Wal-Mart has been subject to criticism by various groups and individuals. Labor unions, community groups, grassroots organizations, religious organizations, and environmental groups protest against Wal-Mart, the company's policies and business practices, and Wal-Mart customers. Other areas of criticism include the corporation's foreign product sourcing, treatment of product suppliers, environmental practices, the use of public subsidies, and the company's security policies. Wal-Mart denies doing anything wrong and maintains that low prices are the result of efficiency.
In 2005, labor unions created new organizations and websites to influence public opinion against Wal-Mart, including Wake Up Wal-Mart (United Food and Commercial Workers) and Wal-Mart Watch (Service Employees International Union). By the end of 2005, Wal-Mart had launched Working Families for Wal-Mart to counter criticisms made by these groups. Additional efforts to counter criticism include launching a public relations campaign in 2005 through its public relations website, which included several television commercials. The company retained the public relations firm Edelman to interact with the press and respond to negative or biased media reports, and has started interacting directly with bloggers by sending them news, suggesting topics for postings, and sometimes inviting them to visit Walmart's corporate headquarters.
Economists at the Cato Institute suggest that Wal-Mart is a success because it sells products that people want to buy at low prices, satisfying customer's wants and needs. However, Wal-Mart critics argue at the same time Wal-Mart's lower prices draw customers away from other smaller businesses, hurting the community.
Local communities
When Wal-Mart plans new store locations, activists sometimes oppose the new store and attempt to block its construction. Opponents to the new Wal-Mart cite concerns such as traffic congestion, environment problems, public safety, absentee landlordism, bad public relations, low wages and benefits, and predatory pricing. Opposition sometimes includes protest marches by competitors, activists, labor unions, and religious groups. In some instances, activists demonstrated opposition by causing property damage to store buildings or by creating bomb scares. Some city councils have denied permits to developers if they plan to include a Wal-Mart in their project. Those who defend Wal-Mart cite consumer choice, the overall benefits to the economy, and object to bringing the issue into the political arena.
A Wal-Mart Superstore opened in 2004 in Mexico, 1.9 miles away from the historic Teotihuacán archaeological site and Pyramid of the Moon. Although Wal-Mart's proposal received protest and media attention, the location was supported by Mexico's National Anthropology Institute, the United Nations, and the Paris-based International Council on Monuments and Sites. Local merchants, helped by environmental groups and anti-globalization groups opposed the construction, and poet Homero Aridjis joined the protest characterizing the opening as "supremely symbolic" and "...like planting the staff of globalization in the heart of ancient Mexico."
Archaeologists oversaw construction and discovered a small clay and stone altar along with some other artifacts where the store's parking lot is now located.
In 1998, Wal-Mart proposed construction of a store off Charlotte Pike near Nashville, Tennessee. The building site was home to both Native American burial grounds and a Civil War battle site. Protests were mounted by Native Americans and Civil War interest groups, but the Wal-Mart store was eventually constructed after moving graves and some modifications of the site so as not to interfere with the battlefield. Civil War relics were also discovered at the site. The project developers donated land to permit access to the Civil War historic site. The Indian burials were removed and re-buried.
Allegations of predatory pricing and supplier issues
Wal-Mart has been accused of selling merchandise at such low costs that competitors have tried to sue it for predatory pricing (intentionally selling a product at low cost in order to drive competitors out of the market). In 1995, in the case of Wal-Mart Stores, Inc. v. American Drugs, Inc. , pharmacy retailer American Drugs accused Wal-Mart of selling items at too low a cost for the purpose of injuring competitors and destroying competition. The Supreme Court of Arkansas ruled in favor of Wal-Mart saying that its pricing, including the use of loss leaders, was not predatory pricing. In 2000, the Wisconsin Department of Agriculture, Trade, and Consumer Protection accused Wal-Mart of selling butter, milk, laundry detergent, and other staple goods at low cost, with the intention of forcing competitors out of business and gaining a monopoly in local markets. Crest Foods filed a similar lawsuit in Oklahoma, accusing Wal-Mart of predatory pricing on several of its products, in an effort to drive Crest Foods's own company-owned store in Edmond, Oklahoma out of business. Both cases were settled out of court with no fine and no admission of wrongdoing.
In 2003, Mexico's antitrust agency, the Federal Competition Commission, investigated Wal-Mart for "monopolistic practices" prompted by charges that the retailer pressured suppliers to sell goods below cost or at prices significantly less than those available to other stores. Mexican authorities found no wrong-doing on the part of Wal-Mart. However, in 2003, Germany's High Court ruled that Wal-Mart's low cost pricing strategy "undermined competition" and ordered Wal-Mart and two other supermarkets to raise their prices. Wal-Mart won appeal of the ruling, then the German Supreme Court overturned the appeal. Wal-Mart has since sold its stores in Germany.
Wal-Mart has been accused of using monopsony power to force its suppliers into self-defeating practices. For example, Barry C. Lynn, a senior fellow at the New America Foundation (a think tank), argues that Wal-Mart's constant demand for lower prices caused Kraft Foods to "shut down thirty-nine plants, to let go 13,500 workers, and to eliminate a quarter of its products." Kraft was unable to compete with other suppliers and claims the cost of production had gone up due to higher energy and raw material costs. Lynn argues that in a free market, Kraft could have passed those costs on to its distributors and ultimately consumers.
For example, most Wal-Mart store pharmacies fill many generic prescriptions for $4 for a month's supply. However, in California and ten other states, complaints from other pharmacies has resulted in Wal-Mart being required to charge at least $9 for a month's supply of certain drugs.
Employee and labor relations
With close to two million employees worldwide, Wal-Mart has faced a torrent of lawsuits and issues with regards to its workforce. These issues involve low wages, poor working conditions, inadequate health care, as well as issues involving the company's strong anti-union policies. Critics point to Wal-Mart's high turnover rate as evidence of an unhappy workforce, although other factors may be involved. Approximately 70% of its employees leave within the first year. Despite the turnover rate the company still is able to affect unemployment rates. This was found in a study by Oklahoma State University which states, "Wal-Mart is found to have substantially lowered the relative unemployment rates of blacks in those counties where it is present, but to have had only a limited impact on relative incomes after the influences of other socio-economic variables were taken into account"
Wages
The activist group Los Angeles Alliance for a New Economy (LAANE) said "in 2006 Wal-Mart reports that full time hourly associates received, on average, $10.11 an hour." It further calculated that working 34 hours per week an employee earns $17,874 per year and claimed that is about twenty percent less than the average retail worker. (The number of hours the "average retail worker" worked was not specified) The report from LAANE further opines that this pay is "over $10,000 less than what the average two-person family needs." Wal-Mart managers are judged, in part, based on their ability to control payroll costs. Some say this puts extra pressure on higher-paid workers to be more productive.
By contrast, Wal-Mart insists its wages are generally in line with the current local market in retail labor, although direct comparisons are complicated because Wal-Mart employs more part time workers, and the company's more extensive training, supervision, and automation provides opportunity to workers with little or no experience or skills, which may account for wage differences. Wal-Mart grants "full time" benefits to those working as little as 34 hours per week, but does not limit workers to just 34 hours per week. The company does control labor costs by such ways as discouraging overtime, and by the use of "off the clock" labor. There have been numerous lawsuits against Wal-Mart by former employees because of this problem.
Other critics have noted that in 2001, the average wage for a Wal-Mart Sales Clerk was $8.23 per hour, or $13,861 a year, while the federal poverty line for a family of three was $14,630. The company has hired low-skille
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