the warehouse, fills that order, and it's sitting back on the shelf the next night or the following night. ...

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So the efficiency is enormous.

Oh, yeah. And it has to be. And it keeps getting more and more, faster and faster. ...

Professor of Sociology, Duke University

I think one of the secrets of Wal-Mart's success was that they took their technological sophistication from the U.S. market in terms of information technology and logistics and distribution-center management and took it global. And in particular, when they went to China, they had managed to marry the high-technology system in terms of transportation of goods and delivery of goods with low-cost production in Chinese factories. So Wal-Mart has married high tech and low tech in the U.S. retail revolution.

And even though others went to China before them, like Sears, like JCPenney, like Kmart, they were the first to take a highly technical, globalized supply chain to China. Is that it?

Other U.S. retailers have been doing business in Asia and China for a long time. I don't think any other retailer has been as good as Wal-Mart in making that China sourcing a high-tech business venture. ...

Fellow, U.S. Business and Industry Council

China is a godsend for companies like Wal-Mart because low Chinese production costs let it widen profit margins. Wal-Mart can't really widen profit margins by raising its own prices very much, but it can widen profit margins by lowering costs, and going to China is a great solution for lowering the costs. ...

So what you're saying is Wal-Mart is not only supplying consumers with lower-priced goods from China, it's boosting its own profits by using stuff that comes

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from China?

Wal-Mart is clearly boosting its profits by encouraging its own suppliers to move to China. Wal-Mart is a very well-managed firm. It's got the art and science of retailing down, and it makes a lot of money doing that, but getting more and more goods from China is a big driver of Wal-Mart's rising profits.

Walmart at a Glance (from Frontline,PBS)

Here are some stats and facts that capture Wal-Mart's size and scale.

100 million: The number of people who shop at Wal-Mart's 3400 American stores every week.

50 million: The amount of square footage Wal-Mart plans to add this year, including 50-55 new Wal-Mart stores, 220-230 new Supercenters, 35-40 new Sam's Club and 130-140 new international stores. [View a chart of Wal-Mart locations worldwide, as of Jan. 31, 2004.]

1.2 million: The number of Wal-Mart associates in the U.S. Any full- or part-time Wal-Mart employee, up to and including the CEO, is considered an "associate," in Wal-Mart parlance. Internationally, Wal-Mart employs an additional 330,000 associates.

600,000: The number of new employees Wal-Mart hires each year. The company's turnover rate is 44 percent -- close to the retail industry average.

1979: The year Wal-Mart's sales first top $1 billion.

$256 billion : Wal-Mart's sales in 2003. In the words of Wal-Mart CFO Tom Schoewe, Wal-Mart's sales are equal to "one IBM, one Hewlett Packard, one Dell computer, one Microsoft and one Cisco System -- and oh, by the way, after that we got $2 billion left over."

35: The number of Wal-Mart Supercenters in China.

$15 billion: The amount of Chinese products Wal-Mart estimates it imports each year; others suggest the number may be higher.

$120 billion: The U.S. trade deficit with China in 2003.

8 percent: The amount of total U.S. retail sales, excluding automobiles,

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accounted for by Wal-Mart.

$9.98: The average full-time hourly wage for a Wal-Mart employee. The average full-time hourly wage in metro areas (defined as areas with a population of 50,000 or more) is $10.38. In some urban areas it is higher: $11.03 in Chicago, $11.08 in San Francisco, and $11.20 in Austin.

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