Wal-Mart, 1970-1985

Fiscal Policy has been heavy on spending The average

spending deficit in this time is 2.95% of GDP, and trending upwards

The focus on growth of the economy leads to massive subsidies to incentivize Wal-Mart’s expansion

1970-1985

Source: http://www.heritage.org/research/features/BudgetChartBook/fed-rev-spend-2008-boc-C3-All-Recent-Administrations-Ran-Up.html

Monetary Policy Interest rates throughout

this time period trend upward from a low of under 4% to a high of just above 18%

The dips in rate made it easier for banks to lend Wal-Mart the money it needed to lease new stores, and correlate with high growth periods

1971-1973: begins operations in Tennessee, Kentucky, and Mississippi

Early 1980s: continued westward expansion beyond Texas

1970-1985

Source: http://www.irs.gov/taxstats/indtaxstats/article/0,,id=98123,00.html

Tax Laws IRS data from 1969-1989 shows an increase in

average salary per tax return from $7,382 to $25,795

1970-1985

The same data shows a growth in low to lower-middle class families (the kinds of families that would benefit from discount retailers)

The chart to the right shows the drop in individuall tax rates dropping during the Reagan administrationSource: http://www.heritage.org/research/features/BudgetChartBook/fed-rev-spend-2008-boc-T1-Income-Tax-Receipts-Stay-Constant.html

Trade Policy Starting in 1976, the Importation of Goods

surpassed the Exportation

1970-1985

This is due largely to the work of President Nixon and Henry Kissinger, who worked in 1970 and 1971 to kick start trade with China

This leads to the U.S. and China naming each other most-favored-nation status when they sign a three year trade agreement in 1979

Source: http://ita.doc.gov/td/industry/otea/usfth/aggregate/H04t01.html Source: http://www.stratfor.com/analysis/u_s_china_trade_timeline_1784_2008

Gross Domestic Product The Real GDP of the U.S. nearly doubles in this

time period from 3 trillion to 6 trillion 2000 US dollars

1970-1985

In addition, a prolong recession heading into 1976 heralded a period of stagflation, leading to a spike in the levels of people living in poverty

Source: http://www.census.gov/prod/2006pubs/p60-231.pdf

Meanwhile, Wal-Mart hits $1 billion in sales in the shortest time period in U.S. history

Gross Domestic Product Growth The Real GDP growth rate of the US reveals the

recession heading into 1979, and the prolonged periods of decline through 1980

1970-1985

With many more Americans living below the poverty line, discount retailers prospered – especially the discount retail king, Wal-Mart

Source: http://www.data360.org/dsg.aspx?Data_Set_Group_Id=354

Unemployment Rate Unemployment rates followed the course of the

economy, with levels rising to unprecedented levels.

With less money coming in to American families, the demand for discounted goods and their retailers grew.

1970-1985

Source: http://www.bls.gov/cps/cpsatabs.htm

Consumer Confidence

The Michigan Consumer Sentiment Index is a measure of the confidence the consumer has as compared to December 1966

In these hard times, American families looked to the discount retailers not only more often, but for more of their goods purchases

1970-1985

Source: http://www.sca.isr.umich.edu/main.php

There was a shift in brand loyalty due to the fair standard in labeling act, shifting consumer confidence to brands rather than retailers. This led to a rise in the success of Wal-Mart as the lowest cost purveyor of consumer goods

Huge population boom as the baby boomers of the 50’s and 60’s grow up to have jobs, homes, families, and consumer needs.

A backlash to the hippie movement of the 60’s and 70’s led to the rise of the “generation me” which came with a focus on materialism

The movie industry made a comeback after being hit hard for decades by the rise of television – along with these new blockbuster movies came big sales in movie merchandise (Star Wars, Jaws, etc…)

1970-1985

Source: http://www.sca.isr.umich.edu/main.php

Wal-Mart was quick to adopt new tech as they were developed and adapt them to their operations 1975 – Wal-Mart Leases an IBM computer to keep track

of inventories at the distribution, supported by a network of over 100 stores recording POS data at the register

1977 – Wal-Mart adds the capability to order from their suppliers to their growing computer network

1983 – One of the first retailers to adopt bar codes for scanning POS data

1970-1985

Source: http://www.cio.com/article/147005/_Years_of_Wal_Mart_History_A_Technology_Time_Line