Posted on 01/01/2006 3:06:28 PM PST by flixxx
The Wal-Mart Model
The American economy continues to surge ahead, though you won't read much about it in mainstream media. Economic growth in the third quarter was 4.1 percent--despite Hurricane Katrina!--the 10th consecutive quarter with growth over 3 percent. Unemployment is 5.0 percent--lower than the average for the 1970s, 1980s, or 1990s. Since April 2003 the economy has created a net 5.1 million new jobs. Core inflation is only 2.1 percent, and gas prices, which surged above $3 a gallon after Katrina, are now down around $2. Productivity growth for the five-year period of 2000-2005 is 3.4 percent, the highest of any five-year period in 50 years.
This is a remarkable performance and owes something surely to the Bush tax cuts and to Alan Greenspan's stewardship at the Federal Reserve. But it also tells us something broader about the American economy. Mainstream media coverage about the economy tends to be full of bad news, especially during Republican administrations, and to focus on economic problems. But over the longer term the story of the American economy is one of success. A quarter century ago many economic commentators said that the era of low-inflation, high-job-creation economic growth was over. In the ensuing 25 years it has come to be the norm.
The negative bias of economic coverage can be seen in stories about the current No. 1 private-sector employer in America, Wal-Mart, and the No. 1 employer back in the 1970s, General Motors. The GM story is genuinely grim: The company is laying off thousands of workers and closing plants and is threatened with bankruptcy. Stories about Wal-Mart tend to focus on allegedly low wages and healthcare benefits, and to say less about the company's continual profitability and the low prices that benefit consumers. These companies are not entirely comparable; they're in different businesses. But some of the differences between them illustrate why the American economy, which seemed to have run out of gas 25 years ago, is now doing so well.
One big difference is this: General Motors' business model was designed for a static economy; Wal-Mart's for a dynamic economy. From the 1930s, GM--as one of only three major automakers--was able to pass along to consumers the high costs imposed by wages, pensions, and health benefits negotiated with the United Auto Workers. When emerging foreign competition started to make life tougher for Detroit executives in the 1970s, they tried to insulate themselves with government tariffs and domestic-content requirements. More recently, they've tried to offload their high healthcare costs onto the government. Wal-Mart, in contrast, started off with many retail competitors and has sought more, by taking on supermarkets. It competes by holding down costs and prices for consumers.
Quick reaction. Wal-Mart has been much more skilled at adapting to market conditions. Its computers keep it instantly apprised of sales, and its distribution system keeps stores stocked with items consumers want. Someone making a 3-ton car cannot adapt so quickly, but even so it still takes GM years to get new models on the market--and often they're not what consumers turn out to want.
Then there are employment costs. Yes, Wal-Mart does not pay high wages or provide healthcare benefits to all employees. But not all workers today want full-time jobs (they may want to be home when kids return from school) or health insurance (many are covered by a spouse's policy or Medicare). And Wal-Mart promotes from within: You can work your way up from the store floor to management ranks. GM and the UAW, in contrast, insist on a sharp line between labor and management, with all employees working full time and getting full benefits. That made sense when almost all workers were men supporting families. But it is a poor fit with a labor market in which many workers are women, teenagers, or retirees seeking extra income.
In retrospect it's not so surprising that 25 years ago, when GM was deemed the prototypical firm, experts were pessimistic about the American economy. They failed to foresee that more nimble firms like Wal-Mart would rise and would supply the amazing resilience that has enabled the American economy to thrive, as Greenspan has observed, even when hit by calamities like September 11 and Katrina.
There is a point of diminishing returns in turn over of employees. These added costs are mostly hidden in training, efficiency and the actual hiring process.
Plus, when you are competing for employees in a labor limited labor pool against a company paying better wages, the low payer is bound to get the dregs, which increases costs regarding training and what is politely called "shrinkage."
Something that companies like Costco have apparently discovered while companies like Wal-Mart seem to dismiss.
Just curious.
You need to get angry at a different villian, such as Congress my man. The envirowacko regulations, high taxation, and litigatious atmosphere is responsible for Wal-Mart (and other companies) moving manufacturing operations overseas.
Do you have any idea how many American jobs Wal-Mart has created directly and indirectly? When new Supercenters are built, another dozen or so other businesses spring up next to Wal-Mart. The sales tax revenues that hypocrites in state government who bash Wal-Mart over their "sponging" off of public health services but will pocket all the sales tax receipts that Wal-Mart generates.
I disagree with you about Target - their employees are rude, think they are better than the customer, that is if you can find one and their crap is the same as anywhere else except more expensive.
Except fo their children's clothes......the clothes they sell for little girls belongs in a Frederick's of Hollywood catalog not in the children's department of a retail store.
I happen to like the people that work at the local WalMart....and there is very little turnover in the one near me. And they are one of the better paying employers in this area. But that's just one gal's opinion.
ROFL!!!!!!!!
Very true indeed :)
What is the ratio of those who plan on making a lifetime career scanning products than those who just plan on doing it for a year or two part-time? Either someone really, really enjoys cashiering and taking feces from customers or its the highest skill level that they're able to achieve.
Yeah, there really is. No wonder whenever a new Wal-Mart opens, they get a ton of applications. The Wal-Mart mafia is very good at rounding up people at gunpoint, eh?
Wal-Mart is trying to mitigate the effects through standardized routines. You know, breaking each job down into carefully described components. But this only works to a limited degree and tends to inhibit initiative and "creativity" on the part of employees. That is to say, the best you can hope for from employees is to do what they're told and nothing more.
There is also the idea that customers don't expect or value quality service from wal-mart. They expect and value cheap prices. In this regard, I'll say the thing that nobody else is willing to say: wal-mart most resembles a ghetto store that caters to people on highly restrictive budgets. The hallmarks of such stores are: quantity over quality. Price over service.
I assume you have access to management directives and policies.
"Wal-Mart executives said the memo was part of an effort to rein in benefit costs, which to Wall Street's dismay have soared by 15 percent a year on average since 2002. Like much of corporate America, Wal-Mart has been squeezed by soaring health costs. The proposed plan, if approved, would save the company more than $1 billion a year by 2011."
http://www.truthout.org/issues_05/102605LA.shtml
Egads! A corporation trying to cut healthcare costs, which inevitably is going to be the ruin of all American corporations and businesses, including your beloved Costco. Oh, the horror.
No question about that. Wal-Mart simply was the first to recognize that manufacturers in the US were at a significant disadvantage and wisely sourced all manufactured products in cheaper Asian nations.
Yeah, there really is. No wonder whenever a new Wal-Mart opens, they get a ton of applications. The Wal-Mart mafia is very good at rounding up people at gunpoint, eh?
The sarcasm aside, I get your point. It depends on what other employment opportunities are available in the area. Someone would have to be a fool to choose a lower salary between two relatively identical jobs.
Yes, they're trying to simplify and get the most out of tasks. Can you imagine that?
But this only works to a limited degree and tends to inhibit initiative and "creativity" on the part of employees. That is to say, the best you can hope for from employees is to do what they're told and nothing more.
Since when is working at Wal-Mart the equivalent of being a Hollywood animator? Wal-Mart is a low-skilled, entry-level job that doesn't require a bunch of brain cells. When are you Wal-Mart bashers going to realize that those who work there aren't doing it as a career choice?
There is also the idea that customers don't expect or value quality service from wal-mart. They expect and value cheap prices.
Why should I pay $5 bucks for a brand of toothpaste that I can easily buy the Ultrabrite brand at Wal-Mart for less than a buck. Are the razor blades I buy at Wal-Mart of an inferior quality than if I'd ran my ass all over town and bought them elsewhere? What about the gallon of milk? Is it missing the calcium that's why its cheaper at Wal-Mart?
I'll say the thing that nobody else is willing to say: wal-mart most resembles a ghetto store that caters to people on highly restrictive budgets.
Ah yes, there's nothing like the smell of John Kerry-esque elitism to start the New Year. Only the little people shop at Wal-Mart while I (cue the cigarette holder and turn of the 20th century eyeglasses) shop at Mom and Pop (next to the butcher) where the dashing gentleman kisses my hand and gets my order.
Actually, all the floor staff in the stores I frequent are usually young people, probably part-time college kids. It's pretty rare to see a grown person under retirement age with a low-level sales job anywhere. The lower-management types are a little older than the clerks, probably business majors starting out.
Believe it or not, I'm not anti-wal-mart. They obviously fill a need. That is a fact, just as it's a fact that they cater to people on restrictive budgets. That's not elitism. It simply is the way it is. And for the record, although we don't have wal-mart in my neck of the woods, I do regularly shop at "ghetto stores" for items that I can't find elsewhere.
However, once you eliminate creativity and motivation in employees, you lose sales. That is also a fact. I purchased a gift MP3 player not long ago from Circuit City. The kid who waited on me knew the specs, down to battery life, of every single model in the store. He was, without a doubt, one of the best salesmen I ever encountered for a lot of reasons.
I guess I just don't understand.
when you're part-time or just working at Wal-Mart to make ends meet, you're not going to exactly offer solutions on how to make Wal-Mart better. You're just going to punch the clock, do your thing, and collect the paycheck. It's all about the paycheck.
That is also a fact. I purchased a gift MP3 player not long ago from Circuit City. The kid who waited on me knew the specs, down to battery life, of every single model in the store. He was, without a doubt, one of the best salesmen I ever encountered for a lot of reasons.
Well, I would never purchase serious electronic equipment from Wal-Mart anyway (not because it's "Made in China" crap, but the selection is very poor and cater to those needing something simple and cheap).
All I can do is offer this example, which I posted before -- I go into Circuit City to by this MP3 player. It's a chore, okay? An obligation.
This young black kid (maybe 19 or 20) waits on me. The kid is full of energy. Speaks perfect english to me (old white guy in a suit). We go over to the case with the players and he runs through five or six in my price range -- this many hours, this many songs etc. Twenty bucks more, you get this much more...the kid, absolutely, had the whole sales thing down. It took about five minutes and he's got me enthusiastic about buying the thing -- and I'm not an easy mark.
Long story made marginally shorter -- I bought one for forty bucks over what I intended to spend. Then he writes his name down on a piece of paper, if the kid I'm buying it for wants to return it, see him.
As I'm walking away, he turns to wait on a rapper type guy and his whole speech, body language changes and he's off selling the guy a flat panel TV, running through all the specs and features from memory.
I have no doubt that at some point, someone somewhere is going to recognize this kid's sales talents and give him an opportunity to make a great deal of money.
Like I said its all from personal experiences. I have a perticular crappy walmarts or as I call it ghetto-mart because that is where all the gang bangers go after dark (dont ask me why) if anyone here is from houston I am talking about the one on poast oak off of 610. It is by far the dirtiest and most vile wal-mart I have ever been in.
I will say in wal marts defense, there stores in rural areas tend to be much better then there urban locations.
Wal-Mart has been much more skilled at adapting to market conditions
....with the help of Chinese slave wages.
The part that ticks me off is that good Americans have to ride this self destructive streak at the hands of Globalism. When China makes its domination move the globalists will blame it on American selfishness.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.