New Internationalist

Worldbeaters…

Issue 325

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'An American original,
Sam Walton embodies the entrepreneurial spirit
and epitomizes the
American Dream.'

Citation for the Presidential Medal of Freedom presented by President Bush in 1992.

The Ghost of Sam Walton

'Sam is looking down here and he's very proud,' Vice-Chair Don Sonderquist assured Wal-Mart employees at the company's annual general meeting in 1997.

When he died of cancer in 1992, at the age of 74, Sam Walton was the world's richest man. Since then his creation, Wal-Mart, has expanded with incredible speed and is now bigger than the three next-largest US retail chains combined - with annual sales in excess of $138 billion.

In fact, it is one of the largest corporations of any kind, with 950,000 employees (more than General Motors) and a long-range plan to triple in size again. The largest single retailer of hand guns - among many other things - in the US, it has been expanding fast elsewhere and now dominates retailing in Canada and Mexico too. The invasion of Argentina, Brazil, China, Indonesia, South Korea, Germany and Britain is well underway, with more to come.

Sam Walton was born into a family of Midwest farmers in 1918. His first job after leaving college was with the JC Penney department store in Des Moines, Iowa. Eventually settling in Bentonville, Arkansas, he established a network of stores based on the principle that there was money to be made from large-scale discount retailing at rock-bottom prices in small-town America. Walton would set up stores on cheap, out-of-town sites and then wait for urban sprawl to reach them. For every Wal-Mart opened up, 100 small local businesses would close down.

Parsimony was his watchword. Walton claimed that JC Penney in person had showed him how to wrap packages using less string and paper. He bummed dimes and quarters for phone calls or soft drinks while out on his endless round of store visits. Today the stores are connected to a satellite network that minutely monitors the movement of goods and can even regulate the temperature in individual premises.

In 1975 Walton visited Korea and Japan and was so impressed by workers practising callisthenics and mouthing company cheers that he brought the idea to America. At store openings he would lead employees in a routine that began with a 'Gimme a W!' and proceed through the company letters, pausing only for 'Gimme a squiggly!' at the hyphen, when everyone was expected to crouch down and 'squiggle'. One employee commented: 'I was somewhat embarrassed, but I was also in a minority... When I saw all the old ladies of the lingerie department up on their toes in a frenzy, I learned a little about sheer motivation.'

Keeping organized labour out of the Wal-Mart 'family' became an obsessive feature of the company's operations. When the firm moved into Canada, buying the Woolco chain, it rejected the few stores where unions were already established. Instead Sam Walton preferred to 'Wal-Martize' his employees, calling them 'associates' and offering them profit-sharing options in place of basic, secure benefits. Many are so poorly paid they actually qualify for social assistance in the US. According to the Wall Street Journal, 38 per cent weren't covered by the company's health-insurance plan in early 1999. Hourly rates in Spring 1999 were 14-per-cent below the retail-industry average.

Because of its size, Wal-Mart has acquired enormous power over its suppliers, beating them down to the narrowest possible margins. And it has become a major player in the 'globalization' of production, shifting its sources of supply to low-wage regions. This despite the fact that in Canada, at least, Wal-Mart has always pushed how Canadian its product line is; whenever something is made locally they slap red maple leaves all over it in their advertisements. In August 1999 the New York-based National Labor Committee reported that a Wal-Mart contractor in Bangladesh was paying teenage seamstresses less than half that country's minimum wage, illegally forcing them to work 80-hour, 7-day weeks. Chief Executive David Glass, challenged on the use of child labour in Bangladesh, responded: 'You and I might define children differently.'

With such colossal success the company is indifferent to criticism and even to the law. In April 1999, when Wal-Mart was found guilty of withholding evidence from the courts 15 times in a single year, a judge in Texas imposed an $18 million fine. In August of the same year Wal-Mart agreed to pay $6.4 million to settle a case in which managers twice flatly ignored a court order to stop selling fake Tommy Helfiger clothing.

The Wal-Mart created by Sam Walton exemplifies the immense power now wielded by giant retailers in rich countries and their baleful effect on everything from organized labour to the environment. If the hyper-market and superstore are the cathedrals of consumer capitalism, Sam Walton must be its god in heaven.

sense of humour

In 1984 Walton donned Hawaiian garb and danced the hula down Wall Street, to fulfil a promise he made to his employees that he'd do this if Wal-Mart's pre-tax profits reached eight per cent of sales.

 

animal cunning
Walton issued instructions that all dollar bills were to be placed face-upwards in Wal-Mart tills - that way, he felt sure, employees would feel less tempted to remove them.

Sources: Bob Ortega, In Sam We Trust - the Untold Story of Sam Walton and How Wal-Mart is Devouring the World, Kogan Page, 1999; Bill Quinn, How Wal-Mart Is Destroying America, Ten Speed Press, 1999; Corporate Watch, no 9, Autumn 1999.

If infamous or not-so-infamous
big shots are beating up on you, let
us know at worldbeaters@newint.org

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