Tuesday, April 29, 2008

Everyone's Favorite Retailer

Walmart, the corporate behemoth that rules the United States and much of the world. Millions of customers visit its thousands of stores each and every day, while others despise the retailer. I count myself among this latter group of haters - it has been over four years since I entered a Walmart to purchase something for myself. I have often been asked what my reasons are for never going to the largest and cheapest store in the United States. Am I sad that Bob's hardware went bankrupt because they could not compete with the Bentonville, Arkansas juggernaut? Walmart's affect on small businesses is well documented, so let's explore a little bit deeper inside of their evil, worm-infested core. What possible negative could come out of a place that delivers better prices than any of its competitors while at the same time providing a greater array of products under one roof?

-You Get What You Pay For-

You have no doubt heard the six words listed above hundreds of times over the course of your life. What does this common bit of wisdom mean when applied to Walmart? Essentially, there are repercussions when a business is able to lower their costs to the point that they are able to undercut the competition to the extent Walmart has. Sure, you may say, they deal in such mass quantities of products that they can purchase them from the distributors for a cheaper bottom line. You are only partly correct if you have made this assumption. In truth, Walmart goes beyond this basic pretense and uses their size as a weapon against the companies from whom they purchase merchandise. Why do they have power over their suppliers? For many businesses, Walmart is their main source of profit. Some companies do well over 30% of their business with the giant retailer. Such a high percentage gives Walmart leverage. Say a company named Willy's Naughty Necrophiliac is delivering widgets for 69 cents per unit. One day Walmart decides that they want to purchase these widgets for 65 cents per widget. Willy can either choose to comply or lose 30% of his business. More than likely, he will comply for fear he cannot stay afloat otherwise. In the words of Star Trek, resistance is futile, you will be assimilated.
So what does Willy do to appease the Walmart beast? They lay off workers, move their factory out of the USA where labor is cheaper, streamline production methods, or cut down on the quality of the parts they purchase to make their product. You can see immediately why it might be bad for America to lose jobs and have products made from lower quality materials, but why is it bad for suppliers to streamline their production methods? Walmart often brags that they have led to more efficiency among the businesses they deal with regularly. Greater efficiency and lower costs should be beneficial to everyone. Unfortunately, it also means cutting corners. When Willy's Naughty Necrophiliac has to deliver a cheaper item to stay alive, Willy might skimp on worker safety and environmental standards in order to achieve his price target. What other choice does he have other than going out of business?
*If you would like to read more on this topic, pick up Charles Fishman's "The Walmart Effect," which explains in detail Walmart's affect on the American and even world economy.

- Twenty registers and two employees -

Walmart claims their stores employ so many people that it makes up for the jobs that are shipped overseas as a result of their actions. I have witnessed important evidence to the contrary on my past trips there. Every time I went into a Walmart, the place would be packed with customers, but when I reached the front to pay for my Chicken and Bacon Hot Pockets (always eat healthy, I do) two of the nearly eight million registers located there had someone working them. The registers stretch on forever. It reminds me of the scene at the end of "Raiders of the Lost Ark" when the man is putting the box up inside a huge warehouse. I feel so terribly alone amidst such vast empty space. The lines for the two registers, needless to say, were brutal beyond belief. I am an impatient person when I go shopping - I like to get my stuff and get the hell out of there. So where are these employees Walmart claims to have? They sure are not doing anything to facilitate my exit. I guess they must be needed to greet me at the door. "How are you doing today sir," they ask. Great, until I got to this shithole.


I said I wouldn't get into the small business thing, but I lied so deal with it. The trend in the United States over the past twenty years has been towards corporate behemoths at the expense of the small business. We operate under the presumption that our economy is based on the principals of the free market. Nothing could be further from the truth. Large corporations have tremendous advantages over there competitors not just because of economics of scale, but because of the tax breaks they are given in exchange for the promise of more jobs for our citizens. Whether Walmart brings more jobs or takes them away is a questionable proposition in and of itself, but there is little question that Wally jobs are likely to be of lower quality (pay, benefits). That is beside my main point, however, which is that as a result of the failure of so many small businesses across America (which admittedly Walmart is only one of the causes) there has been a decrease in the variety that we see in our stores as we cross our great country. Sometimes I feel as if I am in cheaply produced cartoon where the background repeats over and over. When I see such a monotonous landscape, I am forced to think of the line from Demolition Man - "All restaurants are Taco Bell."

- Caveat -

In conclusion, I must admit to purchasing a product from Walmart in the recent past. You may wonder how, since I claim to have never bought anything inside a store in several years. Did I lie? No sir. The product in question is gasoline, which they sell outside of their many of their stores. If they can find a way to fuck over the oil companies, than God bless them. Wally World is certainly the lesser of the two evils in that battle.