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Wal-Mart Chain Remains Dedicated to Customers

In business, there is big, bigger... and then there is Wal-Mart, the largest retailer and private employer in America. Sam Walton was the man behind the retail chain. A southerner with a hard work ethic, Walton had an idea more than 40 years ago that turned into a great American success story.

At the heart of Walmart's success lies the customer, the person Sam Walton referred to as the "boss." When he opened his first store in Arkansas back in 1962, he had a simple business plan… please the customer by offering friendly service, and a variety of products at the lowest available prices.

Mia Masten works for Wal-Mart's corporate affairs division. "Sam Walton's philosophy was respect for the individual -- the customer always come first."

That formula became a blueprint for the company's growth. By the time Sam Walton died in 1992, Wal-Mart was a household name with locations all across America and in eight other countries. Today the company employs over 1.6 million people.

Tim Kane, an economist from the Heritage Foundation says Wal-Mart's innovative spirit has much to do with that success, "It has done things in retail business that people for decades. People thought retail is retail, what can you do? "

One of the things Wal-Mart did was to come up with the idea of providing the American consumer with one-stop shopping. It built super-sized stores where customers could find everything from clothes to groceries all under one very big roof.

"Americans don't want to have to shop at seven different places to find three things, a t-shirt and grapes and paper, if you can go to one store and get what you need, it adds to efficiency, and lowers prices." says Mr. Kane.

By the end of this year, Wal-Mart hopes to build 250 more super centers bringing the total of super-sized Wal-Mart stores to 1,900 -- and that doesn't include its regular-sized stores that are well over 8,000 square meters. Customers love the concept.

One shopper says, "You can find whatever you're looking for and it's priced reasonably. It gives you some options and it's cheap."

Another shopper says, "I like everything about it; the prices, the people."

On average, over four million customers shop at Wal-Mart every month. And last year alone, the company brought in over $250 billion in sales. In order to keep those sales growing, Wal-Mart has mastered the use of information technology.

Every time a cashier scans a product, that information is stored in a database and studied by Wal-Mart to track what customers are buying and when.

Mia Miesen adds, "We'll notice what clothing is selling better… what colors are selling better."

And the company stocks its stores accordingly. Knowing what sells and what does not, has given this retail giant an upper hand. But that is only half the story. Because Wal-Mart is the largest retailer on the block, it has incredible buying power, and can call the shots on [dictate] what U.S. manufacturers produce, and for how much.

Tim Kane explains,"They've really made an efficient supply chain, they've squeezed a lot of the excess cost and the fat out. Because they are such a big player they can demand that wholesalers can be very competitive with one another."

By controlling production costs, Wal-Mart is able to offer its customers those "everyday low prices" which, on average, are 20 to 30 percent lower than its competitors. But while that's good news for customers, critics worry that it is costing American jobs.

Alan Tonelson heads the U.S. Business and Industry Council, an organization which represents small and medium sized manufacturers who have felt the pinch of Wal-Mart's power. "The problem is that even though Wal-Mart does provide relatively low prices by U.S. standards, its business model forces the enormous number of companies that supply it to send work overseas."

Wal-Mart officials disagree. They claim the company spent 18 billion dollars on products from China last year… an amount far less than products purchased from suppliers in the US.

Mia Matsen states, "We actually spent over $137.5 billion from over 6,800 U.S. suppliers. If you were to put that money together and put it in a business, it would rank number five in the Fortune 500."

Add to those numbers the fact that Wal-Mart is the largest private employer in America, and you begin to see the enormous effect this company has on a large segment of the U.S. economy. That kind of power has won Wal-Mart both praise and criticism.