How Walmart Affects the American Economy and Labor Market
This paper analyzes the economic impact of Walmart — the world's largest retailer — on American consumers, small businesses, employees, and suppliers. Beginning with a history of the company's U.S. origins and global expansion, the paper examines Walmart's strategy of locating stores on the outskirts of towns, pricing competitors out of business, and leveraging enormous buying power to extract concessions from suppliers. The paper also addresses the acceleration of U.S. manufacturing outsourcing to China, suppression of wages and labor rights, and Walmart's public relations tactics. It concludes that Walmart's unchecked growth threatens healthy market competition and violates core American labor values.
- Introduction: Walmart as a Global Retail Giant: Walmart's scale, origins, and global reach
- Expansion Strategy and Impact on Local Businesses: Outskirts strategy, low pricing, and small business closures
- Effects on Employees and Labor Conditions: Job losses, lower wages, and weakened labor unions
- Walmart's Influence on Suppliers and Outsourcing: Supplier pressure, China imports, and factory conditions
- The Shift in Bargaining Power and Information Control: Retailers overtaking manufacturers and PR tactics
- Conclusion: Competition, Monopoly, and the Call for Change: Market competition, monopoly risks, and reform demands
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What makes this paper effective
- Relies heavily on direct quotation from primary and journalistic sources, giving specific data points (e.g., $12 billion in Chinese imports, 13 cents per hour wages) that ground abstract economic claims in concrete evidence.
- Moves logically from Walmart's internal strategy to its external effects — first on local businesses, then employees, then suppliers — building a layered critique that grows in scope and severity.
- Balances Walmart's own stated rationale (its website language about adapting to local cultures) against critical third-party sources, creating an implicit contrast that strengthens the paper's argument.
Key academic technique demonstrated
The paper demonstrates effective use of multi-source synthesis: it weaves together economic analysis, investigative journalism, and activist commentary to construct a multi-angle critique. Rather than relying on a single perspective, the author triangulates claims about Walmart's business model from trade publications, PBS documentary sources, and academic research, lending credibility to each successive point.
Structure breakdown
The paper opens with a description of Walmart's scale and history, then traces its expansion strategy. Subsequent sections address impacts on local businesses, employees, and suppliers in turn. A section on bargaining power and information control adds depth before a concluding argument about market competition and the need for reform. The bibliography includes seven sources spanning corporate, journalistic, and advocacy perspectives.
Introduction: Walmart as a Global Retail Giant
Walmart is considered the largest retailer in the world by global sales. It is a discount chain that originated in the United States, with stores located in many towns that, depending on the specifics of each location, offer a wide range of products. Its "SuperCentres" span approximately 150,000 square meters — about four times the size of an average supermarket — and carry around 150,000 types of products, roughly six times the number found in ordinary supermarkets.
Starting in 1962 as a national company operating only in the United States, Walmart expanded internationally in 1991, when a Sam's Club opened near Mexico City. Sam Walton, the successful entrepreneur who founded the company, saw his firm grow rapidly worldwide. Currently, there are more than 2,660 units operating in fourteen countries, with more than 500,000 associates residing in Argentina, Brazil, Canada, China, Costa Rica, El Salvador, Germany, Guatemala, Honduras, Japan, Mexico, Nicaragua, South Korea, Puerto Rico, and the United Kingdom.
The company's expansion was achieved through a blended approach of building new stores and acquiring existing retailers. Regarding its global strategy and local focus, Walmart's management has stated: "Despite obvious cultural and business challenges, Walmart International has experienced success because of its ability to transport the company's unique culture and effective retailing concepts to each new country. The division makes a concerted effort to adapt to local cultures and become involved in the local community. Associates respond to customer needs, merchandise preferences and local suppliers. By serving each hometown in the same way, Walmart International has realized significant growth with potential for much greater development worldwide" (Walmart website).
Expansion Strategy and Impact on Local Businesses
Analyzing the expansion policy that Walmart adopts, it is important to note that it does not operate similarly to other retailers. Instead of opening stores in commercial areas, the company chooses locations on the outskirts of towns. There, it can build large stores without paying the enormous taxes associated with city-centre locations. After opening, the company works to attract customers to its location rather than meeting them in established commercial centres.
Walmart displays low prices across different types of products — so-called category-killers. Its promotional strategy is highly effective at attracting customers, and by varying which products carry low prices, it ensures that it targets most of the population. These low prices do not threaten the company's sustainability because its considerable resources allow it to operate at a loss for extended periods. Customers find the low prices attractive and, therefore, shift their spending away from established local stores toward Walmart.
"But every time a shopper saves 40 cents on a tube of toothpaste at Walmart, a local shop loses a sale. Soon the financial reserves of small shop owners are depleted and local businesses start folding. According to an Iowa State University study, five years after the opening of a new Walmart, stores within a 20-mile radius suffer an average 19 per cent loss in retail sales. [...] The formerly thriving towns and neighborhoods soon resemble ghost towns" (Mander and Boston, Wal-Mart Worldwide, The Making of a Global Retailer).
It has been shown that new Walmart stores effectively close down most existing local stores. The only businesses able to survive are those offering products not found inside the Walmart chain — though even this is a temporary situation, as the corporation continuously expands its variety of items. Because of its tremendous buying power, distribution efficiency, and low labor costs, the corporation maintains a decisive competitive advantage.
Effects on Employees and Labor Conditions
Nevertheless, the benefits that Walmart brings to its customers are outweighed by the negative effects it generates. Many people lose their jobs; others must accept lower salaries and mandatory overtime. As the company grows stronger, employee benefits decline. Labor unions are practically eliminated, leaving workers with no choice but to accept the firm's terms and conditions.
Conclusion: Competition, Monopoly, and the Call for Change
As a conclusion, we must recognize that the most important force managing a healthy market is competition. As Walmart extends beyond control, the U.S. market is thoroughly affected, and ultimately the global market risks being held under similar sway. Competition is vital because it establishes prices by confronting demand and supply. In a market controlled by a monopoly, the dominant company can run its business without paying meaningful attention to the parties it affects — customers, employees, and suppliers alike.
Americans themselves have initiated movements against the colossal power of Walmart, demanding that it change its business conduct. "The truth is that Walmart has let America down by lowering wages, forcing good-paying American jobs overseas, and cutting costs with total disregard for the values that have made this nation great. Walmart has needlessly exploited illegal immigrants, faces the largest gender discrimination lawsuit in history, forced workers to work in an unsafe environment, and — incredibly — broken child labor laws. America's largest employer must reflect America's values. But Walmart will never change on its own. Lee Scott, Walmart's CEO, mistakenly thinks he only answers to a few wealthy shareholders who own Walmart stock. Lee Scott is wrong. Walmart and Lee Scott must answer to the American people" (Why Wal-Mart Must Change, Wake-Up Wal-Mart).
Bibliography
"International Operations." Walmart website, 14 November 2006. http://walmartstores.com/GlobalWMStoresWeb/navigate.do?catg=369
Mander, Kai, and Boston, Alex. "Wal-Mart Worldwide, The Making of a Global Retailer." The Ecologist, vol. 25, no. 6, November/December 1995.
Fishman, Charles. "The Wal-Mart You Don't Know." Fast Company, December 2003. http://www.fastcompany.com/online/77/walmart.html
"Why Wal-Mart Must Change." Wake-Up Wal-Mart website.
Smith, Hedrick. "Who Calls the Shots in the Global Economy?" Frontline, November 2004. http://www.pbs.org/wgbh/pages/frontline/shows/walmart/secrets/shots.html
Barbaro, Michael. "Wal-Mart Enlists Bloggers in P.R. Campaign." The New York Times, March 2006. http://www.nytimes.com/2006/03/07/technology/07blog.html
Corn, Josh. "The Wal-Mart Crusade." Find Articles, July 2006. http://www.findarticles.com/p/articles/mi_m1568/is_3_38/ai_n16545982
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