Sunday, July 02, 2006

The Wal-Mart Effect by Charles Fishman

A few of my favorite parts of the book:

Concerning pharmacies
He opened a pharmacy at the Wal-Mart in Mena, Arkansas, #67, in 1982 or 1983. "There was already a pharmacy in the shopping center there. I opened with a coupon in the newspaper for $5 or $10 off, with the grand opening of our pharmacy, and the 9-cent rubbing alcohol special or something." The next day, the pharmacist in the shopping center announced that he would match Arch's coupon. "So the day after that, I ran a coupon for $20 off your next prescription. And I never heard another word from the guy after that."

You really can walk in the store, drop off your prescription, do your shopping, and pick up the prescription on the way out. "Once, Mr. Sam said to me, 'Clarence, tell those pharmacists to slow down a bit, so we can get the carts filled up some more.'" (pg. 43
Not just competition, cut-throat, purposeful put-them-out-of-business competition.

Monopoly and Monopsony
The term for suppliers who are big enough to control prices and markets is familiar - that's monopoly, and anyone who has played the board game understands that if you control the available real estate, you get to charge not what the market will bear, but what you want.

There is a parallel economic concept for a company that is such a large buyer (Wal-Mart)- of pickles, say - that it holds an equivalent kind of price-control power. The term is monopsony
So it is pretty clear (at least to me) that Wal-Mart has a huge, and unfair, advantage over just about any other retail business in the USA. If you haven't read the 'Vlasic Pickle Story' you can fined it here.


Anonymous said...

There is an artice in a July 2006 Harper's magazine that talked about this very thing. The article is called "Breaking The Chain' by Barry C. Lynn. It is well worth your time to read. Lynn also says that during the Reagan administration, one of the first things Reagan did was to water down the anti-trust laws. These laws prevented one business having an unfair advantage over another. The Sherman anti-trust bill in 1890 kept everything fair. And in the 1930's the Atlantic & Pacific company or the what we know as the A & P found itself in court a lot. They were a grocery chain that was considered a monopoly during its time.
If this bill was still in place today, with all its teeth intact, Wal-Mart would find itself in court a lot just like the A & P of the 1930's. Why? Because they have made the playing field unfair, and would by the anti-trust bills standards be considered a monopoly.
It is interesting to note that at the end of this article Lee Scott, CEO of Wal-Mart was calling on the British government to take anti-trust action against a U.K grocery chain called Tesco. Scott doesn't hesitate to recommend anti-trust action against other businesses. Lynn, the article's author says it's time to put some teeth into the anti-trust laws once again. And then we should bring Wal-Mart into court for violating the anti-trust laws. If Scott wants to go after other companies, then we should take him at his word, and go after his.
This is an excellent article. It can be found in the local library. The article begins on page 29. It is 8 pages of great reading.
Is Wal-Mart a monopoly? Absolutely! But can we do anything about it? Not until we put some teeth into the anti-trust laws once again. And it's watch out Wal-Mart! You will find yourself in court.

Anonymous said...

Along these same lines, Al Norman's web site had an interesting article. It is titled "Asbury Park, N.J. Nearly 30% of Americans Hold Unfavorable View of Wal-Mart."
Apparently, there was a survey done of 1,000 adult Americans in Asbury Park, New Jersey. Norman had this to say in his article.
"Given the fact that Wal-Mart is a retailer, and not a politician, a 29% negative rating is remarkably high. Ordinarily, one would expect Americans to have no strong views one way or another towards a retailer, like Sears, or Kroger's, or Kmart. They might not shop there, or not like their product selection, but Wal-Mart has become the number one reviled retailer in the United States."
Norman finishes his article with this: "For a company that spent $1.6 billion in fiscal 2006 on image advertising, this growing level of uncertainty or disapproval of Wal-Mart has got to be a major corporate disappointment."
Al Norman's web site is "" Go over to news flashes, and you will find this article. It is dated 7/01/2006.
Al Norman can be considered a Wal-Mart expert. He has 2 books out about them, and has spent many years telling communities how to fight them from coming into your town.