The Wal-Mart You Don't Know

Fast Company ^ | December 2003, | Charles Fishman

[blackie]

Yep ~ some people don't there choices in life. :)

[LowCountryJoe]

A one sided demand is not a "negotiation", no matter how much you want to spin it.

What???

DugwayDuke,
I do not think that a class is going to help here. Holy crap!

[blackie]

"There are" *sigh*

[Physicist]

Wal-Mart isn't a manufacturer.

[PRND21]

Liberal hogwash pickle barrel Bump

[Question_Assumptions]

Have you ever known a company to grow into a "monopoly" and then raise prices? No. The fact of the matter is that they have to please the consumer or die. That's regulation enough for me.

I'll address this hear, since you pointed me to it. Do I know a company that grew into a "monopoly" and then raised prices? Have you priced Microsoft Office lately? Better yet, price Microsoft Project. Or look at their compilers. Now compare to what they charged when they had competitors in Borland, WordPerfect, Lotus, etc.

But even if they don't raise prices, monopolies are not a good deal. As a disclaimer, many of my family members worked for AT&T, as did friends, but I'm going to talk about why breaking up AT&T was a good thing.

Did AT&T's prices go up? Not really. But they didn't go down. And for the longest time, you had a choice of about 4 phone models and had to rent them. You couldn't buy your phone. But that's only the tip of the iceburg.

After AT&T was broken up, not only could you now buy your own phone. Long-distance rates dropped dramatically. What most people didn't see was why AT&T's rates were so high. They were supporting a huge bureaucracy of workers that didn't really add anything to the business. There were whole business units that nobody knew what they did. So long as there was no competition, there was no reason for AT&T to drop their dead wood. The reason why AT&T couldn't compete is that they spent too much time worrying about how to get their customers to pay more for the same things (remember the iPlan?) than trying to cut costs.

Let me put it this way. I've worked for my state's government and I did consulting work at AT&T. AT&T, while it was a monopoly through while it was still the market leader, was the closest thing to the government I have ever seen in the private sector. Why? Because productivity and improvements didn't really matter. They were getting lots of money no matter what they did.

[TightyRighty]

I do the same......I'll go to Wal-Mart for some things but I'd rather step foot in Target. The Wal-Marts where I live (California) tend to be dirty and unkempt. You can't walk down an isle without having to dodge and step over stuff and their shelves are always disorganized.

[snopercod]

I'm getting real tired of these hit-pieces on Wally World.

[DugwayDuke]

And since they don't like their choices in life, they lay down on the floor and pitch a fit about the big mean ole walmart (or microsoft).

[Physicist]

All those reasons you give for hating AT&T are reasons to love Wal-Mart. Wal-Mart is a search-and-destroy engine for bureaucrats, deadwood and unnecessary costs of every description.

[Question_Assumptions]

I do not think that a class is going to help here. Holy crap!

If I point a gun at you and say, "Your money or your life!", am I negotiating with you?

[blackie]

Roger that!

The world has many complainers and whiners ~ thank God for the do'ers because that's how things get done.

[jb6]

I didn't find it posted, didn't check that far back and it seemed an interesting article. Who is Libertysailor?

[jb6]

Oh and the article came up in my economy search on Yahoo.

[Diana in Wisconsin]

I'm honored, Jaysun! One thing I've never wanted was one of those big, ceramic Dalmation Dogs from "The Wheel of Fortune," so can I have one of those as my unawarded prize? ;)

"I don't care about the money. I just don't want to lose all the stuff!" ~ Bernadette Peters, "The Jerk"

[jb6]

What's the cost in social spending by big government to cover the 2 million manufacturing jobs lost. You know, retraining programs, drug counceling, lower tax incomes (thus usually higher taxes), death of secondary and trinary businesses that serviced the closed factories and their employees. Higher crime rates and more police? Everything has a cost.

[AmusedBystander]

Well another aspect of the Wal-Mart you may not know is that they pay better than most of their competitors, have very good health insurance at a very low cost, profit sharing, bonuses, and stock incentive plans that they offer to their lowest paid employees as well. Some other big name companies would do well to emulate that behavior and corporate responsibility.

Now personally I hate to go there because of the crowds, but the Mrs. just loves them. As for Chinese made goods, well 30 years ago the same thing was said about Japan, then Taiwan, then Indonesia, then ... (well you get the point)

[Question_Assumptions]

The number one thing that a consumer demands from a vendor is more value for his dollar. Nothing else comes remotely close. To the extent that Wal-Mart calls that shot, on the consumers behalf, better than any consumer could possibly do, the consumer happily surrenders that power.

Wal-Mart reduces that value equation down to a single variable -- "cost". Wal-Mart never says, "Can you create a higher quality pair of pants for the same price?" Wal-Mart always says, "Can you give me the same pair of pants for a lower price?" even if that means that manufacturing moves to China or the pants have a lower and lower quality over time. Given that it's in Wal-Mart's best interest to sell low-quality goods that need to be replaced often (selling things is their business), I don't trust Wal-Mart to care about the quality of the goods they sell nor do I ultimate want them making decisions about the trade-off between price and quality on my behalf, any more than I want a central government planner making those choices for me. If huge centralized one-size-fits-all planning was really such a bargain, then socialist countries should have been utopias but, interestingly enough, they suffered from the same cheap in price and quality problem.

And when Wal-Mart fails to do that, the consumer will withhold that proxy by withholding their dollars. Amazon will get them instead.

That's fine if you have access to Amazon. Not so fine if you live in the middle of nowhere, don't have a computer, and Wal-Mart is the only big-box retailer in town.

[jb6]

But those jobs are parasitic. They don't create wealth; they simply provide the service of transferring wealth between consumers and producers. That's a valuable and necessary service, of course, but the fewer people it takes to provide the service--and the less they get paid--the better off our economy will be.

But what do you think happens to those people without jobs? They just don't vanish into thin air. 1. you pay for their support through higher taxes. 2. You pay for their ER visits. 3. You pay for their retraining.

Then there are the social costs. Loss of other businesses when those people don't spend money. Hay, I spent half of last year unemployed, thanks to IT outsourcing, and guess what: I bought damn little, along with my family. We didn't go to resturants and didn't go on trips, etc.

But I'm sure some Indian, in India, was going to resturants and creating other jobs in secondary industries for some other Indians.

Meanwhile, as businesses and factories close and people move, property values fall, tax income falls (which usually means more taxes or more government debt spending) and crime rises (which means more taxes for more police.) These are the costs that no one speaks of.

Oh and here's another cost that we shall all bear in the future: a stronger and revitalized left, especially the communists. Northern Italy already has a large communist movement because of outsourcing. Seems the Italians don't have the same credit margin we do for credit card debt, so they became poor much quicker.

[independentmind]

Wal-Mart never says, "Can you create a higher quality pair of pants for the same price?" Wal-Mart always says, "Can you give me the same pair of pants for a lower price?" even if that means that manufacturing moves to China or the pants have a lower and lower quality over time.

Another objection that many people have about Wal-mart is the quality of the in-store service. Some people refuse to shop there because they refuse to wait in line for 15 minutes at the check-out lane.