Friday, August 25, 2006

Shopping at Wal-Mart - Is it good for our country?

Thanks to Jonathan at Writing on the Wal for putting me on to these comments by Ezra Kline.
What's worrisome about Wal-Mart is that, like GM and Ford once did, they are setting the norms for the coming (or current?) economy. One in every five retail sales is done at their cash registers; they're larger than the next five retailers combined. Indeed, for major producers, Wal-Mart is just about the only market that matters, which allows them to dictate the production methods, employee relations, and business strategies all the way up the food chain. In action and effect, Wal-Mart is an active monopsony -- a seller able to dictate the price to its producers. They've forced Coke to change their secret recipe, Kraft to lay off thousands of employees, and Vlasic to declare bankruptcy. And because Wal-Mart so obsessively pursues the lowest possible prices, they're not only depriving their own workers of generous benefits and compensation, they're making it literally impossible for their producers to do so, as Wal-Mart won't abide by the minor cost differences that on-shore production and respectable benefits demand.
Unfortunately, kinda like the Iraq War, the attitude seems to be "let the other guy worry about it."

1 comment:

Anonymous said...

Some of this is written about in The Bully From Bentonville by Anthony Bianco. Is it true? Yes. Will Wal-Mart supporters believe it? No.
In the book The Wal-Mart Effect by Charles Fishman, he writes about the Snapper Lawn Mower folks. Fishman says that Snapper NO LONGER SELLS TO WAL-MART. Why? Because the CEO of Snapper said they would have to eventually start to reduce the quality of their lawn mowers in order to meet Wal-Mart demands. Snapper had 10,000 lawn and garden centers they sold to. Not willing to eventually manufacture a cheaper product, and risk losing their customers, Snapper said "no" to Wal-Mart. Snapper also knew that people who wanted their lawn mowers were people who took pride in their lawns. They wanted and were willing to pay for a GOOD QUALITY PRODUCT. So I say congratulations to Snapper! They did the right thing.
It is too bad that other companies didn't say "no" to Wal-Mart early on. If they had Wal-Mart couldn't have possibly gotten this large or had this much power. Wouldn't their large stores look funny with empty shelves everywhere because they couldn't find suppliers willing to sell to them? What a hoot!