With a small-town culture, Wal-Mart dominates The company had to
learn to do many things on its own because it started in little
Bentonville, Ark., but that helped it become a retailing power. Has
it gone too far?
By David Faber 8:57 AM EST November 10, 2004
Love it or hate it, Wal-Mart (WMT, news, msgs) is one of the
greatest powers American business has ever seen. This year its
annual sales will top $270 billion. It's the largest private
employer in the United States with more than 1.2 million workers.
Wal-Mart sells more DVDs, groceries, bicycles, guns, diamonds,
engine oil, bedding, detergent, dog food, sporting goods, CDs, socks
and toothpaste than any other company in the world. It's the
nation's biggest film developer and optician, largest private fleet
truck operator, energy consumer and real estate developer.
To some Wal-Mart is an example of capitalism at its finest, a
company whose success allows people of limited means to live well.
To others, Wal-Mart is a predatory monster responsible for low
wages, suburban sprawl and lost jobs.
"They're exploiting workers by the conditions that they have them
working under, by the low salaries that they pay them and by
depriving them of benefits that workers are entitled to," says John
Sweeney, AFL-CIO president.
"If you listen to the outside world and you said, 'why is Wal-Mart
different,' the people who don't particularly care for us might list
all things you might have asked me about, health insurance, wages or
whatever else. But the truth is, what makes us different is our
logistics, our systems, our culture," says CEO Lee
Indeed, what's important at Wal-Mart is sustaining the culture that
founder Sam Walton created. It's a culture that expects managers at
all levels to wake up early and work long hours.
It's 5:30 a.m. when regional manager Pat Curran leaves her
Bentonville, Ark., home. Around the world in Shenzen, China, Joe
Hatfield, Wal-Mart Asia CEO, likes to hit the office by 4:30 a.m.
Every Saturday morning, Wal-Mart's top execs get together at 7 a.m.,
citing their biggest sellers and going over the latest sales numbers.
Its semi-annual managers' gathering starts at 6 a.m. and gets right
down to business. Even its shareholders have to get up early because
Wal-Mart's annual meeting gets rocking by 7 a.m.
"It's like our management meeting we have on Fridays and Saturdays,
and they're early meetings, but they're designed to get action
started before the day is over," says David Glass, a Wal-Mart
director and former CEO. "I used to always come to work at 6:30.
That was just a time that worked out well for me. And when I'd get
here, Sam would always be here. He'd get here about 3 o'clock in the
Adds Scott, "David Glass has been retired for, gosh, four and a half
years now, semi-retired now, and I try to get in to work at 6:25
because he gets in at 6:30 and I just can't stand the thought that
he might know more than me at first."
Wal-Mart's culture also comes from being in a small town.
"A lot of our competitors were headquartered in cities or operated
in cities where they had access to wholesalers and other services
that they could employ," Glass says. "We didn't have that. Being
located in northwest Arkansas ... we had to do a lot of things for
ourselves. And initially, we created our own distribution logistics
network which served us very well. We were on the leading edge of
technology because we had to do that to control the growth. And as
we began to do things for ourselves, it gave us a competitive
advantage over the other folks."
That small-town culture also creates an almost cult-like atmosphere.
Like almost everything else about Wal-Mart, the annual shareholders'
meeting is the biggest in the nation. More than 18,000 people from
around the world come to the Bud Walton Arena at the University of
Arkansas. Like many Wal-Mart events, it's part pep rally, part
revival meeting, giving management another opportunity to spread the
But for all the cheering, Wal-Mart remains wary of the outside
"You can see us getting criticized more and more and even attacked
more and more," says Jay Allen, a senior vice president of corporate
affairs. "The media, political leaders, it's going to continue."
Wal-Mart can look paranoid. "I think it's probably with good
reason," Scott says. "There's always somebody who's just really
good, and if you ever get satisfied with what you're doing, you're
in real trouble."
The focus on improvement usually leads to a focus on how to cut
costs. Wal-Mart is relentlessly efficient. Whether it's the conveyor
belt that makes sure there's no wasted space between goods moving
through one of its 110 distribution centers or the company's health
benefits policy under which employees bear a significant cost, no
expense, large or small, is overlooked.
Scott and Chief Financial Officer Tom Schoewe earned a combined $14
million in stock and cash in 2003. But on business trips, the two
will share a $49 hotel room.
"Sharing rooms is a very symbolic part of what we do," Scott says.
"It's also an equalizer. If I'm asking the district managers to
share a room, but I won't share a room with Schoewe, then what am I
saying? There are two different standards here? The customer is the
most important thing for all of you, but for me I think I'll run a
"You can't do that. You can't do it because it's not how Sam would
have done it."
Says Glass, "Sam has been gone for a number of years now, but he's
still alive and well in this company to a great extent. There's not
a day that goes by that I don't hear conversations around here about
what Sam would do or how he felt about something."