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The End of Walmart

There was a time when Wal-Mart did not conjure up the negative stereotypes it does today. There was a time when the discount retailer had a much lower profile, maintaining strongholds in the South and Midwest. Slowly but surely, Wal-Mart pushed east and west simultaneously, causing a culture war. Wal-Mart has been blamed for everything from grocery store strikes to the oppression of Chinese workers. Marked by more and more rapid expansion, and cutting prices, the question remains: what happens when there is no new place to open a Wal-Mart? Will stores raise prices when they are the only store in town?
Wal-Mart has found itself unable to make inroads where it is weakest: California and the Northeast. Some cities, like Rosemead, California have capitulated to the desire of the retail giant to open Supercenters there. Others like Inglewood, have resisted bitterly. And surprisingly, of all the things that you could imagine the corporate officers fear, this inability to open new stores is chief among them. Growth is a principal concern for the company; if new stores do not open, it is not as profitable. But there are finite limits to where stores can be opened, and the question remains what happens when there is a Wal-Mart on every corner.
The answer may be more visible than every person thinks. After all, while Wal-Mart is a publicly traded company, it has the majority of its stock owned by the Walton family. And the value of the stock has fluctuated from the 1990s into the new millennium. But if growth powered the stock’s rise, will lack of growth cause it decline, and the rich family’s fortunes with it? The answer appears to be yes and no. Currently, Wal-Mart does not have higher wages because of an anti-union environment. Healthcare and other benefits are non-existent for the majority of employees. Raising those standards could cost the company its bottom line.
Even if the only limit to growth is Wal-Mart’s own success, it still seems possible that the ultimate end-game for the Waltons would be to sell their stock. And had the stock market not crashed in 2000, perhaps this would have been fait accompli. With the economy rebounding, and investors moving back into stocks after cautious avoidance in light of such corporate scandals as Enron, the Waltons may be ready to start selling their stock.

posted by Thomas at 9:56 PM 0 comments