Americans & Wal-Mart

Salisbury Daily Times ^ | Monday, March 3, 2003 | Jim Hopkins -- USA Today

[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.

[discostu]

I read at the beginning of the whole thing that WalMart was the biggest retailer in the world. As I pointed out that makes some things follow automatically, like being the biggest importer, biggest employer, moving the most money through the store. All perfectly valid assumptions. But YOU SAID they'd "built their success" on this stuff, so that encompasses a time period BEFORE they were the biggest.

I've asked it on multiple ocassions, otehr have asked it to: where's the proof that more of WalMart's stuff on the shelf is from China that what you'll find in Target, JcPenny's, Sears. And remember YOU'RE the one that said that was how they BUILT THEIR SUCCESS, so it's not just now but while they were BUILDING THEIR SUCCESS. I'm forced to slide my question around because you're afraid to answer it, if you'd have answered the question the first time, instead of using a bunch of spam the next day, we wouldn't have this problem. If your SPAMpost actually has something useful in it then you should have, as JohnRob says, HILIGHTED AND LINKED. Since most of it isn't even sourced there isn't even any proof that you didn't just write it yourself.

I know you'll be back because I've questioned your sacred cow and you've taken it personally. Which is sad, this should have been real quick but like so many people with sacred cows you completely fell apart when it was questioned. I didn't even doubt you, I just wanted to see some fact to support one of FR's favorite CWs. And you've proven to be completely incapable of providing that proof. Given how obsessed you are on the issue I'm shocked that you didn't have a couple of quick charts linked for easy access, instead it took a day of cajoling and finally you retaliated with spam. Sad, very sad. You should go back and actually investigate your position and be able to back it up in under 2 pages. It shouldn't be that hard.

[tallhappy]

I've asked it on multiple ocassions, otehr have asked it to: where's the proof that more of WalMart's stuff on the shelf is from China that what you'll find in Target, JcPenny's, Sears.

Yes, mutiple occasions. Perhaps it would be understandable is there were a point to it.

Also, I can't see how you come off criticizing High Road for "spamming" when you are just as bad a tape loop and "sacred cowish".

[A. Pole]

After Sept.11, I remember reading that WalMart was picking up the difference in pay when employees that were also in the Nat'l Guard and Reserves were deployed.

Difference in pay? Does WalMart pay more or less?!!

[discostu]

There is a point to it: challenging the common wisdom. A lot of people on FR believe certain things with no proof presented, so I asked for some proof. And the poor shlub was completely incapable of answering the question.

I criticize him for spamming becaue he threw a couple dozen pages of rubish in one post which takes up more screen space alone than everything I've put into this thread. I wouldn't have to tape loop if if he'd: A- answered the question the first time or B - blown it off completely. Instead he C - began dodging and weaving and throwing in red herrings and just generally trying to pretend he was answering the question while actually no. This forced me to restate the question. Notice once he finally went to B I walked away, now you've decided to go for C and resurrect the whole thing. As for my sacred cow, you're damn right it is, when I ask a question I want it answered, and when the reply consists of nothing more than obfuscation I will point it out and re-ask the question over and over and over until the person's head explodes... or they actually answer the damned question.

So, since you saw fit to resurrect this 4 day old fight: do YOU have ANY proof that WalMart BUILT it's success on Chinese slave labor? Understand there's two major parts to that question: part 1 - proving that WalMart delt in more Chinese manufactured goods than the competion BEFORE they became king of the hill; part 2 - proving that Chinese labor is slave labor. Now part 2 should be a gimme, a fellow FReeper freep-mailed me half the proof and it was a whopping 1 page, shouldn't be too hard to finish it off. Part 1 might be a little harder but any debater worth his salt should be able to handle it.

[HamiltonJay]

Agreed, Walmart IMHO is on the route of KMart in the 80s... albeit slowly... I won't even go into the local one here anymore and its not simply because its all foreign crap... its because its overcrowded, dirty, and quite frankly a fire trap... can't even navigate the isles because of POP displays blocking the paths etc... can't even get a shopping cart into the cloting sections because the racks are too close together etc.

[tallhappy]

There is a point to it: challenging the common wisdom.

What common wisdom? What do you mean by "common wisdom"?

And, what is the point you are making in saying Walmart does not import a purportionately higher percentage of goods than JC Penney or Target etc...

I criticize him for spamming becaue he threw a couple dozen pages of rubish

What about it was rubbish?

[discostu]

I explained what common wisdom I was refering to later in that paragraph. From that you should be able to sus out what common wisdom is as an overall concept.

What about it was rubbish?! Well it was a dozen un sourced pages with no sorting or hilighting of what was actually related to the issue at hand. As johnRob says: hilight and link. he should have taken out the most pertinent parts and quoted them then linked to the whole.

[verity]

There are many American-made products on the shelf that are fantastic buys [e.g. Auto supplies].

[verity]

There are many American-made products on the shelf that are fantastic buys [e.g. Auto supplies].

[BSunday]

KMart=Bad, WalMart=Good

[tallhappy]

I asked very simple questions. Why did you write responses to both that do not answer them?

What is your point about percentage of imports among retailers?

Why was his post rubbish -- was the information in the "spam" wrong or not true?

[discostu]

Oh aren't you cute. You wanna play games let's play.

I answered your first two questions in the very post your were responding to, but since you seem to have reading comprehension problems I'll be more direct.
Common wisdom is assumptions held by a group and generally assumed to be true within that group but it might not actually be true. For instance it's common wisdom among conservatives is that government is a problem, common wisdom among liberals is that government is a solution; obviously one of them is wrong.
One of the pieces of common wisdom you'll find on FR is, as was put forth by High Road in post 5 of this thread which I have directly questioned, that WalMart's empire was built by Chinese slave labor (you'll note I said this EXACT SAME THING in the post your question was in reply to, and it VERY DIRECTLY answered your questions before you even asked if only you had bothered to actually read what was written rather than plunging on in your desperate attempt to prove you have a point).

The point of percentage of imports among retailers, as I have ALREADY EXPLAINED MULTIPLE TIMES IN THIS THREAD is quite simple. The asertion is that WalMart built their empire on Chinese slave labor. If, during their growth years, they imported no more stuff from China than their competitors then that is clearly NOT how they built their success, which would make the assertion wrong.

As for what was rubbish in that spam, again I have ALREADY ANSWERED THAT QUESTION DIRECTLY, but I'll do it again to show you how reasonable I am even when confronted with someone that's doing nothing more than wasting time. It was too damn long. It was complete unsourced and therefore unverifiable. And there was no form of hilighting to draw attention to the parts that delt directly with the question at hand. That makes it rubbish. He should have selected the parts that delt directly with the question at hand, preferably less than a page's worth, and quoted them with links to the source for further investigation if I so chose. Instead he tried proof by volume, knowing full well that nobody would sit down to read all that he just dumped it in, and didn't even provide any proof that it wasn't stuff he just made up (ie source links). I could spend a couple of hours typing up a bunch of crap that looks official and tossed it in here too, wouldn't have made it proof.

See the difference here is that I ACTUALLY ANSWER your questions. When asked to prove that WalMart built their empire via Chinese slave labor High Road went on a tangent about diapers made in Nazi Germany by Jews, NOT an answer to my question.

[tallhappy]

The point of percentage of imports among retailers, as I have ALREADY EXPLAINED MULTIPLE TIMES IN THIS THREAD is quite simple. The asertion is that WalMart built their empire on Chinese slave labor. If, during their growth years, they imported no more stuff from China than their competitors then that is clearly NOT how they built their success, which would make the assertion wrong.

This is not logically sound. It presupposes there can only be one succesful company. More than one could build an empire on slave labor.

This, though, is trivial.

My questions about your point were meant to address the boycott issue. My impression is that you are saying why boycott Wal-mart but not others when all have either built (or not built) their success on slave labor equally.

You talk too much. Simple and straightforward is best.

[tallhappy]

It was too damn long. It was complete unsourced and therefore unverifiable

I have gone through at looked at the "spam" post, number 130, which is here

It is fully sourced with url or link to each section.

[discostu]

It is completely logical, in order for a company to have BUILT their succes via something then they must have used it BEFORE they were successful and have done so more than their competitor. If they and their competitors did the same amount of something then it must not have been how they built their success, otherwise their competitors would be just as successful.

I could give a crap if you boycott WalMart or any other company. I was asking questions about the commonly held assumptions on FR, boycott don't boycott not my problem, proof of assumptions is all I was after.

I tried being straight forward, and in reply you asked questions that were clearly answered, obviously it went over your head so I had to elaborate.

[discostu]

That's nice I'm happy for you. If you read that entire waste of bandwidth then you also read this sentence:

OK here we go. Wal-Mart is the Largest importer of MIC products in the world (pertinent info bolded just for you!):

And you would also have noticed that only a few sentences are bolded. He should have just quoted those and linked to the rest. That's the advice of JohnRob, and it's good advice.

[tallhappy]

The issue he's bringing up is should large retailers like Walmart and others (all are successful) use Chinese labor given the nature of the Chinese government.

You get so excited over an undefinable tenuous term ("BUILT their succes (sic)").

The issue is boycott.

You say you have no interest in that question. Then why are you trying to emotionally argue the equivalent of how many angels can dance on the head of a pin.

Try to come down to Earth and discuss concrete things and follow a train of thought and respond to specific comment or argument.

As it is you are arguing with yourself in an argument you are inventing over terms such as "built success" that only you care about and define.

[tallhappy]

That's nice I'm happy for you.

The issue is you were either wrong or lying.

The things you said he did not do, he did.

Were you stupid, or did you lie. Those are the only two possibilities.

[tallhappy]

Do you understand me?

[discostu]

The issue is it's STILL SPAM. by his own admission. Even though I was wrong on the sourcing (feces happens, I said MULTIPLE TIMES I didn't read it all) he still posted a bunch of worthless spam. The post starts off with him saying he'll bold the pertinent information and less than 1% of the thing is bolded, by that very action he admits that less than 1% of the post is pertinent, ie IT'S SPAM.