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Americans & Wal-Mart
Salisbury Daily Times ^ | Monday, March 3, 2003 | Jim Hopkins -- USA Today

Posted on 03/03/2003 10:16:10 AM PST by Willie Green

For education and discussion only. Not for commercial use.

*U.S. economy follows the Wal-Mart way; Americans

We are a Wal-Mart nation.

Wal-Mart's influence on the U.S. economy has reached levels not seen by a single company since the 19th-century rise of Standard Oil, economists and historians say. Even if you don't shop at Wal-Mart, the retail powerhouse increasingly is dictating your product choices -- and what you pay -- as its relentless price-cutting helps keep inflation low.

Wal-Mart is the top seller of groceries, jewelry and photo processing. It is moving into banking, used-car sales, travel and Internet access. It averages 100 million customers a week.

Anyone whose stocks rose in the late 1990s owes Wal-Mart, the world's biggest company. It alone accounted for as much as 25 percent of the U.S. productivity gains from 1995to 1999, says consultant McKinsey & Co. Such gains drove corporate profits, thus stock prices. Wages in retailing, one of the biggest sources of new jobs in the '90s and current decade, are also affected by Wal-Mart.

"I joke we're all going to be working for Wal-Mart someday," says economist Mark Zandi of consultant Economy.com.

Although Wal-Mart is hitting speed bumps because of growing labor challenges, employment lawsuits and higher costs, few doubt it will stop besting competitors as it expands. While other retailers such as Home Depot, tech giants such as Microsoft and manufacturers such as General Electric played big parts in the 1990s productivity gains, Wal-Mart, with its massive buying power and technology advantage, played the biggest role, economists say. As it grows, its influence, largely unknown to consumers, will continue to seep into more parts of the United States and the global economies.

"Everyone knows Wal-Mart," says Jim Hoopes, a business history professor at Babson College, "but nobody has a real sense of how big and how powerful it is."

Few companies have moved so far so fast. Founded 40 years ago in rural Arkansas by Sam Walton, Wal-Mart has swelled to 4,300 stores in nine countries and annual revenue near $250 billion. Its computer network, a critical part of its success, rivals the Pentagon's.

It is now the biggest customer for many of the world's leading consumer-products companies, including Kraft, Gillette and Procter & Gamble. At P&G, Wal-Mart accounts for 17 percent of annual revenue, up from 10 percent just five years ago. That makes those companies more dependent on Wal-Mart's success, more vulnerable should it stumble and more likely to respond to Wal-Mart's requests for lower prices and product changes.

The chain's buying power is so immense that 450 suppliers have opened offices -- many in the 1990s -- near Wal-Mart headquarters in tiny Bentonville, Ark. As many as 800 more such offices are expected in the next five years. Sales representatives want to be near Wal-Mart buyers to beat the competition, says Rich Davis, a local economic development official.

Wal-Mart is increasingly affecting:

# PRODUCT CHOICES. P&G is dumping weak brands, such as Crisco and Jif peanut butter, sold to J.M. Smucker last year. It wants to focus on heavy hitters, such as Tide detergent, most desired by Wal-Mart and other big retailers, P&G says. That strategy helped P&G boost fiscal second-quarter net income 14 percent year-over-year to $1.5 billion, it said.

Other companies have tweaked products so that they pass muster with Wal-Mart. Video-game maker Planet Moon Studios two years ago wanted an industry group to give its "Giants" game a teen rating. Why? So it would be carried by Wal-Mart and others. Planet Moon changed the color of blood in the video to green from red, toned down the language and put a bikini on a topless character, says CEO Bob Stevenson. Without those changes, he says, "The risk to sales was too high."

Wal-Mart is also challenging its suppliers by developing more of its own products, called "private labels." It stepped up that effort in the mid-1990s as it expanded into vitamins, batteries and bathroom tissue. Its Great Value grocery line has 1,475 items, up from 194 two years ago.

Wal-Mart says it is committed to keeping shelves full of well-known brands such as Kellogg' cereal and Tide. But, in general, private-label profits run as high as 30 percent, vs. 15 percent on brand-name items, says Burt Flickinger, managing director of consultant Reach Marketing.

Private-label products also promise Wal-Mart more profit as the chain expands abroad, because U.S. brands don't have the same clout there. In Europe and the United Kingdom, where Wal-Mart is battling for Britain's Safeway grocery chain, private-label goods are 50 percent of its sales vs. 25 percent in the United States.

# PRODUCT PRICES. Big food companies including Kraft, which gets 10 percent of its revenue from Wal-Mart, have not been able to raise prices as quickly as they once did because of Wal-Mart's demands, says Jonathan Feeney, a consumer products analyst at investment firm SunTrust Robinson Humphrey. Kraft declined to comment.

History has shown that suppliers suffer if they run afoul of Wal-Mart. Rubber-maid raised the prices it charged Wal-Mart in the mid-1990s because of an 80 percent jump in the cost of a key ingredient in its plastic containers. The retailer responded by giving more shelf space to lower-priced competitors, helping drive Rubbermaid into a 1999 merger with rival Newell, says John Mariotti, a former Rubbermaid executive. "Rubbermaid earned Wal-Mart's wrath by not giving it the best deal," he says.

# EMPLOYMENT. Wal-Mart's impact on wages was first felt in rural towns in the South and Midwest where Wal-Mart got its start. Often, it became the biggest employer overnight, setting wage rates for all retailers, experts say.

Now, its impact on retail employment has spread nationwide, contributing to slower wage growth throughout the sector, economist Zandi says.

Pay for retail workers rose 43 percent from 1990 to 2001, vs. 50 percent for non-retail workers, according to Bureau of Econo-mic Analy-sis data. No one knows exactly how big a part Wal-Mart played, Zandi says. But its influence is "undeniable" because it created more jobs in the 1990s than any other company, he says. More retail jobs are on the way. Wal- Mart plans to add 800,000 workers in the next five years. U.S. re-tailers are ex-pected to add 3.1 million jobs by 2010, the govern-ment says.

Manufacturers, which pay more, will add fewer than 600,000 jobs in the same period. Labor unions that represent factory workers are alarmed. They say Wal-Mart, in demanding ever-lower prices from suppliers, has helped drive thousands of U.S. manufacturing jobs abroad, where labor costs are lower.

Now they worry about Wal-Mart's push into the unionized supermarket industry. Wal-Mart has no unions. That means its employees earn less than those at competing supermarkets, says the United Food and Commercial Workers.

Wal-Mart's hourly pay averages $7 to $8 an hour, vs. $11 at Kroger, Safeway and other competitors with unions, says UFCW spokesman Greg Denier.

Not true, says Wal-Mart spokesman Tom Williams. While he would not disclose wages, which vary by market, he says Wal-Mart pay is close to or equal to union wages.

# PRODUCTIVITY. Wal-Mart's key role in the 1995-99 economic boom came partly because of its legendary use of technology to analyze costs and speed delivery of goods from its 30,000 suppliers to dozens of sprawling warehouses, say retail and financial analysts.

Wal-Mart says it has the nation's biggest private satellite communications network, one that links stores to Bentonville by voice, data and video. Suppliers tap directly into Wal-Mart's computers to track sales of everything from soup to nuts, which improves inventory controls and cuts costs.

Other retailers, including Kmart, tried matching Wal-Mart's tech prowess but failed. Kmart filed for bankruptcy-court protection last year and is cutting 67,000 jobs and closing nearly 30 percent of its stores.

Wal-Mart also teaches manufacturers to be more cost-effective so product prices can stay down. For example, Wal-Mart might suggest that a supplier cut its labor costs by shipping toasters in their cartons, rather than packing them in bigger boxes and shrink-wrapping them onto shipping pallets, says James Champy, chairman of Perot Systems' consulting unit, which advises Wal-Mart suppliers.

Such close communication between a retailer and supplier is unusual. But it's being adopted by more companies, including Dell Computer, as U.S. businesses seek more productivity to better compete globally.

"It's where the future of business has to be," Champy says.

That future may also include fewer companies. To achieve economies of scale, more consumer products companies are merging. Wal-Mart's demand for low-cost products partly influenced Kellogg's purchase of Keebler in 2001, and the merger of Kraft and Nabisco in 2000, analyst Feeney says.

"We're all working together; that's the secret. And we'll lower the cost of living for everyone, not just in America, but we'll give the world an opportunity to see what it's like to save and have a better lifestyle, a better life for all. We're proud of what we've accomplished; we've just begun."

-- Sam Walton (1918-1992), founder of Wal-Mart Stores Inc.


TOPICS: Business/Economy; Culture/Society; Editorial
KEYWORDS: globalism; recession; thebusheconomy; walmartaphobia
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To: Protagoras
Yes, the stench of protectionism hiding behind a self righteous facade of caring about human beings is quite pungent.

This is an evasive answer.

Are you unable to address his comments and state your positions?

141 posted on 03/04/2003 11:31:01 AM PST by tallhappy
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To: HighRoadToChina
To: Sparta; comwatch; Jeff Head; American Soldier; tallhappy; belmont_mark; Alamo-Girl; ... Hey, fellows. Any use in arguing further with these useful idiots? 138 posted on 03/04/2003 1:26 PM CST by HighRoadToChina (Never Again!)

Hey! You did send for the cavalry! I thought you didn't need 'em.

LOL

142 posted on 03/04/2003 11:34:26 AM PST by Protagoras
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To: HighRoadToChina
I'm sorry, but if you are too lazy to distill your post into the pertinent facts, I'm under no obligation to do it for you.

You say you "have always argued for the boycott of ALL PRODUCTS made in China", yet your posts on this thread ONLY mention WalMart. Your agenda is very transparent.

143 posted on 03/04/2003 11:37:09 AM PST by TomB
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To: tallhappy
Guess you better read the entire thread before you try to help this poor soul out. I have stated my position clearly several times.

Never send a boy to do a man's job. The cavalry must be on mules. :^}

144 posted on 03/04/2003 11:37:55 AM PST by Protagoras
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To: Deport Hollywood Scumbags
I never worked for "Mr. Sam", but I'd leave my half-million-dollar corporation in someone else's hands to go sweep floors for that man. Customer service lost a great front-runner the day he died. I'm a small-town retailer, and while I grouse about Wal-Mart dropping prices, I admire the system.
145 posted on 03/04/2003 11:46:11 AM PST by Indrid Cold
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To: Protagoras
I want some of my FR friends to see the idiocy of people such as yourself.


146 posted on 03/04/2003 11:54:42 AM PST by HighRoadToChina (Never Again!)
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To: TomB
You are too lazy. Do a FR search for all my posts. My agenda is very transparent--for all the see, if they are not so lazy as to go and do it.
147 posted on 03/04/2003 11:56:50 AM PST by HighRoadToChina (Never Again!)
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To: newgeezer
I live in a village where the department store just went out of business. So there's not a whole lot of choice. I loved the Ames stores. They had better bargains than Walmart's, but now that Ames is gone, we shop at Wally World. They're all over the place in Central New York. A new one just went up in New Hartford, near Utica. It's huge but I don't like it as much as I do the others. I remember the old Woolworth stores. Now they were fun to shop in!
148 posted on 03/04/2003 12:00:57 PM PST by Marysecretary
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To: HighRoadToChina
Once again you expect other people to do your home work.

Your position on this thread has been that WALMART built its success on Chinese slave labor. There's an implication there that they use more Chinese slave labor than their competition. If the competition used the same amount of Chinese slave labor then WalMart's success would have to be attributed to something else. When confronted with it you immediately wiggle, and yet continue to keep your guns pointed on WalMart.

So, have you removed all the Chinese chips from your computer?
149 posted on 03/04/2003 12:01:54 PM PST by discostu (This tag intentionally left blank)
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To: HighRoadToChina
I read the very large post you provided above, and did not find it to be spam. It was very information dense, with just about every line providing pertinent data to refute the claims of the China traders (I won't get nasty by calling them "ChiCom dupes" or "Panda huggers").

However, we are in the minority. The majority of people, even extremely intelligent and well-informed people, choose not to recognize this threat. Remember that it was leading Universities that were the intellectual power behind the appeasement movement in Britain in the days leading to World War II. Our opponents in this argument will be remembered the same way we remember those appeasers as well as those from our own country like the disgraced Ambassador Kennedy.

Hopefully, we will at least be regarded as the "Churchhill set", that is those who read the enemy's books, monitored his actions, and anticipated his plans, and did their best to warn others before it was too late for Chinese and Americans alike.

150 posted on 03/04/2003 1:25:20 PM PST by American Soldier
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To: American Soldier
Thank you, American Soldier!
151 posted on 03/04/2003 1:26:39 PM PST by HighRoadToChina (Never Again!)
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To: discostu
"Your position on this thread has been that WALMART built its success on Chinese slave labor. There's an implication there that they use more Chinese slave labor than their competition. If the competition used the same amount of Chinese slave labor then WalMart's success would have to be attributed to something else. When confronted with it you immediately wiggle, and yet continue to keep your guns pointed on WalMart."

You have no idea what my position is or is not. You are insinuating all sorts of bogus claims in your statement above. When confronted with "too much" facts or "too little" facts, you wiggle and spew forth insinuations and all-out lies.

You are a loser.
152 posted on 03/04/2003 1:29:09 PM PST by HighRoadToChina (Never Again!)
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To: Protagoras
You stated your position.

But my point was you did not, and in fact avoided, answering points made in 31.

Specifically, "Do you honestly think that Americans would buy products made in Nazi Germany--by Jews, just because it was cheaper and readily available? "

Your position is self evident. People buy things at a good price.

You evade taking a stand on any moral questions.

It was done smarmily and is weak.

Grow a spine and make a statement rather than avoid the issue.

You could dispute his facts. You could accept his facts and say it is of no import. You could address his points rather than say a silly ad hominum.

153 posted on 03/04/2003 1:31:59 PM PST by tallhappy
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To: HighRoadToChina
Let's see here, right at the beginning of the thread in post 5;

http://www.freerepublic.com/focus/news/855896/posts?page=5#5

Forgot to mention that all this success is being built on the backs of slave labor and almost slave labor in Communist China.

That's YOU clearly stating that WALMART's success is on the backs of Chinese slave labor (which IS YOUR POSITION QUOTED AND LINKED which is better than you've managed to do in TWO DAYS OF INSULTING RAMBLING). And yet you are completely INCAPABLE of showing that they sell more Chinese goods than their competitors. Thusly you CANNOT PROVE your position.

You're the one that's spewing insults and LIES. You've LIED about what I said, you've LIED about what you said, and you just insulted me. It's truly sad that you ARE EVERYTHING you ACCUSE others of being.
154 posted on 03/04/2003 1:37:42 PM PST by discostu (This tag intentionally left blank)
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To: tallhappy
You didn't read the whole exchange you moral midget. I'll answer you dumb questions later. BTW, that's the first ad hominem I have used, and you deserve it you twit.
155 posted on 03/04/2003 1:38:27 PM PST by Protagoras
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To: Protagoras
Awaiting your next brilliant response on pins and needles.
156 posted on 03/04/2003 2:04:23 PM PST by tallhappy
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To: discostu
"Forgot to mention that all this success is being built on the backs of slave labor and almost slave labor in Communist China.

That's YOU clearly stating that WALMART's success is on the backs of Chinese slave labor (which IS YOUR POSITION QUOTED AND LINKED which is better than you've managed to do in TWO DAYS OF INSULTING RAMBLING). And yet you are completely INCAPABLE of showing that they sell more Chinese goods than their competitors. Thusly you CANNOT PROVE your position." If you read what you quoted me as saying, I said and I quote myself, "slave labor and almost slave labor" You seem to conveniently forget that second part, "almost slave labor." But that's OK, you don't care for facts.

Also, if Wal-Mart is the world's largest importer of Made in China products (as one of the articles that you didn't read had pointed out), can you deduce that they just might be the largest seller of Made in China goods in America, in the world?

Hey, it's been a blast arguing with you and your compatriots. Got to get on with life if you know what I mean.
157 posted on 03/04/2003 3:14:31 PM PST by HighRoadToChina (Never Again!)
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To: HighRoadToChina
I'm "conveniently forgeting" your "slave labor and almost slave labor" bit because it's LONG and WORDY and I'm a bad enough typer as it is. I also use "mankind" to refer to both men and women. Slave and almost slave are close enough that only a dipstick would quible on the difference. DEAL. Oh and congradulations you have successfully deployed another RED HERRING in your DESPERATE ATTEMPT to maintain that you have a point when you most clearly DO NOT.

BUZZZ false logic. WalMart is now the largest retailer in the world, it's obvious that they would CURRENTLY be the largest importer from ANY COUNTRY and are also probably the largest distributor of DOMESTIC goods. But at one point they weren't the largest. Also one must understand the different concepts of "more", I've asked you on MULTIPLE OCCASSIONS to show that more of WalMart's stock is imported from China than their competitors. And you continue to OBFUSCATE, LIE, and DODGE. Come on dude, how hard can it be to go to walmart.com and target.com and do some product comparisons and outline hte differences between what they stock? Of course I know what'll happen if you do that, and probably so do you which is why you're desperately trying to shift the focus of the discussion away from something that will clearly destroy your argument.

Don't forget to boycott Chinese good while you get on with your sad pathetic life. THAT INCLUDES YANKING ALL THE CHINESE CHIPS OUT OF YOUR COMPUTER.
158 posted on 03/04/2003 3:22:08 PM PST by discostu (This tag intentionally left blank)
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To: discostu
OK. The very last time that I am ever going to engage in any meaningful communication with you, my stubborn friend.

You said in #152, "And yet you are completely INCAPABLE of showing that they sell more Chinese goods than their competitors."

Now, you are saying in #158, "I've asked you on MULTIPLE OCCASSIONS to show that more of WalMart's stock is imported from China than their competitors."

Now who is deploying red herrings?

What you really trying to say is this: "Show me this stupid fact that I am making you do to get away from the issue of discussion and what I am switching in mid-stream to is to ask you to show me that more of WalMart's stock is imported from China than (1) all of Wal-Marts suppliers or (2) all of its competitors."

You didn't read up there in one of my many and long posts that Wal-Mart is the LARGEST, BIGGEST, MOST GARGANTUAN importer of Made in China goods IN THE WORLD, which is like saying that they import more products from Communist China than any other company in the world and that they import more from Communist China than from any other supplier that they use from anywhere in the world.

OK. That's it. Fini. Completo. Sinanora.
159 posted on 03/04/2003 3:38:28 PM PST by HighRoadToChina (Never Again!)
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To: HighRoadToChina
Did you know that Jim Hightower is Molly Iven's bastard son?
160 posted on 03/04/2003 4:14:17 PM PST by Ben Ficklin
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