Walmart responds with actions, not just words

by Alan Ellstrand (aellstrand@walton.uark.edu) 561 views 

Saturday morning, Aug. 3, a gunman shot and killed 22 people and injured 24 at a Walmart store in El Paso, Texas. Less than 24 hours later, in the early morning hours of Aug. 4, another mass shooting occurred in Dayton, Ohio.

There, the gunman killed 10 while injuring 27. Later that day, as Ohio Gov. Mike DeWine sought to console citizens of Dayton, his speech was partly drowned out by citizens chanting, “Do something!”

In the aftermath of those events, Walmart did something. On Sept. 3, the world’s largest retailer modified its firearms and ammunition guidelines by discontinuing sales of:

  • Handguns (which were previously only sold in Alaska)
  • Ammunition for handguns
  • Ammunition that can be used in large capacity clips

Walmart also requested that customers no longer openly carry firearms into stores in states that permit open carry. Walmart previously stopped selling military-style rifles such as the AR-15. The firm will continue to sell rifles for hunting and sport shooting as well as BB and pellet guns. However, Walmart uses an enhanced background check system that exceeds federal law in requiring a “green light” to appear after a waiting period.

Given the controversy surrounding firearms policy in this country, it is likely a lot of thought went into Walmart’s decision. No doubt, the fact that the El Paso mass shooting occurred in a Walmart store was a catalyst in taking this action.

In addition, at locations including San Bruno, Calif.; Portland, Ore., and New York City, Walmart employees staged protests to encourage Walmart leadership to adopt a more restrictive firearms policy. The nation’s largest teacher’s union, the American Federation of Teachers, threatened to call for a boycott of Walmart over firearms sales. But once Walmart announced its new firearms policy, the National Rifle Association, stated it was “… shameful to see Walmart succumb to the pressure of anti-gun elites.”

Clearly, there is great pressure on both sides of the gun divide, and Walmart was caught in the middle.

In making its decision to restrict gun sales, Walmart also had to consider shareholders. As the nation’s largest retailer, Walmart accounts for about 2% of guns sold in America, but about 20% of ammunition sales. While these amounts may represent significant sales revenue, for a firm that has total sales of $500 billion, losing revenue from reduced gun and ammunition sales will not significantly alter Walmart’s bottom line. In fact, Walmart’s stock price increased 1% to a record high the day after the new firearms policy was announced. Clearly, investors were not discouraged by Walmart’s stance.

Corporate leaders prefer to stay out of controversial issues. Successful businesses understand they need to attract customers with a wide range of beliefs, values and opinions. Walmart’s decision to limit firearms sales, while courageous in some ways, was pragmatic, as Walmart President and CEO Doug McMillon noted that he is a gun owner and the changes are an effort to responsibly serve customers and the general public.

The Business Roundtable, a group representing the nation’s largest businesses, recently revised its statement on the purpose of a corporation to reflect a fundamental commitment to all stakeholders, not just shareholders. Walmart’s new gun policy reflects that new corporate focus. It remains to be seen how many other corporations will follow suit with actions and not just words.

Editor’s note: Alan Ellstrand is a professor and associate dean in the Sam M. Walton College of Business at the University of Arkansas with expertise in corporate leadership teams. The opinions expressed are those of the author.

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