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[Rev_DelFuego]

Winner, Best Topic: Economy & Business 2003-2004

I opened this topic in regards to and article I have read in USAToday. It pretty much states that WalMart goes into towns with super competitive prices and puts local competitors out of business.
Do you think this is healthy for a community?

This post has been edited by Jaime: Aug 10 2004, 01:32 AM

[deerjerkydave]

The only thing most American consumers care about is the lowest price.  Walmart can provide the lowest prices so they get the most customers, and can easily wipe out the local competition.  This is a great example of how unwatched capitalism can cause serious problems...

If American consumers were just a bunch of drooling mindless zombies that don't know what's best for themselves, then perhaps you would be right. I like to believe that American consumers are slightly more intelligent than you give them credit for.

I can understand people disagreeing with the practices of certain businesses. There are a number of companies out there that I disagree with in their policies. Sometimes other people are just fine with those policies. And I can understand that too. Nobody is the same. But using the government to club communities over the head by dictating who they can and cannot do business with is tyrannical in nature. If the people want it, and no rights or laws are being violated, they should be free to have it. Freedom is what makes America great.

[jenreiautter]

But using the government to club communities over the head by dictating who they can and cannot do business with is tyrannical in nature. If the people want it, and no rights or laws are being violated, they should be free to have it. Freedom is what makes America great.

There are some communities where this is just the opposite. Not too far from where I live there was a fight about allowing a "big box' into a community. In this particular instance it was Home Depot.

The community was up in arms about it, wanting to keep the area they lived in safe and nice. There was a concern that it would bring in too much traffic from other communities as well as ruin the cozy feel of that community. The council of that community, however had closed door meetings and decided to allow the development, mainly for tax revenue purposes. Now, you can say don't vote for those council members again, but by then it will be too late -- shutting the barn door after the horse has escaped kind of thing.

I personally avoid Wal-Mart. I'd rather give my business to places that encourage diversity and pay decent wages to employees.

This post has been edited by jenreiautter: Mar 4 2004, 12:22 AM

[Skyler1534]

Target, Cosco, and other wholesale discount stores have been brought up here. Isn't it interesting that those chains do not inspire the vitriol that Walmart does? Perhaps it is because their tactics are not as cut-throat and monopolistic?

I don't particularly think Wal-Mart's tactics are cut-throat or monopolistic, and incidentally, neither does the Department of Justice, since they have not filed greivances under anti-trust law. Your reference to the other wholesale stores not being attacked is akin to why the rest of the world hates the U.S.

The United States is the only superpower left, we have the largest economy, and more freedom than a large majority. Consequently, peoples of countries around the world resent us.

Wal-Mart is the 6th largest company by market capitalization at $257 billion as of today's close. Of the two competitors you mentioned, Target is the second largest in its industry with $39 billion, and Costco trails as third-largest with $18 billion. TJX Companies (parent company to TJ Maxx, Marshalls, and several other large chains) is forth with a market capitalization of $11 billion. The capitalization of the leading competitors to Wal-Mart combined only comes to around 3 and 3/4 that of Wal-Mart.

The previous statistics may account for why Walmart is often attacked or controversial while others in its industry are not as much so. Coincidentally, where I live there is at least one of those stores within the same 15 mile radius and none have gone under or look to be in trouble through the years they have been competing.

Walmart grew to be so large because Americans embraced it. The mention about damage to the workers without benefits is outweighed (or neutralized) in most cases by the money saved by the community as consumers. [This is anecdotal evidence. I do not have scientific, so please don't ask or criticize too harshly.]

Monopolization is the growing so large that you corner the market and can sell at whatever price you want. Of the four companies mentioned, a 10-year average annual income growth comparison shows Walmart to be the lowest with 15.4%, Target second with 20.1%, Costco with 22.4% and TJX with 26.4% growth. They all look to be very healthy companies with mostly positive fundamentals (all positive earnings). Walmart is not the place to channel your anger if you want to be mad over the demise of Mom and Pop Stores; the blame lies in the entire discount store industry.

I, for one, and not complaining about lower prices.

[Julian]

Just wait for 20 years, at which point there will be no "mom & pop" stores left selling anything, except those few whose quality of service or specialisation of offer allows them to survive and thrive.

The Wal-Mart's of the world will then have no further room for expansion (and therefore profit growth, and therefore stockholder dividends and share price growth - the only measures that matter in Anglo-Saxon economies), so the only way to continue their revenue growth will be through subtle upwards shifts in pricing.

This has already happened in the UK. The big four supermarkets here do not offer particularly low grocery prices on international comparisons - the logistics costs in the UK are cited as explanation, but for the most part the supermarkets control their entire supply chain so this is somewhat misdirective.

They can't obviously gouge their customers as yet, so have expanded their offer to include non-food items such as the clothing, domestic electrical equipment, and so on that have been staples of US super-sheds for some time. This does the same to smaller competing businesses in these areas as it has to gocers, butchers, greengrocers, and so on.

The supermarkets can offer keen prices to consumers, for sure, since they just take lower margins for themselves until they have the market power to pressurise their suppliers into funding the value proposition (as they have done in food already). Part of this means the "exporting of jobs" that so many in the West get exercised about - it allows the production of goods at much lower cost, protecting retail margins and giving consumers lower prices.

Sooner or later the supply chain will operate as efficiently as possible. All supplies will be produced at the lowest possible cost in the lowest cost economies. All domestic competition will have been forced into niches where they can do the mega-corporations no harm. All available penetrable foreign markets will have been fully exploited.

This may take another 20 or 50 years, but by the time there is no room for more than incremental profit growth for the four or five transnational retail organisations that survive, and they realise that the easiest and quickest way to continue their double digit profit growth is to begin price increases in earnest, the power of consumers to remove their custom, and governments to have any control over inflation, will have long gone.

[amf]

Just wait for 20 years, at which point there will be no "mom & pop" stores left selling anything, except those few whose quality of service or specialisation of offer allows them to survive and thrive.

This is true of ANY industry, though. For example, Dell is one of the most efficient computer builders in the world. But they don't have -- nor will they ever have -- 100% of the market share. But they HAVE put some less-efficient makers out of business and they HAVE forced some of the other computer makers to catch up.

They've also helped force down the price of the components that make computers, which benefits everyone.

But some customers won't buy from them because they don't offer exactly what the customer needs. It works that way in any market.

Don't blame Wal-Mart for doing well in retail. They haven't forced Target or Kohl's out of business. They haven't put BMG Music Club out of business with their low prices on CDs. They also won't put specialty shops out of business, because those shops offer stuff that Wal-Mart can't efficiently sell anyway. And Wal-Mart's insistence that its supply chain be efficient lowers costs for other retailers as well.

Personally, I think any town that gets a Wal-Mart should assume that the town has gotten big enough to support a Wal-Mart, which is an accomplishment when you're out in the middle of nowhere.

[popeye47]

Just wait for 20 years, at which point there will be no "mom & pop" stores left selling anything, except those few whose quality of service or specialisation of offer allows them to survive and thrive.

This is true of ANY industry, though. For example, Dell is one of the most efficient computer builders in the world. But they don't have -- nor will they ever have -- 100% of the market share. But they HAVE put some less-efficient makers out of business and they HAVE forced some of the other computer makers to catch up.

They've also helped force down the price of the components that make computers, which benefits everyone.

But some customers won't buy from them because they don't offer exactly what the customer needs. It works that way in any market.

Don't blame Wal-Mart for doing well in retail. They haven't forced Target or Kohl's out of business. They haven't put BMG Music Club out of business with their low prices on CDs. They also won't put specialty shops out of business, because those shops offer stuff that Wal-Mart can't efficiently sell anyway. And Wal-Mart's insistence that its supply chain be efficient lowers costs for other retailers as well.

Personally, I think any town that gets a Wal-Mart should assume that the town has gotten big enough to support a Wal-Mart, which is an accomplishment when you're out in the middle of nowhere.

If you are comparing Walmart and Dell, that is a loss cause.

Yes, Dell is one of the best in its industry because of efficiency.

Yes,Walmart is one of the best in its industry because of paying low wages to its workers,no benefits, and being the 900 lb gorilla.

Dell and Walmart are at the top in their respective industries,but for different reasons.

One uses a intelligent and efficient system.

One uses a system that takes advantage of workers,uses fear to control the workers and uses illegal immigrants.

[heart]

The Walmart plan: This is why I think WalMart is bad for a community and bad for America.

Yes. WalMart purposely goes into local community stores (particularily hardware stores), and looks at what's on the shelves in large quantities, and the prices. Then they proceed to take a loss on these items in their new stores until the town store goes out of business. This is documented by marketing people who have left WalMart and spilled the beans. WalMart has to spend millions in advertising to improve their image for a very good reason. If you read any of the WalMart employee forum boards you will find some very disturbing information.

WalMart is so big now that they tell everyone what they will and will not do. Last year they told all of their suppliers that they would only carry their goods if they lower the prices each year, no one gets a raise, they must take less every year. Since it seems unlikely that the owners/ceos will take the pay cut, the employees will, and/or quality will suffer.

They are also insisting that over the next 5 years all of their suppliers must use FIVR(sorry if I have this name wrong) tags on all of their merchandise. These tags allow you to keep track of all merchandise throughout the supply chain. It tells you where the item has been and how long it has been there. This seems innocuous to some, but here is the real plan: WalMart wants to pay their suppliers for what sells, not purchase quantity items. So, WalMart doesn't have to take the chance that a product will not sell.

After WalMart has cornered the market in many communities, and put all of the locals out of business, the innovator or wholesaler will eventually have to take the risk and the customer will never know. We have a short memory, and we forget that Sam Walton wanted goods "made in America" in WalMart, but he would roll in his grave now.

I may not be able to do anything about this, but I can vote with my money and I do. I shop at my local stores. I don't even support the corporate fast food chains, coffee chains or any of it. I pay a little more and I buy from local business people who keep the profits in the community. I don't always do it, because I don't want to be a radical idealist either, but I make choices everyday based on principle.

If 15 people make a decision every day to eat at a local restaurant rather than a fast food chain, that alone keeps one local in business, so it's easy to make a difference. If I choose my local hardware store, gift store or whatever, I only need a small population to join me to keep those people in business. WalMart needs 1000's, but my locals only need dozens.

[NiteGuy]

I don't particularly think Wal-Mart's tactics are cut-throat or monopolistic, and incidentally, neither does the Department of Justice, since they have not filed greivances under anti-trust law. Your reference to the other wholesale stores not being attacked is akin to why the rest of the world hates the U.S.

Actually, while their actions may not be deemed monopolistic at the present they are rather cut-throat. Here's an article in Fast Company that points it out rather plainly: The WalMart You Don't Know
The article is rather long, but well worth the read.

Wal-Mart wields its power for just one purpose: to bring the lowest possible prices to its customers. At Wal-Mart, that goal is never reached. The retailer has a clear policy for suppliers: On basic products that don't change, the price Wal-Mart will pay, and will charge shoppers, must drop year after year. But what almost no one outside the world of Wal-Mart and its 21,000 suppliers knows is the high cost of those low prices. Wal-Mart has the power to squeeze profit-killing concessions from vendors. To survive in the face of its pricing demands, makers of everything from bras to bicycles to blue jeans have had to lay off employees and close U.S. plants in favor of outsourcing products from overseas.

Shopping at Wal-Mart, it appears, could be accelerating the amount of "off-shoring" jobs that's currently going on, to the detriment of our job growth:

Steve Dobbins has been bearing the brunt of that switch. He's president and CEO of Carolina Mills, a 75-year-old North Carolina company that supplies thread, yarn, and textile finishing to apparel makers--half of which supply Wal-Mart. Carolina Mills grew steadily until 2000. But in the past three years, as it's customers have gone either overseas or out of business, it has shrunk from 17 factories to 7, and from 2,600 employees to 1,200. Dobbins's customers have begun to face imported clothing sold so cheaply to Wal-Mart that they could not compete even if they paid their workers nothing.

"People ask, 'How can it be bad for things to come into the U.S. cheaply? How can it be bad to have a bargain at Wal-Mart?' Sure, it's held inflation down, and it's great to have bargains," says Dobbins. "But you can't buy anything if you're not employed. We are shopping ourselves out of jobs."

Seems they are cut-throat in other ways as well....

Here, for example, is an executive at Dial: "We are one of Wal-Mart's biggest suppliers, and they are our biggest customer by far. We have a great relationship. That's all I can say. Are we done now?" Goaded a bit, the executive responds with an almost hysterical edge: "Are you meshuga? Why in the world would we talk about Wal-Mart? Ask me about anything else, we'll talk. But not Wal-Mart."

"You won't hear anything negative from most people," says Paul Kelly, founder of Silvermine Consulting Group, a company that helps businesses work more effectively with retailers. "It would be committing suicide. If Wal-Mart takes something the wrong way, it's like Saddam Hussein. You just don't want to tick them off."

Apparently, saying anything that could be construed by Wal-Mart as negative, gets you instantly moved to lesser-quality shelf space in the store, or removed outright.

The mention about damage to the workers without benefits is outweighed (or neutralized) in most cases by the money saved by the community as consumers. [This is anecdotal evidence. I do not have scientific, so please don't ask or criticize too harshly.]

I seriously doubt this. Let's say you were working for a local business, when Wal-Mart came to town. You were making decent money, working full time, and had health insurance and other benefits. But Wal-Mart was able to undercut your company on identical items, time and again, because they could afford the loss, until your company went out of business.

Now, you have to go to work for Wal-Mart. Part time, no health insurance, and no other benefits. Do you really think the money you are saving by buying from Wal-Mart, is going to make up the difference?

Or, lets say you are one of the suppliers to Wal-Mart, like in the article. Your company can no longer afford to sell to Wal-Mart by utilizing American labor, and terminates your job to ship it overseas. Can you afford even Wal-Mart's prices, if you have no income?

Steve Dobbins (quoted above) is right. We are so obsessed with "cheap" prices in this country that we are literally shopping ourselves out of a job in many cases.

[Jaken]

With walmarts recent problem with illegal immigrants i dont think people are looking at it in the same light. YES, i do think that walmart is one of many big busineses that try to move into small towns and try to get most of the busines. Lets look at the past few years in my VERYSMALL TOWN. When the first walmart opened up in town it was pretty good, for a while. Then after about 2 months local "mom and pop" businesses started shuting down. You could barely count on your two hands how many stores started to shut down. I admit, i got a little steamed but it wasnt a big deal. Then after about three years the walmart closed, SHOCKING, but thats not the problem. THEY OPENED A SUPER WALMART ACCROSS THE STREET, oh yeah INSANE. I recall a moment when i was standing in the parking lot of the new BETTER walmart and looking over at the vacant, logo-less building i laughed. These people had to spend at least a million dollars to get the first walmart up and runnig smoothly, then they shut it down and spent another million dollars to open up another, the difference between the two, hmmm THE NEW ONE HAS MILK AND BREAD, oh and dont forget, FROZEN PIZZAS. Absolutly insane. Well i was fine with this. Well, the crazy part about this is about a half of a year after this whole ordeal, a Fred Meyers opened across the street from the only Grocery store chain that is Alaska owned. Well that store soon shutdown. This *** NOTICE: THIS WORD IS AGAINST THE RULES. FAILURE TO REMOVE IT WILL RESULT IN A STRIKE. *** me off (beside that fact that Fred Meyer opend up on our lake ). Well after our little town got used to these two new stores CRAP HAPPENED. Remeber the old walmart building, yeah a SEARS OPENED UP IN ITS PLACE. Well all the people that think GIANT label stores are the best thing since walmart bread, well those people went insane. GOD traffic shot up like crazy. People from Anchorage (the biggest city in Alaska, its about 40 miles from my town) came in to use the facility of Fred Meyers, walmart, and wrap their day up with a stop at sears. So i guess all i have to say is that big business is ok, persay but too much in a small town is bad. Oh yeah dont get me started on the fact that our towns SECOND blockbuster opened up in the parking lot of fred meyers, no 3 miles from the original. Yeah IN THE PARKING LOT, right next door the the Charles Junior, IN THE SAME PARKING LOT. OH MY GOD. This is the most insane thing ever. I HATE THIS. We have one more blockbuster and 1 too many Charles Junior.

[overlandsailor]

I have a few problems with Walmart.

1> They use questionable tactics when resisting unionization. Resisting unions is fine, but disciplinary actions suddenly totaling up to get suspected organizers fired is another.

2> They were using Illegal Aliens in their stores. This problem is probably corrected now since the big publicity shake up on it, but Walmart was willing to break the law to save money.

3> They come into areas with low prices and drive other smaller companies out. However, once those companies are out, usually is smaller rural areas, their prices climb and climb. Apparently the price cutting smile guy only works in more urbanized areas.

4> Their customer service is Horrible. The aisles are too small, the carts are ridiculously small considering the variety of goods they carry, the employees are generally rude and impossible to find if you need assistance (though at their wages who can blame them) and Management is even worse (though admittedly this varies from store to store).

That being said. I am forced to shop at Walmart. Not because of lack of choices, St. Louis has plenty of variety. But because I need to stretch my families dollars as far as I can. Walmart, on most consumables, is by far the cheapest in my town.

So I Hate Walmart, but I shop there regularly. Funny thing is, most of my friends and neighbors say the same thing. We frequently go as a group so we can commiserate together . With attitudes like ours it's no wonder Walmart's customer service is terrible. Why fix it? The people will come anyway.

This post has been edited by overlandsailor: Mar 15 2004, 02:39 AM

[Christopher]

I have read articles that state the almost perfect perfection of the Wal Mart business approach as an example of capitalism. They drive down the prices and can offer the best deals to its customers. The can force companies to offer great deals to the American public at a low cost. Simply put if you lose your spot at Wal MArt your gonna lose a fortune.
They keep costs down and profit UP. To a capitalist they are almost perfect.
The down side is they treat their employees like garbage. Low wages, no healthcare, and those who do get it pay very high costs and it is alleged they target those people for removal when costs need to come down.
They take out the competition and reduce the available tax base for the locations they are at. There are being sued for up and moving out at the last moment to avoid having to pay out owed monies to towns and cities and are so arrogant they will open another center JUST over the city's border thereby continuing the destruction of the tax base.
They deliberately train manager to steer employees to public and civil services to cover their healthcare needs thereby driving UP the need for bloated Federal and State taxes.
Whether you want them in your town or not they WILL do as they please. One way or another.
But like OverLand says. We all shop there. We really need the deals. Even as those deals erode the quality of life around us. Also making us dependant on them even more. It's a sick cycle.
To my way of thinking its a strange thing. Capitalism is the best way to assure freedom, but at the same time it also makes you a slave.

[Paladin Elspeth]

As a former Wal-Mart employee, I know that health insurance benefits are offered to full-time employees. I also know many employees who cannot afford to pay the premiums or the co-pays, so they forgo joining the insurance plans.

There are advancement opportunities at Wal-Mart, but I do not feel that they are as gender-neutral as they might be in selecting their management trainees. In addition, I have seen managers chewed out or fired for surprisingly insignificant reasons. Management positions are in fact quite tenuous from what I've observed.

Wal-Mart is a company reputed to have family values. I know of one assistant manager who was fired for having a relationship with a subordinate employee. I also know a gay man who was not allowed to take a day off to attend his partner's funeral--it was against the rules, and they were not in the mood to cut him any slack.

Some time after it hit the fan that Wal-Marts were using outside contractors who employed undocumented workers for maintenance work, the local store decided to pull the remnant of the former maintenance crew from stocking and reinstate them to clean and wax the floors. The buildup on the floors was terrible, and the old, reinstated crew has been working hard to restore them to the condition they were in before Wal-Mart decided to save a few bucks by outsourcing the job.

Since Sam Walton died, the focus of the corporation changed. When he was alive to supervise and visit every store, the employees were treated better and the stores sold far more American-made products.

This post has been edited by Paladin Elspeth: Mar 15 2004, 03:14 PM

[Robin_Scotland]

In my country, Wal-Mart bought over ASDA which was one of the biggest supermarket chains. Local ASDAs have gone under renovations since then, and in my opinion they aren't as good as they were

I tend to do my shopping at the Co-operative supermarket, a smaller chain with smaller stores, which also has one of the largest supplies of Fair Trade in the UK which is what I like. It isn't to ease my conscience, its just that i like to see big chains taking action, and they lead the way in that respect. But my main gripe with ASDA/Wal-Mart is that it is just too darn big. I can't find my way around, and its generally less well kept that smaller stores. I also find the decor cold. Even the employes wear fleece tops here, maybe ASDA want to save money by not having heating systems!

Well enough of my ASDA/Wal-Mart gripes. I don't think they will obliterate all competition in my area. They certainly have a large share of the market (although I believe Tesco are the biggest chain in the UK) but there are so many supermarkets, and ASDA are rarely the cheapest. I was reading the top 100 richest people in the world: the richest supermarket owner was the founder of Aldi, the third richest man in the world! And Aldi along with fellow German chain Lidl have the cheapest prices in my part of the country.

On the matter of local shops, well I'd say they are all but dead. Very few people shop at local stores, obviously because of the unbeatable superstore competition. Local bakeries and butchers still hang on in there, but grocers are few and far between. The remaining stores are either small corner shops or semi-supermarkets. I don't think it is neccesarily a bad thing, its a free market and this is capitalism afterall. So long as the big chains are subject to higher taxes proportionate to their profits, and so long as they treat employees well and contribute to local communities, (and also so long as supermarket chain competition remains healthy and one doesnt run away with a monopoly), then fine by me.

This post has been edited by Robin_Scotland: Mar 15 2004, 04:05 PM

[NiteGuy]

Simply put if you lose your spot at Wal Mart your gonna lose a fortune.
They keep costs down and profit UP. To a capitalist they are almost perfect.

Christopher, for some vendors that's true. For others, not so much.

As the story link in my previous post points out, Wal-Mart doesn't just ask for cost or profit concessions, it demands them, year after year. A lot of companies have had to close US factories, and move to cheap overseas labor, just to stay in business. Others have gone bankrupt. Having a spot on Wal-Mart's shelves may look impressive on paper as far as your supposed "market share" goes. But, if you can no longer afford to pay the bills, all the market share in the world won't help you.

The down side is they treat their employees like garbage. Low wages, no healthcare, and those who do get it pay very high costs and it is alleged they target those people for removal when costs need to come down.

Actually, it's quite a bit worse than even what you list, Christopher. Or, at least, it used to be. Ever hear of "dead peasant" insurance? Here's how it works.

Wal-Mart used to offer either $5,000 or $10,000 life insurance to it's employees, at a nominal monthly fee. The amount depended on whether you were an hourly worker, or in management. The payroll deduction was was only $10 to $20 a month and Wal-Mart had signed up nearly 90% of it's 350,000 employees. What's the big deal right?

Well, when Wal-Mart obtained the insurance for the employee, it also obtained a second policy, purchased without the employees knowledge, in amounts from $50,000 to $500,000 with Wal-Mart named as the beneficiary. So, when one of their employees died, the insurance company paid out twice. Once to the employee's estate, for barely enough to cover the funeral, and once to Wal-Mart, for a lot more. In some cases, 50 times more than what the employee's estate was paid.

It gets better. Reportedly, the insurance payouts that Wal-Mart received, went into the executive's and director's retirement fund. Nice huh? Pay for your rather lavish retirement on the backs of your deceased employees.

Now let's add insult to injury. The insurance purchased by the company was paid for through a complicated series of business loans, which were fully tax deductible. So, they were charging their employees for insurance that it wasn't costing them anything to begin with, and then profiting off of said employee's death.

Wal-Mart didn't stop obtaining the additional "dead peasant" insurance until 2000, when some deceased employee estates found out about it, and started suing to get the payouts that Wal-Mart had received. Additionally, many states began closing loopholes in their insurance laws that allowed for this kind of policy, or at least disallowed the tax break, so it became unprofitable. By the way, other companies have used this insurance as well, including Enron, Dow Chemical, Olin Mills and Shell Oil.

As one columnist in Texas, R.H. Meyer wrote in January 2003:

Several years ago Wal-Mart embarked on a television ad campaign featuring older semi-retired employees in an apparent attempt to recruit older folks into their employ.   Is it possible that Wal-Mart valued its older "associates" in a more sinister way?

The ghoulishness of this practice speaks to the utter disregard - indeed contempt - that Wal-Mart holds for its "associates". Executives enriching themselves on the death of their employees. How low can one sink?

Apparently quite a bit lower.

In a class action suit filed in 2002, thousands of employees and former employees alledge that Wal-Mart doctors employees payroll records deliberately to keep payroll costs down.

In some testimony I read, payroll personnel stated they were told by store managers to go into the payroll system and "erase" overtime hours of some employees, or to show break times for employees, even if they took no break, to keep their payroll budget in line.

In other cases, managers told employees to clock out, and then called them back to their department to do additional work. Or, asked them to come in early, and then would not permit them to clock in for a couple of hours.

Behavior like this is not just illegal, it's morally bankrupt. R.H. Meyer again, from a different column:

You can ask "so why should I be concerned?"   Well, this is why:  Kmart is currently in chapter 11 bankruptcy, in large part because of competitive pressures from Wal-Mart.  Many, many locally owned retail businesses have been run out of business by Wal-Mart's predatory business tactics.   In my own community, Wal-Mart enjoys a virtual monopoly with regard to many items. When a company is allowed to cheat its way to the top, everyone else suffers.  Free markets only work if there is a reasonably level playing field, otherwise the least ethical of the competitors will rise to the top and through cheating, lying, and stealing, and will establish a monopolistic position.  Companies like Wal-Mart that cheat their way to the top will eventually have their customers at their mercy.  This is already the case in many smaller communities. How many times have you heard "Yes, I shop at Wal-Mart.  I don't like it, but it's the only place in town to shop now?"

   So, what should be done about it?  Well, stealing is stealing, whether its by mearly taking someones property or by deceptive time-keeping practices.  It's clearly time for the U.S. Justice Department and the Department of Labor to get involved and pursue the criminal aspects of these cases.  Heretofore, corporations such as Wal-Mart have been insulated from criminal prosecution through a facade of "civil' remedies.  It's time for the Attorneys General of the various states to pursue criminal actions against Wal-Mart, its executives, and its board of directors.  Reasonable suspicion has been established.  Every Attorney General needs to launch an investigation into possible criminal activities by Wal-Mart. Civil actions alone will be insufficient to deter Wal-Mart from continuing its practice of stealing from its employees.  Unless this practice is stopped, competitive pressures will force Wal-Mart's competitors to adopt similar practices.   If that happens, more folks suffer.

If convicted, Wal-Mart executives, directors, and corporate managers, in addition to jail time and heavy fines, need to be sentenced to stand in front of their stores wearing sandwich signs that read "Wal-Mart - Bringing you low prices by stealing from our employees."

Hey, truth in advertising. I don't normally go to Wal-Mart if I can help it, but I'd certainly make an exception to see executives with those sandwich boards.

[lee]

I am not sure about the speific legal ramifications or how to develop such a policy, but I would be interested in some form of legislation requiring stores like WalMart and Blockbuster to maintain their prices (so they cannot use their huge national profits to unfairly monopolize small towns). Business classes told me that it is just an evolutionary part of modern business, but I feel that destroying shops that have had the same ownership for generations is wrong. It is one thing when everything is cheaper, but when this is no longer the case, it is unfortunate. Ma and Pa stores could get together and consolidate or restart their businesses to compete, but making some law that keeps everything at its lowest price would be ideal.

I don't like suggesting the implementation of new laws, seeing as there are far too many already. I also don't like to encourage the strict regulation of business (nor do I know how to go about it in this case). It is merely an idea to combat the situation, and I would be interested to hear any responses.

[Christopher]

NiteGuy I am not arguing the fact of Wal Mart's tactics. I disapprove of them.
I merely pointed out that from a pure capitalistic standpoint they are almost perfect. They are a purely profit driven entity. There are no concerns for people outside the realm of profitability. Forcing the companies to seek cheaper production costs elsewhere in a purely economic standpoint is good. From a societal standpoint its brutal.
Businesses exist to make a profit. They don't exist to care for the needs of employees or the public at large. If they do they will in most cases fail.
While WalMart IMO lowers the quality of life in its surroundings the sickest part is I could not continue on without their deals. Since I make JUST enough money to get by these days the Super Center near me is a life saver. A Stephen King style Catch-22.
Wal Mart has no emotional blocks when it comes to pursuing the best possible profit margin.
As to the overall fairness of their tactics some are indeed cruel and beyond the pale IMO, but at the same time some of the businesses they take down are sometimes poorly run and would have buckled under the strains of any competition or just beyond their prime in this modern economic reality (K Mart was horribly run and a lousy store).
I have had my job outsourced in a sense. I was replaced by two fresh out of college kids for the price it took to pay me. I am far better than they are BUT they together can equal my overall production. They will also begin to reach my numbers and still for quite some time be cheaper than I was. I hate it, it hurt like hell because I had invested so much of my time in that company. But I can't blame them. I might have thought the same way were it my company. The owner has a dream and must pursue it. I could have prepared better and continued my studies and learned new skills to be retained and even promoted. Chances had been available but I didn't pursue them. I didn't want to do any extra, So I got replaced.
As for the customers of that company because of actions like that they can now get the final product cheaper. Which they can then use to further their careers and marketability.
That is how it goes and how it should go. I am back in school and educating myself in fields that are up and coming. No sure bets on any of them but it should be enough to get in somewhere and build on it. This time when the opportunities to advance are available I will take advantage of them.
Whats my point?
My ex-company could have kept me around. I did do fantastic work
but the economy got tight and the best thing for that company was to tighten its belt and only keep those who went above and beyond. They targeted weak areas were they could get by with less and I was smack dead center.
When Wal Mart says we want your product cheaper the reality is that these days there are cheaper alternatives to anything out there. Weak business models will fail. It sucks to be employed by one of those but thats life.
As for Wal Mart unsavory practices in regards to health care, illegals, and the dead peasants insurance.
Sooner or later it all comes around. The grumbling has already begun. It takes time for it to snowball. There are many people doing investigations now. Both official and private. Wal Mart will get nailed for what it does wrong. People will begin to look for alternatives to wal Mart as the effects of Wal Marts business model become apparent.
Many people complain about Microsoft. They are unfair its always said. They stifle competition they say.
Nope they just had a better business model. They played hardball and did whatever necessary to destroy competition. They could beat everyone and did simply because they offered the most value to their customers. Only the tech geeks really complained and criticized. Well now Linux is barking at their heels.
Whole governments are dropping windows for Linux. Businesses are opening their proprietary code to the Open Source community. Microsofts time is coming to an end. A newer and better business model is being developed by the Open Source community and profit methods are being created that benefit from an almost communistic approach to product development. They are offering a better alternative price wise and flexibilty-wise and there is nothing in the end Microsoft can do to stop it.
It'll happen to Wal Mart as well some day.

[Julian]

Fair comment, Christopher - eventually, markets do correct themselves. The question is, do we have the time to wait the decades or longer that it takes for that to happen?

You said

Businesses exist to make a profit. They don't exist to care for the needs of employees or the public at large.

and you're quite right. That is what governments are for, and it is why there must be regulation of markets. This regulation is not there to spite "wealth creators", but to protect consumers from the often very long downturns in the business cycle - as you described, while one particular business model abuses workers and customers.

We must always remember that markets are there to serve people, and not to serve businesses. The businesses that best serve consumer needs will grow, and those that do not will fail, but markets are not perfect (for example, not everyone has access to every retailer. If Wal-Mart is the only store in town, they have a local monopoly) and market dominance gives dominant corporations many years' grace before their shadier practices reign in or undermine that dominance.

For example, for how many years have Microsoft been dominant? Only now are open source suppliers beginning to force competition on them again, and only then in certain markets to a certain extent - Microsoft are still globally dominant. Even if the trend towards the open source model your describe continues at the most optimistic predicted rates, it will be another decade or more before Microsoft have to compete for every customer (the only situation in which the customer can truly exercise free choice, and therefore the only situation in which the market approaches much vaunted "perfection").

In the absence of perfection, regulation is the only thing that protects consumers and workers from the cold wind of capitalism.

[Regent]

Having been offered a job at the Wal-Mart headquarters several years back, I find many of the comments here kind of interesting. I grew up in a smaller town and I have heard this debate many times over the years. Does Wal-Mart actually hurt the town or community? The real answer is both yes and no. In terms of employment opportunities for youth and others this can be a great place to gain some work experience. In terms of the mom and pop shops, Wal-Mart forces them to diversify their product lines to stay in business. One of the largest complaints is that Wal-Mart kills the diversification of products in an area. They are a discount entity at the basic level. They are great for those who do not have much to spend, but need great deals.

Their tactics have been described as less then above board by a few in here, but I find these arguments to be nothing more than conjecture with no real substance. The reality of the situation is that few of us here really know what their objectives are and the complete picture as to how they pursue their goals. One example is the fact that they do an impact analysis before building any store. This is something they do to determine not only profit margins, but the potential for backlash if they place a store in a certain area. Contrary to some opinions the management of Wal-Mart does care about their image. When I went through my series of interviews for the corporate job there were many questions and discussions on these issues.

In many suburban areas they thrive due to competition from other entities such as Kroger, Costco, Target, and other grocery chains. However, they always take the most heat as has been mentioned. The reason for this is simple. They are the most successful. Not due to tactics on store placement or other such things, but due to their ability to keep their own costs down. Their information systems are world class and among the best in the world class category. When studying this company you can see that their ability to distribute products in a just-in-time mentality is unmatched. This is achieved through their network of computers and distribution centers strategically positioned. Their transporting section of the company is very efficient and there are always efforts to reduce cost. Wal-Mart is not unionized which further allows them to offer goods and services at lower costs than many of their competitors such as Albertson’s. The strikes in California by certain grocery unions were a direct result of why Wal-Mart is more successful. The unionized chains can’t compete on cost with Wal-Mart because their unions are making unreasonable demands.

Wal-Mart creates jobs that really have no other purpose except employing the elderly. How many stores do you know that have an elderly person saying hello to you? We all know that they are not needed, but here is this company that apparently is only focused on profit paying not just one, but quite a number of people that they certainly do not need. One could argue they are doing this to try and improve their reputation, but no matter how it is spun the reality is that the job positions are unnecessary and cut into profit margins.

Wal-Mart is a good company to invest in as they are a well managed company. Many people invest their money there because they recognize a good company. They certainly are not a monopoly, but they are a tough competitor. Target and Costco survive due to the difference in their target markets. It is similar to how Lowe’s and Home Depot operate---different target niches.

The biggest of the giants always take the shots from those who are against large corporations or entities. But many who work in the corporate world look for such a company due to its stability and ability to offer excellent benefits and career opportunities. When impact assessment on any community is discussed we all need to look at both sides of the fence before passing judgement.

This post has been edited by Regent: Mar 16 2004, 04:55 PM

[jenreiautter]

I have read more than one post on this thread where someone says "I'm forced to go to Wal-Mart because that's all I can afford".

Now, I may get trounced on by a few people for saying this, but I think it's important to make some priorities.

The way things are in my household now: my fiance is supporting me, our infant daughter and my 9 year daughter from a previous relationship earning under 30,000 a year, we NEVER shop at Wall-Mart and we are living quite comfortably. I believe our secret is that we are fairly un-materialistic, aren't afraid to buy or accept things second hand, and think carefully about what we really want and need before making a purchase.

We are a very politcial family, so avoiding corporations that are exploitive is a high priorty for us. There are ways to avoid Wall-Mart and places like it if you just get creative enough.

The scary thing is -- once all of the competition is gone, and we are all working for Wall-Mart, their prices won't seem very cheap to us then . . .

This post has been edited by jenreiautter: Mar 16 2004, 06:02 PM

[pheeler]

As for Wal Mart unsavory practices in regards to health care, illegals, and the dead peasants insurance.
Sooner or later it all comes around. The grumbling has already begun. It takes time for it to snowball. There are many people doing investigations now. Both official and private. Wal Mart will get nailed for what it does wrong. People will begin to look for alternatives to wal Mart as the effects of Wal Marts business model become apparent.

I'm with you there. I don't think legislation will solve this problem, legislation has already missed its window of opportunity to do so. It's left to us as consumers to use the vote that really counts, our money, to let Walmart know we don't support liars, cheats and thieves. I haven't spent a penny there for years, and I'm working on getting my parents to stop going. Boycott Walmart, get some news coverage and spread the word about their inethical strategies/