WalMart, The High Cost Of Low Price

[Bluer White]

Your rant illustrates my point. And I bet if I had used the same tone and language to slam "progressive" thinking, I would have been promptly warned by FYM management.

I believe that Walmart is the one being "scapegoated," as you might say. Just like big oil is scapegoated when gas prices are high. Some would like to villainize Walmart and hold them to a higher standard than any other discount, grocery, or retail store in America. I think that a better argument can be made that the federal government should provide health care and other benefits to citizens rather than forcing it on the private sector.

 

[sulawesigirl4]

Hey melon, I know you feel strongly about this issue, but there are probably more constructive ways to make your point. Thanks.

Also, Bluer White, I'm not exactly sure how to construe your statement, but if you're implying that there is bias on the part of the moderating team, we'd appreciate it if you'd contact us directly rather than making cute little asides.

 

[U2Scot]

Interesting article comparing Ford to Wal-Mart

by David Batstone and David Chandler


The AFL-CIO has launched a major campaign to draw attention to the business practices of Wal-Mart. "The biggest corporation in America today has a business plan that lowers standards, first among its own employees and ultimately for all Americans," says John Sweeney, president of the AFL-CIO.

Is Sweeney's assessment fair and accurate? Wal-Mart, with over $250 billion in annual sales, is more often praised for its streamlined business model. Its inventory system and distribution network are beyond compare in the retail industry.

Wal-Mart's recipe for success, however, does depend as well on squeezing labor costs. The majority of its hourly workers earn less than $8.50 an hour, which means that a full-time sales clerk at Wal-Mart falls under the official U.S. poverty level for a family of four.

Nearly a century ago, Henry Ford planned for his employees to be his best customers. Challenging the conventional wisdom that the best way to maximize profits was to tailor your product to the wealthiest segment of society, Ford decided to market his black Model T as "America's Everyman car."

For Ford, mass production went hand-in-hand with mass consumption. He established a simple benchmark for worker compensation: His workers should be able to buy the product they were making. Ford promised a $5-a-day minimum wage for all his workers - twice the prevailing automobile industry average.

Doing so, Ford created a virtuous circle. Workers flocked to his factory to apply for positions. If they managed to secure a coveted job, then in time they too would be able to afford one of his cars. The company flourished on these twin pillars - a desirable product and a highly motivated employee base. By the time production of the Model T ceased in 1927, Ford had sold more than 15 million cars - half the world's output.

Compare Ford's virtuous cycle with Wal-Mart's dual strategy of ruthless cost-cutting and "Everyday low prices." On the surface, the goal is the same - produce goods that consumers want and can afford to buy. The result in implementation, however, is vastly different.

While Ford's business model helped lay the foundation for a rising middle class in America, the Wal-Mart model reinforces downward mobility. Wal-Mart today is the largest commercial employer of labor in the United States. In 2002, 82 percent of American households bought something at Wal-Mart. Americans must love to shop at Wal-Mart; on the other hand, maybe they have no choice. A sizeable percentage of Wal-Mart's sales come from low-income households.

The effort to minimize production costs is a legitimate business strategy; no argument there. But does Wal-Mart realize that the employees whose wages they squeeze are often the customers upon whom they rely to fuel their business?

While Ford created demand and wealth with a new and innovative product, Wal-Mart displaces existing demand - siphoning consumption from elsewhere by under-cutting prices. Wal-Mart sets the pricing agenda in whichever market it enters. Suppliers and competitors are squeezed - forced either to push jobs overseas themselves, or forced out of business altogether. For every Wal-Mart supercenter that opens in the next five years, two other supermarkets will close.

Now that it has reached the bargain basement on domestic production costs, Wal-Mart is increasingly turning to overseas operations to stock its shelves. Wal-Mart's domination of the U.S. retail economy has ramifications beyond its own profit margin.

Many economists present Wal-Mart as a net-positive for the U.S. economy. The popular interpretation of anti-trust law today holds that large companies are only a threat to the community if their dominance results in rising prices for consumers. Hence, Wal-Mart escapes regulation because the company's domination of the retail sector delivers lower prices, across the board. Little long-term thought is given to the wider implications of the methods the company uses to produce those lower prices.

The single-minded pursuit of economic growth can exact a heavy toll on a community. Our economic goal of creating wealth should coincide with our ideals of human and societal development. In today's business environment dominated by Wal-Mart, Henry Ford's ideas would be as revolutionary as they were when they were first applied.

 

[melon]

Your rant illustrates my point. And I bet if I had used the same tone and language to slam "progressive" thinking, I would have been promptly warned by FYM management.

What a nonsense argument to divert from the issues. I never once issued a personal attack and ideas are fair game in this forum, are they not?

Most conservative ideals fall flat, and you know why? Most of it is based on hysterical superstition and bigotry. And I will call it out on every occasion, just like I will call out the KKK or neo-Nazis who want to mold the U.S. into some non-existant romanticist ideal at the expense of minority rights. And, likewise, when liberals get overly romantic or illogical, I rip them to pieces too. There's plenty to gripe about the current state of the Democratic Party and how liberals only seem to get energetic when it involves war protests and WTO riots. Nobody seems interested in solving the problems, and the GOP does little more than make those problems worse.

The irony is that the only conservative argument I can find merit with is the poster-child of all conservative causes: anti-abortion (note that I refuse to call it "pro-life" when most "pro-lifers" are ardent supporters of the "death penalty," so such contradictions cancel each other out). You could make a secular humanist argument against it, if you earnestly believe that a fetus is an autonomous human being.

I believe that Walmart is the one being "scapegoated," as you might say. Just like big oil is scapegoated when gas prices are high. Some would like to villainize Walmart and hold them to a higher standard than any other discount, grocery, or retail store in America. I think that a better argument can be made that the federal government should provide health care and other benefits to citizens rather than forcing it on the private sector.

I already said all of this, if you weren't too busy nitpicking. Wal-Mart merely epitomizes the worst of corporate greed and behavior, but it is, by no means, the only company acting so irresponsibly.

And, again, we have another argument in favor of nationalized health care. That's fine too, but that's not the system we have in this country. Over the last few decades, we have a healthcare system built on the premise that the employer will provide it. There's no way around that. And when John Kerry proposed an interim step towards national health care, Bush issues a highly misleading campaign ad that trashed the idea, so we have an administration that completely rejects the idea of national health care and, in turn, supports the existing employer-provided expectation. Wal-Mart is not living up to its responsibilities, and when their employees aren't contributing to the system, your health care premiums go up. Fewer people = higher prices. That's how economics works.

If we want a nationalized form of health care, that's fine, but with the current state of mind of the federal government, it's not going to happen. Not with the Republican Party, that's for sure. But even then, we would have to find a way to pay for that health care. You can't put all the burden on individual taxes when corporations are the entities with the most money. It would have to be a balance between the two.

Until then, it's hard to find sympathy for a company that's raking in record profits--more than the oil companies. Maybe it's time to reregulate.

Melon

 

[VertigoGal]

Well, to their credit, at least Wal-Mart doesn't fund Nazis.

If we want business to be required to take care of employees, we still need to ultimately look to the gov't to make it happen. You can't expect businesses to act on some moral high ground, when their stated goal is to make money. The government is supposed to be different.

 

[melon]

If we want business to be required to take care of employees, we still need to ultimately look to the gov't to make it happen. You can't expect businesses to act on some moral high ground, when their stated goal is to make money. The government is supposed to be different.

The government won't be different when all we do is elect businessmen into office. Their allegiances are not to the government or to the American people, but to business interests. Why else would multimillionaires work so hard to get a job that forces them to take a substantial pay cut?

And you're right. Business will always do the absolute bare minimum it is required to do. We would still have unsafe, loud clunkers of cars that have 7 mpg efficiency if it weren't for federal regulations over the decades. Consider this the largest argument for government reregulation of business. But, again, the Republican Party is not interested in that.

Melon

 

[nbcrusader]

so, this begs a question: is it in society's best interests to level the playing field; i.e., to prevent a company from becoming so big and powerful that they can buy everything at such bulk prices, resulting in lower cost to the consumer, and essentially destroying the competition? should the government prevent a company from being able to do this?

Walmart by no means has a monopoly. Just look at last year's 4th quarter sales. Walmart got killed by the competition. Between other brick and mortar discount outlets and the ever expanding cyber shopping, Walmart is far from establishing a monopoly.

how many Starbucks do we need? how many Wal-Marts do we need?

Funny, I heard this same question before regarding Starbucks. The answer is simply - as many as the market will support. Besides, with every new store, you've created jobs.

also, is there something aesthetically and culturally advantageous to preserving a merchant class? one of the great joys i have is going into independent bookstores where the clerks actually know a great deal about books, and they can order you anything you could possibly want. is this kind of experience that's nearly impossible at Borders or Barns & Noble worth protecting? and if so, how? aesthetically speaking, i abhor how simply ugly strip mall America looks. it's grotesque ... all neon and boxes and SUV filled and traffic congested. why does such a beautiful country care so little about it's built environment?

All the things you seek are available, and will continue to exist if desired by the market. Should everyone pay higher prices so a few can enjoy their aesthetic preferences?

 

[nbcrusader]

http://www.dsausa.org/lowwage/walmart/2004/walmart study.html

* Reliance by Wal-Mart workers on public assistance programs in California comes at a cost to the taxpayers of an estimated $86 million annually; this is comprised of $32 million in health related expenses and $54 million in other assistance.

* The families of Wal-Mart employees in California utilize an estimated 40 percent more in taxpayer-funded health care than the average for families of all large retail employees.

* The families of Wal-Mart employees use an estimated 38 percent more in other (non-health care) public assistance programs (such as food stamps, Earned Income Tax Credit, subsidized school lunches, and subsidized housing) than the average for families of all large retail employees.

* If other large California retailers adopted Wal-Mart’s wage and benefits standards, it would cost taxpayers an additional $410 million a year in public assistance to employees.

But I guess that explains Wal-Mart's windfall profits.

Melon

Interesting, that Walmart pays above minimum wage, yet somehow creates a bigger burden on society. My guess is that these union sponsored studies, assuming they are true, ignore the extent by which most people rely on some form of public assistance (which can be broadly defined).

 

[nbcrusader]

You can trust me, I've seen architecture firms that WalMart put out of business because of this practice. They asked them to work for them exclusively and then forced them to go under because they wouldn't pay them on time.

I've been in the middle of similar situations. Unfortunately, as always, there are usually two sides to a story. Many firms who rely exclusively on a big client can in ruin through mismanagment, or failure to understand the contracts they so quickly sign. I'm sure Walmart, like any other sophisticated entity, can obtain adventageous terms very easily.

The practices you mention are found at every level of business - from the sole proprieter to the largest corporation. Everyone seeks an advantage for themselves.

 

[Irvine511]

Walmart by no means has a monopoly. Just look at last year's 4th quarter sales. Walmart got killed by the competition. Between other brick and mortar discount outlets and the ever expanding cyber shopping, Walmart is far from establishing a monopoly.



Funny, I heard this same question before regarding Starbucks. The answer is simply - as many as the market will support. Besides, with every new store, you've created jobs.




All the things you seek are available, and will continue to exist if desired by the market. Should everyone pay higher prices so a few can enjoy their aesthetic preferences?

i suppose i simply have less faith in the free market than you do. i also don't think that just because the Free Market wills it to be so, that it is by definition a good thing.

i think that everyone, especially those far from the aesthetes in urban centers (guilty as charged ), are negatively impacted by sprawl, strip malls, and cultural homogenaity.

also, both you and i living in urban centers simply have more options available to us, so we can overlook the near total hegemony that WalMart has in many rural towns. my boyfriend is from rual Tennessee, and his family buys nearly everything -- from groceries to fishing rods to detergent to lawn mowers -- at WalMart. there really are no other options.

 

[MrsSpringsteen]

lovely

I also heard on the CNN last night that Wal Mart wants to start a bank

Wal-Mart 'heartsick' over DVD grouping
No. 1 retailer apologizes for bizarre racial combinations on Web site, spoofs poor sales in song.
January 6, 2006:

NEW YORK (CNNMoney.com) - Wal-Mart is ringing in the new year with a pair of snafus.

The retail giant apologized Thursday after its Web site directed buyers of "Charlie and the Chocolate Factory" and "Planet of the Apes" DVDs to consider DVDs with African American themes.

Wal-Mart said in a statement it was "heartsick" over the offensive combinations and that its retail Web site was linking "seemingly random combinations of titles."

The company said it would shut down its cross-selling system until the problem was resolved. It said the system was also referring buyers of movies such as "Home Alone" and "Power Puff Girls" to African American-themed DVDs.

Wal-Mart's apology came less than a week after the company played a spoof song about its disappointing holiday season on a recorded company phone message.

The company played a remake of the Christmas classic "Up on the Housetop" during its weekly recorded sales update Saturday, Reuters reported. By Thursday, the song was no longer on Wal-Mart's recording.

The song, which joked about the retailer's holiday sales performance and included a reference to the infamous limited laptop computers it sold and which caused customer brawls, risked angering investors, public relations experts told Reuters.

"People get kind of emotional about their money," Christopher Atkins, head of the global corporate practice at public relations firm Ogilvy, told Reuters.

He said there are times when humor is an effective tool for companies, but when things are not going well, it can appear as if managers are trivializing major problems.

 

[BonosSaint]

But I'll wait to see if they come up with a better explanation.

 

[Carek1230]

I don't shop at Walmart

 

[nbcrusader]

But I'll wait to see if they come up with a better explanation.

I'd think anytime a web site would reference you to African-American themed DVDs, you would run the risk of someone suggesting racism.

 

[U2DMfan]

I'd think anytime a web site would reference you to African-American themed DVDs, you would run the risk of someone suggesting racism.

I agree.

Does anyone really think that it was intentional?

 

[deep]

Md. Senate overrides veto of Wal-Mart bill



JAN. 13 12:47 A.M. ET Maryland has become the first state in the nation to require Wal-Mart to spend a certain amount on health care or pay the difference in taxes. More such laws may be coming.

The Maryland measure requires Wal-Mart Stores Inc., based in Bentonville, Ark., to spend at least 8 percent of its payroll on employee health care or pay the difference to the state in taxes. The law enacted Thursday applies to all companies with more than 10,000 Maryland employees, but currently only Wal-Mart meets the employee threshold without paying 8 percent toward health care.

Labor unions, who heavily pushed for the bill to pass, said they would pursue similar legislation in at least 30 other states.

"The tide is turning because working people are not just fed up -- they are ready to get active to set our country in a different direction, one state at a time," AFL-CIO President John Sweeney said in a statement.

The Democratic-controlled Legislature overrode a veto from Republican Gov. Robert Ehrlich.

The company said the Maryland vote sets a dangerous precedent.

 

[majid23]

It's an interesting movie...I always like to see something from both sides though (Fahrenheit 9/11, FahrenHYPE 9/11)...

http://www.thewalmartmovie.com