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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: XJarhead
The small town mom and pop stores put the rural gravel and dirt road mom and pop stores. They made a killing when the true country stores went out of business. They had high prices, limited inventory, and good luck getting a refund. When Wal-Mart began moving into these small town areas [places that K-Mart or Target wouldn't touch], the small town stores screamed bloody murder. Everybody says they are for the free enterprise system, until a competitor begins cutting into their business. Then they want artificially propped up protected status like state run economies. Knowing human nature, Wal-Mart, as they forget what made them number 1, will be challenged by some upstart with a better way of doing business someday, too. That's what happened to K-Mart when they were far larger than Walmart. [that and dissing Christians concerning adult magazine sales which led to a boycott -- Disney did the same thing a few years ago and they are suffering for it now -- the once golden boy of the mid nineties, Michael Eisner, is now one step away from the chopping block, because of Disney's lackluster financial performance in recent years].
181 posted on 03/06/2003 2:25:18 PM PST by razorbak
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To: tallhappy
I understand you perfectly, you are an obnoxious weasel that resurrected a 4 day old arguement that never involved you in the first place and is trying to prove you have a point when in fact you don't even have a reason to live. He never answered my questions, the post is 99% spam, by his own admission IN THAT POST, and you should take a long walk off a short peer. Now unless you actually have something intelligent to say LEAVE ME ALONE.
182 posted on 03/06/2003 2:26:12 PM PST by discostu (This tag intentionally left blank)
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To: tallhappy
No that is not the issue he brought up. Read post 5. He said WalMart built its success on slave labor from China. ther'es nothing tenuous or undefinable about the term "built their success" it's VERY CLEAR and your desperate attempt to further obfuscate the issue is moronic and pointless. how about you do what he couldn't: prove the assertion. Or do what he eventually did do DROP IT AND WALK AWAY.

No the issue is NOT boycott, that's the issue YOU are trying to add. And I don't care about it, and it's not what I asked about, and if that's all you want to discuss then eel free to LEAVE ME OUT OF IT.
183 posted on 03/06/2003 2:32:39 PM PST by discostu (This tag intentionally left blank)
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To: discostu
WalMart built its success on slave labor from China

Again, that doesn't mean others also did not build success on it.

What you read in to it is that Walmart is the only one using slave labor to "build success". If that were the claim, then your point would be valid. But that was never implied or stated. You are making up your own internal discussion.

As far as obnoxiousness, you have been.

184 posted on 03/06/2003 2:39:52 PM PST by tallhappy
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To: tallhappy
Whatever, go away, you resurrected this fight, you have nothing to contribute to it, you're just being argumentative for the sake of proving what a jackass you are. Point taken, you are indeed a jackass.
185 posted on 03/06/2003 2:43:47 PM PST by discostu (This tag intentionally left blank)
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To: discostu
Your point that his post was longer than need be is fair enough. If only that's what you'd said.

Your comment was 99% hot air, one percent substance, and at that the substance was wrong.

Why did you become so emotional so quick when you say you don't care about the issue.

186 posted on 03/06/2003 2:44:34 PM PST by tallhappy
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To: tallhappy
Do you enjoy being hated?! Good. I HATE YOU. Glad that makes you feel complete. Now if you're not going to answer my original question you should consider your mission of making a new person hate you complete, now go pick on somebody else.
187 posted on 03/06/2003 2:47:00 PM PST by discostu (This tag intentionally left blank)
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To: discostu
Do you see what I mean by you being incredibly emotional? And, what was your original question. I'll answer it.
188 posted on 03/06/2003 3:07:10 PM PST by tallhappy
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To: tallhappy
you resurrected an arugment that had been dead for two days and have spent much of today desperately searching for ways to irritate me, and golly gee if I didn't eventually get PO'd. But I'm the one at fault.

You know damn well what my original question is, I've posted it a dozen times on this thread and a few times DIRECTLY TO YOU.
189 posted on 03/06/2003 3:08:49 PM PST by discostu (This tag intentionally left blank)
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To: discostu
You know damn well what my original question is

No, I don't. Your comments to me have been long winded and it is difficult to even grasp what question you are asking.

190 posted on 03/06/2003 3:11:11 PM PST by tallhappy
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To: discostu
If your original question as about products sold by Walmart made in China that aren't in other stores, then that has been addressed. I will re-iterate.

Other stores also sell them and everything said about Walmart applies to them as well.

Your mistake was to think Walmart was somehow being singled out based on differences in using Chinese made goods compared to other stores. I don't know why you ever thought that.

191 posted on 03/06/2003 3:17:18 PM PST by tallhappy
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To: tallhappy
"Your mistake was to think Walmart was somehow being singled out based on differences in using Chinese made goods compared to other stores. I don't know why you ever thought that."

WalMart was mentioned by name and the other retailers were not, that sounds like being singled out to me. Obviously HR2China feels very strongly about this issue ( take a look at his homepage), but I think it is an impossibility to boycott EVERYTHING from China.
192 posted on 03/06/2003 4:36:20 PM PST by jaysgal ( what is right is often sacrificed for what is convienent)
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To: jaysgal
Don't bother, he's just interested in flame wars, that's why he resurrected an arguement that had been dead for 2 days, put him on your "do not read" list.
193 posted on 03/06/2003 5:40:21 PM PST by discostu (This tag intentionally left blank)
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To: jaysgal
WalMart was mentioned by name and the other retailers were not, that sounds like being singled out to me.

It is a Walmart thread.

I think they feel all retailers of Chinese products should be boycotted.

As far as Walmart being singled out, it does seem to be. But it is not singled out, as I wrote, "based on differences in using Chinese made goods compared to other stores".

I think Walmart is the largest chain and is of the most symbolic value.

It has nothing to do with Walmart importing from China whereas other stores don't.

Obviously HR2China feels very strongly about this issue ( take a look at his homepage),

An understandable emotion.

but I think it is an impossibility to boycott EVERYTHING from China.

I agree.

194 posted on 03/07/2003 6:46:05 AM PST by tallhappy
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To: Willie Green
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.

Sounds like the government, doesn't it? < /sarcasm>

I derive my greatest satisfaction from buying a Sam's Cola for 25 cents at their soda machines. Only Walmart can put Walmart soda machines next to Coke machines. (That's "pop" for you in the midwest and "tonic" for us in Boston).

195 posted on 03/07/2003 6:54:39 AM PST by Aquinasfan
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