24/7 Wall St.

Walmart, the world’s largest retailer and the largest company in America based on sales and employees, has tried to argue since the beginning of the recession that it can revive its moribund sales growth in the United States. The odds that it can accomplish this are extraordinarily low. In the quarter which ended on April 29, same-store sales in the US fell 1.1 percent and revenue was up only 0.6 percent to $62.7 billion. The company’s growth is constrained by the fact that six of every ten dollars of Walmart’s sales come from the U.S.  Slow growth there has been a source of  concern. Bill Simon replaced Eduardo Castro-Wright as head of U.S. operations in June 2010.    Simon said his main focus would be on increasing store traffic and same-store sales while keeping prices low.  That’s been easier said than done as economic growth slowed and gas prices soared.

24/7 Wall St. examined Walmart’s store locations and distribution centers by state, along with store location growth since 1962, and compared this data to each states’ median income and the percentage of state residents living below the poverty line. Walmart is still essentially a regional retailer with its locations concentrated in ten states, all but one of which is near its home state of Arkansas. The location of the company’s distribution centers are also clustered in these regions. The ten states are overwhelmingly poor, which makes sense considering that many observers note that the chain is the shopping destination of choice of those of modest means.  It is also the shopping destination for those who live in the poorest states–an important distinction which shows one of the many reasons why Walmart has had trouble with its expansion.

• Read The Ten States Where Walmart Is Everywhere
• Read The Five States Where Walmart Can’t Break Through

Walmart’s has about 3,804 stores in the US, not including its Sam’s Club franchise. The rate at which new locations have been added has practically ground to a halt over the past few years. In Walmart’s last fiscal year, which ended on January 31, net store openings were only 49. The year before, that figure was only 52. Even five years ago, Walmart’s net stores opened were only 154. We asked the company’s public relations department for the dates and locations of stores opened since 2006. The company said we could count them by hand using the company’s press relations site.

Walmart’s success in the ten states stands in contrast to the most populous states in the country, where the number of stores is relatively modest. Walmart has 785 stores in its ten-state stronghold, which account for 21% of its US stores. Those states only account for 11% of the county’s population. Among these states, there are over 22 stores per million people. New York, the third largest state by population, has 19 million people with fewer than five Walmart stores for every one million people. California, the largest state by population, at 37 million, also has less than five stores for every one million people. In New Jersey, which has a population of nearly 9 million, the retailer has little more than 6 stores per million people.

New York, New Jersey, and California are not just distinctive because of their sizes. Each of the three states has high median incomes compared to other states, and a relatively low percentage of people who live below the poverty line. As a side note, Costco has 116 stores in California compared to Walmart’s 179. Costco is a more upscale retailer, and that is highlighted by the location of its stores.

A detailed study of Walmart’s store growth from 1962 to 2006, authored by Thomas J. Holmes of the University of Minnesota, shows that nearly all of Walmart’s growth occurred in the ten core states prior to 1977. By 1980, it had begun to open a small number of stores in Illinois, Florida and Texas. Rapid expansion beyond its core ten states took hold by the mid-1980s.

But, even now the company’s US activity shows that it is largely trapped in the center of the US. Over the last six months, Walmart has opened and remodeled stores in Utah, Oklahoma, Missouri, Louisiana, South Carolina, Arizona, and Florida–all states where Walmart already has high market penetration.  Its only activity outside these areas have been a handful of new stores in New York, Massachusetts, and Ohio. In other words, Walmart is making almost no progress in the regions where it must grow to improve US sales..

There have been a substantial number of academic studies about the reasons for Walmart’s growth, the company’s marvelous distribution operations, its battles with unions and female workers, and its lack of a presence in most large American cities. There is not much need to add to those debates in which well-educated experts offer differing opinions about Walmart’s expansion and business practices. Most analysts who cover Walmart for Wall Street believe that the company has not been successful in cities because local communities fear that its appearance would destroy jobs and cause undercut small business. This is despite the fact that data to support that is not conclusive. There are a number of stores in Houston, Texas and Chicago, Illinois. There are none in New York City though Walmart is trying hard to gain a foothold there.

There is no way that Walmart can restart any substantial growth in the US without a sharp increase in its presence in the dozen most populated states which include California, New York, and New Jersey which have 65.5 million residents among them–21% of the people in the US.    Overseas growth alone won’t cut it with investors who have seen shares of the retailer underperform the S&P 500 Index this year, gaining 2.93% versus 6.75%.

Fortress Walmart, which is comprised of ten states, sits in the south central US. Even Walmart management may not know exactly what the company business model has not fared as well outside its home turf.  But if it wants to get back into Wall Street’s good graces, it better figure that mystery out sooner rather than later.

10. Louisiana
> Stores Per 1 Million People: 19.85
> Total No. of Stores: 90
> Median Income: $42,492 (10th Lowest)
> Pct. Living Below The Poverty Line: 17.3% (7th Highest)

Louisiana, which is directly south of Arkansas, Walmart’s birthplace, is prime Walmart country. Louisiana is among the ten poorest states in the country. Poor people are drawn to stores like Walmart because of low prices. Despite being among the most populated states on this list and having 90 Walmart stores, Louisiana only contains two Walmart distribution centers. This is because the 20 centers in Arkansas service Louisiana stores. Despite its great success, there seems to be little room for growth in the state. According to a report from the University of Minnesota, only eight Walmart stores opened in the state between 2000 and 2006. No stores were opened in 2010. 2111?

9. Missouri
> Stores Per 1 Million People: 19.87
> Total No. of Stores: 119
> Median Income: $45,229 (16th Lowest)
> Pct. Living Below The Poverty Line: 14.6% (19th Highest)

Missouri is in much the same situation as Louisiana. Bordering Arkansas, the company’s home state, it makes sense that Walmart would establish a foothold in the state. There are currently 119 Walmart stores in Missouri, a huge number considering the state’s population. Like Louisiana, no stores have been opened in the last year. Regardless of its opportunities for growth, the company remains extremely active in the state. In 2010, Wal-Mart Stores (including Sam’s Club locations) donated more than $21.4 million to local organizations, according to the company.

8. West Virginia
> Stores Per 1 Million People: 19.97
> Total No. of Stores: 37
> Median Income: $37,435 (2nd Lowest)
> Pct. Living Below The Poverty Line: 17.7% (5th Highest)

Walmart has been the largest private employer in West Virginia every year since 1998, according to labor market research firm WorkForce West Virginia. The state, which has an unemployment rate of 9.1 percent, relies heavily on its 37 Walmart stores, which together employ 12,269 people. Relative to many of the other states on this list, Walmart presence in the state is relatively recent. The first Walmart opened in 1962, the first store in Missouri opened in 1968, and the first location in Louisiana opened in 1970. Walmart first location in West Virginia opened in 1989. To make up for its late start, new store growth has been extremely strong.

7. New Hampshire
> Stores Per 1 Million People: 20.51
> Total No. of Stores: 27
> Median Income: $65,028 (2nd Highest)
> Pct. Living Below The Poverty Line: 8.5% (Lowest)

New Hampshire is an outlier on our list. It is located in the Northeast and is fairly wealthy. It has the lowest percentage of residents living below the poverty level and the second highest median income.  Relative to the state’s small population, there are a large number of Walmart stores The company contributes substantially to the state treasury as a result of this. In fiscal year ending 2011, Walmart paid more than $20.7 million in state and local taxes. This is approximately 0.4% of the state’s total revenue, a significant amount compared to other companies. Notably, New Hampshire has no sales tax.

6. Kentucky
> Stores Per 1 Million People: 20.97
> Total No. of Stores: 91
> Median Income: $40,072 (4th Lowest)
> Pct. Living Below The Poverty Line: 18.6% (3rd Highest)

Kentucky is yet another relatively poor state in close proximity to Arkansas. Walmarts in the state have begun to offer services in addition to traditional retail. Starting in 2009, Baptist Healthcare System, one of the largest not-for-profit health care providers in Kentucky, began a statewide initiative with the company to open clinics in Walmart stores. The program has been successful and now includes 12 clinics. This is yet another example of Walmart’s efforts to move into new businesses, which include financial services, pharmacies, and health care.

5. Alabama
> Stores Per 1 Million People: 21.13
> Total No. of Stores: 101
> Median Income: $40,489 (5th Lowest)
> Pct. Living Below The Poverty Line: 17.5% (6th Highest)

There are 101 Walmart stores in Alabama, 92 of which are Supercenters. Unlike similar states, growth in Alabama has continued at a strong pace. Since the first Alabama store opening in 1979, a new store has opened in the state almost every year. There are currently plans to open a new Supercenter in Huntstville this summer. As evidence of the company’s popularity, most of the Walmart stores in the state which were not originally Supercenters have been converted into Supercenters, the largest type of Walmart store.

4. Kansas
> Stores Per 1 Million People: 21.38
> Total No. of Stores: 61
> Median Income: $47,817 (23rd Lowest)
> Pct. Living Below The Poverty Line: 13.4% (25th Lowest)

Kansas presence on this list suggests that a state’s proximity to Arkansas may be more important to Walmart’s success than the number of low-income shoppers. While the average income of its residents is close to the national average, its proximity to Walmart’s central distribution network secures its place on this list.  Access to the Arkansas hub makes it more efficient to open stores. Although growth slowed in the early 2000’s, Walmart is finding other ways to boost sales. According to the Wall Street Journal, Kansas stores which had stopped selling guns  five years ago will start selling them again.

• Also Read: Yum! Brands Rapid Growth Is Over

3. Mississippi
> Stores Per 1 Million People: 22.24
> Total No. of Stores: 66
> Median Income: $36,646 (Lowest)
> Pct. Living Below The Poverty Line: 21.9% (Highest)

Walmart has a huge presence in Mississippi. Mississippi is located along Arkansas’ eastern border. It is the poorest state in the nation. The company employs just under 2 percent of Mississippi’s total labor force. In the  2011 fiscal year, the company paid more than $39.7 million in state and local taxes. In April, Walmart donated a meager $1 million to support relief efforts for recent natural emergencies, including the storms, and subsequent flooding, which hit the state. A.J. Holloway, Mayor of Biloxi, told a local news station that he expected “some big things” following the opening of a Walmart Superstore in the city.

2. Oklahoma
> Stores Per 1 Million People: 27.46
> Total No. of Stores: 103
> Median Income: $41,664 (6th Lowest)
> Pct. Living Below The Poverty Line: 16.2% (15th Highest)

Oklahoma, which sits on Arkansas’ western border, is in a similar position to Mississippi. More than 32,000 residents of the state work at Walmart, just under 2 percent of the labor force. Oklahomans are also doing a large amount of shopping at the chain. Between July 2009 and March 2011, $506 million out of $1.2 billion in food stamps spent in the state were spent at Walmart, according to the AP. Unfortunately for residents of Oklahoma, they do not receive all of the same Walmart deals as the rest of the country. Due to a law in the state, which requires stores to sell items at at least 6 percent above cost, many deals offered by Walmarts across the country will not be found in Oklahoma as they would make products illegally inexpensive.

1. Arkansas
> Stores Per 1 Million People: 30.87
> Total No. of Stores: 90
> Median Income: $37,823 (3rd Lowest)
> Pct. Living Below The Poverty Line: 18.8% (2nd Highest)

Walmart has an extraordinary presence in its home state. There are over 30 Walmart stores for every million people in the state, by far the largest ratio in the country. There are more than 48,000 Walmart employees in the state, making up approximately 3.5% of Arkansas’ labor force. Walmart works hard to maintain a positive relationship with the state. According to the company, it donated almost 4,000 tons of food last year to Arkansas residents. The Walton Family Foundation, started by Walmart founders Sam and Helen Walton, recently announced it will be giving $800 million to the Crystal Bridges Museum of American Art in Arkansas, which was founded by their daughter Alice. This February, after Walmart was given an award by the National Governors Association, Arkansas Gov. Mike Beebe showed his appreciation for the company, saying “Walmart has demonstrated a commitment to philanthropic efforts across the nation, but its efforts here in Arkansas have been particularly generous and noteworthy.”

The Five States Where Walmart Can’t Break Through

5. Vermont
> Stores Per 1 Million People: 6.39
> Total No. of Stores: 4
> Median Income: $51,618 (20th Highest)
> Pct. Living Below The Poverty Line: 11.4% (12th Lowest)

4. New Jersey
> Stores Per 1 Million People: 6.26
> Total No. of Stores: 55
> Median Income: $64,918 (3rd Highest)
> Pct. Living Below The Poverty Line: 9.4% (4th Lowest)

3. Hawaii
> Stores Per 1 Million People: 5.88
> Total No. of Stores: 8
> Median Income: $64,098 (5th Highest)
> Pct. Living Below The Poverty Line: 10.4% (8th Lowest)

2. New York
> Stores Per 1 Million People: 4.9
> Total No. of Stores: 95
> Median Income: $54,659 (15th Highest)
> Pct. Living Below The Poverty Line: 14.2% (Tied for 25th Highest)

1. California
> Stores Per 1 Million People: 4.8
> Total No. of Stores: 179
> Median Income: $58,931 (9th Highest)
> Pct. Living Below The Poverty Line: 14.2% (Tied for 25th Highest)

Douglas A. McIntyre, Charles B. Stockdale