Wal-Mart, Kmart, and Target: Retail Giants Reshaping America

Introduction: The Rise of Discount Retail in America

The dream of Sam Walton was a simple one: "Give people high value, low prices and a warm welcome" (Walton, 2003). From an early age, he worked hard delivering what customers needed and wanted at a reasonable price — selling newspapers and milk from the family cow (Huey, 1998). The development of Wal-Mart, Kmart, and Target brought about a retail industry that is highly competitive within the communities of America. Over the years, a trend emerged that encompasses each corporation. This paper discusses the phenomenon of Kmart, Wal-Mart, and Target and how these large corporations have affected today's economy, communities, and lifestyles.

On July 2, 1962, at the age of 44, Sam Walton opened his first Wal-Mart store in Rogers, Arkansas. S.S. Kresge launched Kmart that same year, and Dayton Hudson began its Target chain. Discounting had hit America in a big way, and the world of retail changed significantly (Huey, 1998). With the extensive growth of the Wal-Mart organization and its expansion into a Supercenter format, Wal-Mart took the country by storm, eliminated much of the competition, and simultaneously created opposition to what critics viewed as an emerging monopoly. Kmart struggled to keep up and had to close several stores in many areas, eventually filing for bankruptcy on January 22, 2002 (Turner, 2003). Kmart responded to competitive pressure by rebounding with its own Supercenter format. Target also flourished by concentrating its expansion in larger urban markets and appealing to customers who wanted something different from what Wal-Mart offered. Target's merchandise, clean store environment, and strong customer service are methods the company utilizes to keep customers satisfied. The low prices and quality products are attractive, but they are not the only factors that distinguish Target from its competition. The "human touch" is remarkable and draws people back for repeat visits (Rowley, 2003). These companies have each succeeded as visionary companies sharing common core values (Collins and Porras, 2002). Each corporation works to improve the life of the customer, build employee relations, and provide competitive prices with an appealing selection. While Wal-Mart has adapted to the way America works and lives, Kmart and Target have similarly evolved to meet the lifestyles of contemporary Americans.

Each company must anticipate where trends are headed and work to understand the implications of social and demographic currents in fashion, household goods, automotive products, and food.

The phenomenon involves all people in every community. Everyone across the nation is involved, voluntarily or involuntarily. The ability to shop week after week because of the variety, the ease of locating many items under one roof, and lower prices helps to create this phenomenon. Not only do people enjoy shopping at these stores, but customers also feel valued through the friendliness of employees and the excellent customer service that each corporation takes pride in. While the average American spends hard-earned money at Wal-Mart, the nationwide chain boasts "a top-line revenue figure of more than $220 billion" (Craig, 2002). The other chains also report large numbers, with record growth seen each year and optimistic projections continuing.

The retailing industry keeps pace with customer needs and wants through technology. As Greenhouse (2004) explains, "When retailing began centuries ago, salesmen were needed to explain goods to customers. But Wal-Mart follows a different model. Using technology, the company collects detailed information on the billions of purchases its customers make each year. Based on that information, it orders products at low prices, confident that customers will like the merchandise and the prices, thus eliminating some of the need for an informed sales force."

In the world of retail, there is also much controversy about the merchandise placed on the shelf for purchase. While condoms, hunting rifles, cigarettes, and R-rated video games may be purchased at these stores, marketing personnel do not permit the sale of handguns, rolling papers, or the film South Park (Saporito & Thigpen, 1999). Wal-Mart representatives maintain that they are a family store and will market their merchandise to reflect family values. While retailers know they cannot be the nation's conscience, their leadership in determining what to sell affects many moral decisions of their customers. Soderquist, senior vice chairman of Wal-Mart, stated, "The watchword for all of our people is 'Do what is right.' That's what we really preach and teach and we want, but there's so much gray" (Saporito & Thigpen, 1999). Strasser (Greenhouse, 2004) states that low-cost goods affect our "global environment, global human rights and the global labor force."

Consumers are being encouraged to overconsume and overdevelop, thus placing a strain on natural resources.

Sam Walton's "drive to dominate" (Rowell, 2000) has also created financial hardships for other companies such as Kmart, Target, and the small-town, family-owned stores where so many Americans once bought their groceries and clothing. The margin that divides Wal-Mart from "its nearest competitor is more than $150 billion" (Craig, 2002), and this figure continues to grow rapidly. Wal-Mart's price-matching strategy is a marketing technique that keeps consumers out of competitors' aisles and keeps dollars in Wal-Mart's registers. Wal-Mart executives have also begun eliminating cashier positions by installing self-checkout lanes, thereby keeping prices down by reducing employee hours.

Wal-Mart's Contribution to Society

Wal-Mart maintains its commitment to each community and demonstrates responsibility as a corporate neighbor. Local Wal-Mart stores have made a difference in their communities by (Wal-Mart.com, 2003):

Underwriting college scholarships for high school seniors. Raising funds for local children's hospitals via the Children's Miracle Network Telethon. Educating the public about recycling and other environmental concerns through a "Green Coordinator," a specially trained associate who coordinates efforts to make each store environmentally responsible. Sponsoring a Community Matching Grant program, which involves fund-raising efforts by nonprofit organizations with the participation of Wal-Mart associates.

Sadly, while Wal-Mart stores strive to show leadership and support within each community where they are located, critics argue the company has created a legacy whose "success has come at a huge ecological, cultural and social price" (Rowell, 2000). Rowell states that opponents are convinced that Wal-Mart has "systematically scarr[ed] hometown America, is notorious for low wages, and that there is evidence that it imports goods from nations where the workers are either enslaved or paid a pittance" (Norman, p. 15, 1999). While competitors are forced out of business in surrounding areas, the large discount chain also strains local communities and can leave behind sprawling vacant properties.

Growing Opposition to Wal-Mart

This phenomenon has many effects on individuals and communities and shapes the identity of the nation. Many problems and issues are a direct result of Wal-Mart's influx into America's communities. Kmart and Target struggle to survive. Wal-Mart gains superiority by outcompeting rivals, and no company is immune. Kalish (Saporito, Boston, Gough, & Healey, 2003) states that "Wal-Mart's Supercenters are able to underprice their supermarket competitors about 15%."

Research (Rowell, 2000) shows that within "ten years of Wal-Mart moving into the state of Iowa, the state lost over 555 grocery stores, 298 hardware stores, 293 building suppliers, 161 variety stores, 158 women's clothing stores, 153 shoe stores, 116 pharmacies, and 111 children's clothing stores." Study after study shows that when Wal-Mart comes into a town, jobs are destroyed, creating a weaker local economy. When Wal-Mart entered Virginia, the company promised the arrival would create "246 part-time jobs." However, 248 full-time jobs were lost within the local business sector as a result. Part-time jobs do not pay full benefits, so many Wal-Mart employees do not have access to company-covered health insurance or retirement plans (Quinn, 2000). AFL-CIO President John Sweeney argued that Wal-Mart's practices were dragging the economy back to the 19th century. That argument is complicated, however, by the fact that Wal-Mart's wages are competitive with those paid by rivals such as Kmart and Target, and "over 800,000 new jobs are expected to be created by Wal-Mart in the United States over the next five years" (Saporito, Boston, Gough, & Healey, 2003).

Opposition remains a growing topic among food retailers when a Wal-Mart considers moving into an area. A study (Huang, Epperson, Cude, & Woo, 2002) describes the results when a Supercenter opened in Athens, Georgia, on January 25, 2000. Athens, with a population of 101,439 (Bureau of Labor Statistics, 2000), is considered a small metropolitan area that was home to several supermarkets, including Bi-Lo, Food Lion, Harris Teeter, Ingles, Kroger, and Publix. The addition of the Supercenter not only created price reductions but prompted each supermarket to develop creative pricing strategies designed to attract consumers (Slater, 2003). Other factors such as location, price clubs, loyalty cards, and loss leaders contributed to varying degrees of success among the food stores. Wal-Mart countered each store's tactics through "price-matching" — a strategy where Wal-Mart matches a competitor's price when a consumer brings in the competitor's advertisement for comparison shopping. The sale products must match by brand name and weight, with store brands being substituted for store brands. Americans save many dollars each year on their household budgets by using this price-matching strategy.

Conclusion: The Future of Retail Giants in American Life

There will always continue to be adversaries who oppose the building of a Wal-Mart within a community. Target and Kmart will continue to gain and hold ground. However, are critics considering the overall community picture, or only a narrow snapshot that involves their own business or lifestyle? Is it time for a change? Possibly. Can these major corporations provide that change? Probably. One must reflect on the overall benefits that each can provide. All three major chains allow consumers to purchase quality goods at a reasonable price while providing a pleasant shopping atmosphere. Where else can one have a car serviced while purchasing groceries or buying a new outfit? Many Supercenters have incorporated banks, photo studios, eyewear centers, and phone kiosks. Such convenience allows shoppers to combine errands effectively and manage their time wisely. Will America continue to shop with these conveniences and benefits? By all indications, yes.

References

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