Wal-Mart 2010

Think Wal-Marts are everywhere you turn today? Just wait five years. Industry analysts predict that by 2010, Wal-Mart estimated sales will exceed $500 billion dollars a year.

SuperCenters are clearly the company's growth vehicle, with 3,131 expected to be in operation in 2010. Conventional Wal-Mart stores will shrink from 1,995 to 668 units by that year. The 99,000-square-foot SuperCenter concept will continue to be rolled out, and a 45,000-square-foot neighborhood market prototype will take off after 2010. [Women's Wear Daily, 6/20/05]

Wal-Mart's growth will be increasingly felt outside the big box.

It already offers financial services, telecommunications, travel services and gasoline at 10 to 15 cents a gallon less than conventional gas stations. There's also real estate services, and Wal-Mart provides check-cashing, for which the company rang up $6 billion in fees last year. Wal-Mart is testing a rental car operation, and it's been suggested that the company could get into publishing or operate a fleet of jets to fly customers across the friendly skies.

Moody's Investor Service estimates Wal-Mart will increase clothing sales 75% by 2010, which would "put unprecedented pressure on Penneys, Kohl's and other moderate-priced department store chains."

Wal-Mart is already leading a race to the bottom on wages, health benefits, and outsourcing U.S. manufacturing jobs overseas. What's more? Wal-Mart costs federal taxpayers more than $1.5 billion in corporate welfare every year. Can we afford to let Wal-Mart double in size?

"Five-Year Plan"

Next year alone Wal-Mart plans to add 250 more Supercenters, but that's just the beginning.

In a presentation to shareholders in 2005, Wal-Mart CFO Tom Schoewe said there is room for 4,000 additional SuperCenters in the U.S. market. And this insatiable pursuit of growth extends around the world. In China, for example, Wal-Mart plans to grow 30 to 50 percent in square footage each year for the foreseeable future, according to the Wall Street Journal.

Company executives are boastful about Wal-Mart's great leap forward while never pausing to consider the consequences of their expansion. Wal-Mart CEO Lee Scott told the Chicago Tribune earlier this year, "When you get as large as we are, you have to paint a picture in people's minds that you can still grow. Otherwise they think of $285 billion and think 'That's the end of that.' Well it isn't.  It's not even the start of it. We have a five-year plan, and have a pretty good idea in five years where we'll be."

Banking on the Future

Perhaps the most lucrative and troubling target for expansion is the financial industry. Commercial banks and credit card companies rack up hundreds of billions of dollars in fees from consumers who move through Wal-Mart's doors. Wal-Mart has been eyeing this cash cow for years. Now the company might finally make its move.

In June 2005, Wal-Mart filed an application to operate an industrial bank based in Utah to handle electronic-payment processing at its stores. If approved, the move could mean big savings for the company, which uses a third party to process its roughly 140 million monthly debit-card, credit-card and electronic check-transfer payments, according to the Wall Street Journal

"Who knows what their business plan is for the long term," said Dale Leighty, who sits on the executive committee of the Independent Community Bankers of America. "If they eventually decide to try and [expand into the consumer banking business], we don't think it will be good for anyone."

"Banks and legislators are concerned about the idea of Wal-Mart getting into banking," said Charlotte Birch of the American Bankers Association. "Bankers are very concerned. There are issues related to the economic concentration of power, if you have the largest retailer in the world easing their way into banking."

In a way, Wal-Mart is already in the banking business through the Walton Family, which owns 96% of Arvest Bank. Arvest operates over 200 branches in several states including in some Wal-Mart stores. Still this is not enough for a company that likes to conduct all of its business under one roof.

Wal-Mart itself offers limited financial services including check cashing, money orders, money transfers and a credit card through GE Finance. But it is prohibited from opening full-service banking centers, because Federal laws prohibit the mixture of banking and commerce.

Some banks are already feeling the squeeze from Wal-Mart. First Interstate Bank plans to close 60 branches in Wal-Mart stores in Montana and Wyoming.

"They have taken on some functions - wire transfers and check-cashing - that banks do,"said Neil Klusmann of First Interstate."

Whether through Arvest or another entity, Wal-Mart definitely wants to become a major financial player. We've seen the problems caused by its dominance of the retail industry. Can we afford to let Wal-Mart gain even more power over our economy?

What You Can Do

In theory, Wal-Mart Watch is not opposed to the company's growth. But Wal-Mart's current business practices have an overwhelming negative impact on taxpayers and workers. Before Wal-Mart gets the green light to grow even bigger, it must address its current failings and strive to become a leader in corporate responsibility.

Stay tuned for future updates. And keep the pressure on.

Click here to tell your friends about why Wal-Mart matters to you.

Latest News

• "Wal-Mart in French courtship?" CNN Money (8/15/05)
  French retailer Carrefour denies newspaper report that it may soon be bought by the U.S. company...Speculation of a bid for Carrefour, the world's second-largest retailer, has surfaced before. Global market leader Wal-Mart and Britain's biggest supermarket chain Tesco have repeatedly been named as potential suitors.
• "Bankers group opposes Wal-Mart plan in Utah," Arkansas Democrat-Gazette (8/12/05)
  The Independent Community Bankers of America, along with several other groups, filed a letter with the Federal Deposit Insurance Corp. saying Bentonville-based Wal-Mart omitted essential elements concerning the company’s plans to own and operate the Utah industrial bank...The group said mixing banking and commerce causes excessive concentration of economic power.