Why We Hate to Love Walmart (and Why It Can Still Surprise Us)

×
BGHMJ8 A woman shops inside a Walmart Supercenter in Arkansas, U.S.A. WALMART; WAL-MART; WAL; MART; SUPERCENTER; RETAIL; WALMART
Alamy
Is any U.S company more reviled than Walmart (WMT)? Documentaries, songs, books and sites sport anti-Walmart sentiments. The company -- which reports its quarterly earnings on Thursday -- is a lightning rod for negative opinion from liberals and conservatives. Considering that a "hate+Walmart" search on Google (GOOG) yields about 40 million results, one wonders how the world's largest retailer and largest U.S. private employer stays in business. Yet millions of us love shopping there enough for the company to net sales of $466.1 billion for the fiscal year ended January 2013.

The Look

Given its cookie-cutter reputation, you might expect that all Walmarts would be created fairly equal -- and that they'd all look like the one closest to you. In fact, the stores come in an array of different sizes and styles: large Supercenters that include supermarkets, neighborhood size (the average Walmart), discount stores, Sam's Clubs and small format (including Walmart Express, Walmart on Campus, Amigo, Super Ahorros and Supermercado).

One of the most common complaints about the stores is aesthetic: Walmarts are perceived as dirty, noisy, crowded, all the same big box. Of the three Walmarts within 15 miles of my home, that is only true of the one that serves the most demographically and economically diverse clientele. Within a block of rivals Target (TGT), Kohl's (KSS), Best Buy (BBY) and Home Depot (HD), it's a depressing, dispiriting place to shop.

The second is in a semi-rural town and is much cleaner and quieter -- a joy to shop in.

The third is a Walmart Supercenter in a bustling small city. It has three (yes, three) beauty salons with spa services, a full-service local bank, an Auntie Anne's and a Subway. It is clean and busy, yet its checkout lines are two to three people deep at most. An assistant manager (who wasn't supposed to talk to reporters at all) likened Walmart to a car with options. Example: his store carried the local high school's colors in various apparel and novelties, but a larger Walmart didn't because it served more high schools.

Wages

Walmart's wage controversy is just one thread in the larger political debate over the minimum wage and U.S. wage stagnation in general. The low wages and part-time hours it offers mean 8 percent to 10 percent of Walmart's 1.3 million U.S. associates have to use food stamps and Medicaid to make ends meet. Conservatives deplore the government aid, and liberals deplore the low wages. The company says its average hourly wage across the U.S. is $12.81 per hour, but this doesn't include part-timers. Officials in big cities like Washington and Chicago have searched their souls about whether they should allow Walmarts to open within their borders, thanks to this issue.

Fanning the fires of anger is the fact that, over the last few years, Walmart's CEOs have been the nation's highest paid, relative to what they pay their workers. Former CEO Michael Duke earned 1,034 times the median Walmart worker salary, according to a Payscale survey in 2013 or 836 times according to NerdWallet's numbers. He also received an outsized deferred compensation package. Doug McMillon is the new CEO, and as an executive vice president, he had a total compensation package of more than $25 million.

Debate rages in the media and academia over what it would cost Walmart and its customers if the company boosted what it paid to a "living wage." According to a policy paper from think tank Demos.org, the company could raise the full-time salary of its average sales associate to $25,000 annually from $18,324.80 (based on independent market research firm IBISWorld's findinghttps://cms.aol.com/554/content/posts/edit/20882658/ of average pay of $8.81 per hour) with only a 1 percent hike in prices. This would cost each Walmart shopper $12.50 more per year, research from Berkeley's Labor Research Center concludes.

Foreign Imports and Trade Practices

Some dislike Walmart because 80 percent of its suppliers are in China, and many of the rest are in Third World countries. Tragedies at factories in Bangladesh and India making products for Walmart haven't improved the chain's image. On the positive side, the company is making an effort to more sustainably source some products, such as fair trade coffee.

But it's not just Third World wages that are affected. The Employment Policy Institute wrote that 200,000 American jobs were lost to foreign manufacturers from 2001 to 2006, thanks to the glut of foreign products imported after Walmart first began expanding its China partnership. A former Texas manufacturer poignantly described how Walmart pressures its U.S. suppliers to make items here as cheaply as possible, also costing American jobs.

Entrepreneurs dream of "making the retail big leagues" by getting a deal to sell their products at Walmart. However, there have long been complaints and lawsuits concerning Walmart's relentless pressure on suppliers to cut prices at the expense of their own margins. This pressure even extends to consumer giants such as Kraft Foods (KRFT), forcing it to lay off 13,500 workers several years ago.

In good news, Walmart is holding an open call for U.S. companies this July to show their products, with a pledge to buy $250 billion in American-made goods over the next decade.

The Competition

Before Sears (SHLD) deteriorated as a major retailer, it was a beloved chain, selling everything a family needed, even kits to build homes. Walmart garners nothing like that warm feeling, yet it sells almost everything one could need, from womb to tomb, including caskets.

It's now a tossup which retailer other retailers fear most: Amazon (AMZN) or Walmart. Whole Foods Market (WFM) just reported disappointing earnings, and its explanation was that Walmart is beating it on organic food, with prices at least 25 percent lower for similar items. Amazon's sales growth of 20 percent can't put a patch on Walmart.com's growth of 30 percent over the last year.

Worldwide, 245 million customers shop Walmart weekly. We love to hate it, even those of us who won't admit to loving its low prices because deep down, we know they come at a cost.

Increase your money and finance knowledge from home

Goal Setting

Want to succeed? Then you need goals!

View Course »

Income Investing

Grow your nest-egg.

View Course »

Add a Comment

*0 / 3000 Character Maximum

47 Comments

Filter by:
Mad Milker

Wal*Mart's Global Procurement Office is in China.
Wal*Mart puts less than 5% foreign in all its stores in China.
Wal*Mart partnered with a billionaire from Hong Kong in 2006 on a port in Mexico.
Wal*Mart commissioned super cargo ships to bring Made In China to America.
1975 the last year America had a trade surplus.
Total US Government Debt in 1975....a mere $533 billion.
It is said one (1) super cargo ship pollutes as much as 50 million cars each year.
It is also said it cost over $90 billion US tax dollars to clean ballast tanks on ships.

What are you saving if Retail makes NOTHING but only moves a country's currency?

.

May 13 2014 at 5:26 PM Report abuse rate up rate down Reply
Iselin007

What was the Maiden name of Union General Judson Kilpatrick's mother? Hint it's the same surname married into CSA General Robert E Lee's family.

May 13 2014 at 2:08 AM Report abuse -2 rate up rate down Reply
Iselin007

You can see the damage all this outsourcing has done to the USA by going to epi.org

Now some questions for the former Confederate states:

Who was the first daughter in law of General Robert E Lee and wife of " Rooney Lee"?

Who married a Cousin of Robert E Lee and served under Robert E Lee's son as a Brigadier General when JEB Stewart was severly injured? You should know the surname because there all descendants of my ancestor.

May 13 2014 at 2:01 AM Report abuse -1 rate up rate down Reply
Iselin007

THE CHINA TOLL
Growing U.S. trade deficit with China
cost more than 2.7 million jobs
between 2001 and 2011, with job
losses in every state
BY ROB E R T E . S COT T
Since China entered the World Trade Organization
in 2001, the extraordinary growth of trade
between China and the United States has had a
dramatic effect on U.S. workers and the domestic economy,
though in neither case has this effect been beneficial.
The United States is piling up foreign debt and losing
export capacity, and the growing trade deficit with China
has been a prime contributor to the crisis in U.S. manufacturing
employment. Between 2001 and 2011, the
trade deficit with China eliminated or displaced more
than 2.7 million U.S. jobs, over 2.1 million of which
(76.9 percent) were in manufacturing. These lost manufacturing
jobs account for more than half of all U.S. manufacturing
jobs lost or displaced between 2001 and 2011.
The more than 2.7 million jobs lost or displaced in all
sectors include 662,100 jobs from 2008 to 2011
alone—even though imports from China and the rest of
the world plunged in 2009. (Imports from China have
since recovered and surpassed their peak of 2008.) The
growing trade deficit with China has cost jobs in all 50
states and the District of Columbia and Puerto Rico, as
well as in each congressional district.
Among specific industries, the trade deficit in the computer
and electronic products industry grew the most,
and 1,064,800 jobs were displaced, 38.8 percent of the
2001–2011 total. As a result, many of the hardest-hit
congressional districts were in California, Texas, Oregon,
Massachusetts, Colorado, and Minnesota, where jobs in
that industry are concentrated. Some districts in North
Carolina, Georgia, and Alabama were also especially hardhit
by job displacement in a variety of manufacturing
industries, including computers and electronic products,
textiles and apparel, and furniture.

May 13 2014 at 1:28 AM Report abuse rate up rate down Reply
Iselin007

Who do you think encouraged the vendors to move offshore to get the contracts?

May 13 2014 at 1:03 AM Report abuse +1 rate up rate down Reply
1 reply to Iselin007's comment
tru.liberal1

If it was anybody other than the consumers of those vendors products, the vendors that followed the encouragement of another would no longer exist as customers would have migrated to the vendors who were listening to them.

May 13 2014 at 8:12 AM Report abuse -2 rate up rate down Reply
WILSON FAMILY

1 Corinthians 10:23-33

May 13 2014 at 12:43 AM Report abuse -2 rate up rate down Reply
hirollerjf

If you like dirty stores & low quality merchandise, then Walmart is for you!

May 12 2014 at 11:36 PM Report abuse rate up rate down Reply
1 reply to hirollerjf's comment
Iselin007

If they used some of that dirt they wouldnt have to import tomatos

May 13 2014 at 2:47 AM Report abuse +1 rate up rate down Reply
cmbluetick

If you folks that work at Wal Marts and want more pay. Here is an idea for a raise and a future.
Quit whinning get some training and get a real job. You say you are part time. That means you have time for training to fit into a better job. Your are losers that do not want to get off food stamps. I can see why you do not want a real job or better pay. Why work for a good wage when you can complain and change the world for the Unions thugs to get rich on your union dues. They made it to costly to build stuff in the USA and forced the big companies to china. WAL Mart can not move to china so the union thinks the strong arm can make them pay or close. Thhey do not need the money to enjoy life. You need them. Go a head put them out of business.

May 12 2014 at 11:35 PM Report abuse -1 rate up rate down Reply
last good man

After 17 years at Wal-Mart and I can tell you they take good care of me, my second family. I have health insurance(I pay a small amount towards it) I have in the past had profit sharing and now a matching 401k contribution, after 17 years and only the last 4 with me putting in a penny I have 130,000 in it, a good start to my retirement savings. I earn close to 90,000 a year and have been since a few years after I started. I also see my company giving away millions and millions to local communities in school grants, civic organizations and disaster relief etc. you don't hear much about these things especially from Wal-mart because their intentions are pure and not PR related. This is a small part of my Wal-Mart story, it's the truth, I love my company.

May 12 2014 at 8:39 PM Report abuse +3 rate up rate down Reply
dlpierce1

I see Walmart contributing millions to communities in philanthropy. Here in Colorado they helped keep the Wild Animal Sanctuary (largest carnivore rescue non-profit in the U. S.) open by providing the food it takes to feed these animals. Saving the TWAS hundreds of thousands a year in cost. You can read more about TWAS at www.wildanimalsanctuary.org.

May 12 2014 at 6:40 PM Report abuse +1 rate up rate down Reply
1 reply to dlpierce1's comment
dougsholmes

Feeding animals is great. Now if they would only pay their real life human employees enough to eat without them having to use food stamps, that would be even better.

May 12 2014 at 7:52 PM Report abuse +2 rate up rate down Reply