Wal-Mart Explosion: Is This What We Want?

Americans want the best value for their money when it comes to their retail shopping. For this reason, Wal-Mart has rapidly grown to become one of the world's largest retailers. At the same time, an increasing number of Americans are concerned that Wal-Mart is becoming too big and it is destroying competition in retailing. Many do not like what the "big box" has done to their community, including downtown shopping.

Wal-Mart will open its first grocery supercenter in California, offering everything from tires to prime meats, and that could be a blessing for middle-class consumers. The reason is simple: Wal-Mart's prices are 14 percent lower than its competitors', according to a study by the investment bank UBS Warburg.

But not everyone is rejoicing about Wal-Mart's five-year plan to open 40 supercenters in California, stores combining general merchandise and groceries that are expected to gobble up $3.2 billion in sales. California's three largest supermarket chains, Ralphs, Vons and Albertsons, are scared, and so are tens of thousands of supermarket workers whose union contracts have put them solidly in the middle class. The three grocers' fears of fierce competition from Wal-Mart and their related drive to cut costs are widely seen as the main reason behind the week-old strike by 70,000 workers at 859 supermarkets in Southern California.

Wal-Mart has already helped push more than two dozen national supermarket chains into bankruptcy over the past decade. That list includes names like Grand Union; Bruno's, once Alabama's largest supermarket chain; and Homeland Stores, formerly Oklahoma's largest.

With Wal-Mart in mind, supermarkets have engaged in tough bargaining across the country. That has led to a 12-day-old strike by 10,000 supermarket workers in Missouri and a six-day-old strike by 3,000 workers at 44 Krogers in West Virginia, Kentucky and Ohio.

It is hard to underestimate the power of Wal-Mart. It has 1.4 million employees and had $245 billion in revenues last year, equaling 2.5 percent of the gross domestic product. Each week 138 million shoppers visit Wal-Mart's 4,750 stores. Last year, 82 percent of American households bought at least one item there.

Wal-Mart sells 32 percent of the nation's disposable diapers, and it is the largest customer for Walt Disney and Procter & Gamble. It has singlehandedly persuaded music companies to issue sanitized versions of CD's. Its 1,397 supercenters account for 19 percent of the nation's grocery sales, making it the largest grocery retailer. With Wal-Mart planning 1,000 more supercenters in the next five years, Retail Forward, a consulting firm, estimates that Wal-Mart's grocery and drug sales will double to $162 billion, giving it 35 percent of the domestic food market and 25 percent of the drug market.

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