My rapidly fading love affair with Wal-Mart

Loading

The first time I ever saw a Wal-Mart I was a grad student getting my MBA down in Tallahassee, FL. One opened up down the road from my apartment and I was immediately taken by the big bright stores with lots of stuff and what seemed to be pretty low prices. In class I learned the secrets to Wal-Mart’s success in its niche of “Always low prices”. It demanded efficiencies from its suppliers. It became fanatical about using information technology to optimize its sourcing and distribution channels. It paid its employees the community average or sometimes slightly more, but never significantly so. And of course the company benefited tremendously from scale. At the end of the day Wal-Mart became a spectacular success because it provided the goods people wanted at the lowest prices possible.

Thus began a two decade long love affair with Wal-Mart. For most of the last twenty years I’ve spent most of my shopping dollars, particularly food, but other items as well, at Wal-Mart. It helped that, as I hate to shop, I could go there and get pretty much everything I needed in one place, from apple juice to socks to those little trees you put in your car to make it smell good.

I remember around 2003 when a friend of mine got married in Key West. I went to Wal-Mart and purchased a pair of those mesh shoes with the rubber sole that you could wear in the ocean. They cost about $7.95. I remember how amazed I was that they could manufacture that pair of shoes in China, label them, ship them across the ocean, transport them to my store where people would receive them, inventory them, display them and eventually charge me for them, and do so at a profit! Even if they paid their workers in China a penny a day I still didn’t see how they could do all of those things and still make a profit.

When my love affair with Wal-Mart began the company had 1,500 stores mostly serving rural communities across the country and generated about $25 billion a year in sales. Today they have 10,000 stores around the world and generate half a trillion dollars in revenue annually.

Like it or not, Wal-Mart has changed the face of American retail. By using the best of the free market the company has saved Americans hundreds of billions of dollars over its lifetime, savings that they might have used to can use to provide more food to their children, to give to charity to buy their kid a computer for college, or just buy another flat screen TV. By any definition Wal-Mart is an American success story.

Unfortunately however, my love affair with Wal-Mart is fading… and fast. The first injury to the relationship was when the company supported ObamaCare in an effort to increase pressure on its smaller competitors. The second was when they supported the taxing of online sales. Since those two events I’ve reduced the money I spend in Wal-Mart by well over 50%. Now I’m beginning to wonder if I need to redirect most of what’s left. According to Bloomberg, the company is considering supporting the Obama administration’s move to raise the minimum wage. While Wal-Mart knows that it would incur higher wage costs, it also knows that because of its size and efficiency it can better weather the increase than most of its competitors.

And that’s the problem. If Wal-Mart wants to raise the wages of its employees, it has every right to do so and most people would applaud it in the process. Indeed that is the route the Gap and Costco have chosen. But alas, that is not the route Wal-Mart seems to be taking. (They supported an increase back in 2007 as well.) Instead the company is seeking to use to use the power of government to tilt the marketplace in its favor. It wants to use the government to force higher costs on its smaller, less efficient competitors. Essentially it wants the government to put its competitors at a competitive disadvantage.

This is the worst of capitalism – crony capitalism – when businesses use government to harm competitors or keep them at bay. Whether it’s Obamacare or a minimum wage increase or restaurants seeking to keep food trucks off the streets, it’s not only the competitors who lose, it’s the consumers and the market itself. Had Sears or K-Mart used the power of government to strangle baby Wal-Mart in its crib the company would not today be the largest retailer in the world. If AT&T had succeed in defending its government sanctioned monopoly and keeping MCI and other startup telephone companies at bay for another 100 years do you think we’d have iPhones, Netflix, or fixed price wireless plans? No. Of course not. The marketplace survives and thrives the less government intervenes. Wal-Mart of all companies should understand this.

By getting into bed with government Wal-Mart is repudiating the very thing that allowed it to prosper in the first place – the free market. Now that the company has used that free market to become the 800 lb gorilla in the retail marketplace it has repeatedly sought to harness the power of government to keep potential rivals from enjoying the same opportunity. Crony capitalism is the most despicable form of capitalism because it hides behind the mask of free markets. Thankfully however crony capitalism usually fails because the propped up company often becomes fat and lazy and forgets how to compete. If Wal-Mart wants to betray free markets, so be it, I just hope it’s not too long before the markets decide to strike back.

0 0 votes
Article Rating
Subscribe
Notify of
41 Comments
Inline Feedbacks
View all comments

Agreed. I’ve not spent a penny with them since they came out for the socialist healthcare scam. And I don’t miss them at all.

I think crony capitalism is a misnomer. Crony government is the real problem. We can always voice our displeasure to a businesses when they advocate for bad public policy. They will usually respond quickly. The government, not so much.

It takes years between elections and a lot of media attention to change politicians. Write to Wal-Mart. Get some friends to add their voices. It doesn’t take many complaints from customers to cause a business to change directions.

Corrupt crony govmint.

Walmart is trying to survive under the obomba boot on its neck.

I will not abandon Walmart.

WalMart is my favorite place to buy plastic from China !! Whenever I need more plastic from China I shop there.

Vince
I heard that WALLMART had been targetted by government goons,
and the UNIONS vindication on them, for not giving in to the unions, who are the government ,
yes they might have had an order they couldn’t refuse,
we probably never know, what happened to make them join in the dirt,
does it excuse them ? NO

It’s really hard for me to bash W-M because they gave me a job when I needed one- also, if one looks at the minimum wage in 1970, and the prices on consumables back then, and then compare them to the prices in 2000, one would see that, taking into account the average rate of inflation, (3.3%)- if the minimum wage HAD been tied to the inflation rate, as most consumables were, the minimum wage would be $17.50- and the companies could have weathered the increase, it being incremental.
A raise of almost $3.00 an hour, all at once, would indeed cripple most businesses, or they would have to raise prices dramatically- the “dollar” menu would become the “five dollar menu”.
I have sympathy for those on minimum wage, but the whole idea of minimum wage is to remain there as little as possible. It is supposed to encourage hard work and the idea of advancement- not as a place you want to stay.

Walmart is feeling the lash of Amazon.com and other internet retailers. Brick and mortar stores have a decided cost disadvantage over online websites. The bottom line is IF Walmart can not or will not adjust it’s paradigm then it too will go the way of FW Woolworth and Ben Franklin Stores. Let’s face it, the same feeling of awe you got from the one stop shopping at Walmart holds true for internet retailers like Amazon but from the comfort of your house/apartment/parent’s basement.

Here is the real issue for Walmart, Target and all other box stores:

Amazon’s operating income in 2012 was just 1% of revenues. Walmart’s was 6%. Amazon has thinner margins than Walmart. That suggests Amazon is even more incentivized to exploit its workers than Walmart is — it has less room for error.

Read more: http://www.businessinsider.com/brutal-conditions-in-amazons-warehouses-2013-8#ixzz2uM13LbNv

The issue is profit margin, compared to Amazon, Walmart is raking in the dough. IF the new paradigm is making a profit at the lowest possible margin percentage, then Walmart is doomed no matter how cheaply it can sell something. How can Amazon make a bazillion dollars on 1% profit margin? It’s taking the discount paradigm to its Nth degree and can do this because it doesn’t have to spend billions on capital assets like retail stores and land or the property taxes that come from having those assets. According to the article, Amazon is paying wages above even what Obama wants to do on minimum wage. Of course all this is really bad news to Counties whose revenue stream is dependent on property taxes. IF Walmart were to go the way of FW Woolworth, internet retailers would locate all their warehouse operations in low property tax areas, meaning more unemployment in the short term. This also matters to stock investors since you want company priced in such a way as to get maximum upside on stock prices (capital gain). Huge capital assets strand vast pools of money that could otherwise be invested and diversified elsewhere, hinder that upward trend line and add risk of downside. The energy companies have a similar problem, lots of stranded capital to make a small profit margin with high risk.

Any company that has huge assets is also a big fat target of liberal PC demonization, as liberals focus on the gross sales and never acknowledge the actual profit margin.

As long as Wal-Mart was acting as a 700 pound gorilla against fellow retailers via pricing schemes that put mom-pops out of business, that was OK with you, right?
I recall when I was in LB, CA and LB had no huge shopping malls anymore because they taxed them all into destruction a Wal-Mart moved in only blocks from my home.
Soon, every mom-pop store out of business.
We finally went inside to see what was so special.
I wouldn’t buy any meat from them….it looked like the cheapest beef I had ever seen.
When I did pick out some material to sew it turned out the checker couldn’t ring it up based on the ticket the sawing dept put on it.
Then it turned out her boss couldn’t either.
Going back to the sewing dept and finding the bolt with its price was no help because the bolt was now empty and could have held anything.
Bringing the sawing dept saleswoman was not good enough either.
So we had to leave without it.
That was my one visit to Wal-Mart.

@dscott:

one stop shopping at Walmart holds true for internet retailers like Amazon

but Amazon does not give the ‘instant gratification’ of Walmart. If you need it ‘right now’ such as you’re making a pie for supper and realize you don’t have enough sugar, you can go on-line and order it from Amazon and get it the next day, or you can run down to Walmart and get it right now. Which one wins?

For those that have ‘stopped’ shopping at Walmart, where do you now buy? Much of what Walmart has, no one else in town has it.

@Redteam: For those that have ‘stopped’ shopping at Walmart, where do you now buy? Much of what Walmart has, no one else in town has it.

no one else has it because Wal-Mart made a deal with manufacturers for a deal the manufacturers simply could not refuse.
BUT…..Wal-Mart does not have certain things that a niche buyer, like a Kosher family needs.
NONE of their pickles are really kosher in that they do not use vinegar in the process.
Some use the term but add the vinegar even at other markets.
Wal-Mart does not carry prime or even choice beef.
They, like many markets carry ”select” beef, a cut below choice.
I use a large superstore (Smiths’ Marketplace) for most food, some clothes and shoes, home goods, some pet care and some hobby items.
Then I use smaller stores for great buys on things like Lox, lamb, prime beef, real Kosher pickles, smaller desserts and so on.
Trader Joe’s is one I use, as is Pirate-O, an import food store.
Hancock Fabrics beats anybody’s prices on hobby items and cloth/sewing goods …especially since they have special sales days, coupons and senior specials.

But then I never really ever shopped at Wal-Mart.
I just tried to once.

@Redteam:

When the Internet Sales Tax was being pushed, especially by the Democrats, I contacted Amazon because I had been told that Amazon was supporting the internet sales tax bill. I received a very, VERY nasty email back from Amazon saying that while they were happy to receive my input in the issue, they supported the sale tax push and if I didn’t like it, too bad and, btw, they hoped they could be of service to me again and that customer satisfaction was their top priority.

What Amazon never informed their customers was that the sale tax would also apply to all shipping charges, so while you may think the shipping was free, you would be charged sales tax on the value of the shipping charges.

And have any of you ever tried to return an item to Amazon? That’s a nightmare. But I can order from Wal-Mart on line, and if the product is not satisfactory, return it to a store when it is convenient for me, no questions asked.

Wal-Mart changed the retail market in America only to become the whipping boy for the left. As long as the unions, and the left, continue to demonize Wal-Mart, I will continue to shop there.

so IT TELL US THAT WALLMART is not in the way of the other stores,
no, it’s the shoppers who are the one in the way of the other business being deprave of
the consumer choice to buy, they THE OWNERS are the decider of any business to win their buyer clients,
AND THE BUSINESS MUST NOT TRY TO COPYCAT WALLMART,
YOU MUST VISIT WALLMART AND LOOK FOR WHAT THEY DON’T HAVE, NOT WHAT IS THERE
BUT BRING WHAT
WALLMART DOESN’T HAVE,
LIKE WHAT ? WELL IT’S FOR THEM TO FIND IT, HOW ABOUT MADE IN AMERICA STUFF
WITH A COMPETING PRICE,
HOW ABOUT MADE IN CANADA STUFF WITH A COMPETING PRICE, HOW ABOUT A SPECIALTY CLOTHING MADE BY HAND OF THE LOCAL, HOW ABOUT SPECIAL ARTISTIC STUFF MADE BY LOCAL ARTIST, ECETERA AND IF THAT SMALL STORE ADVERTIZE THAT SHE WANT THOSE ITEM MADE BY LOCALS THEY WILL DO IT AND BE GETTING A FAIR PRICE FOR IT ,EVEN IF THE SMALL BUSINESS
HAS TO NOT EXPECT TO MAKE ONE HUNDRED PER CENT PROFIT, THEY ALSO CAN SELL” KNOW HOW “ON WHAT THE CUSTOMER LIKE TO LEARN, BY A REAL HUMAN INSTEAD OF A BOOK,
IF YOU ARE SMALLER THAN WALMART DON’T EXPECT TO MAKE AS MUCH AS THEY DO,
BECAUSE YOU HAVE LESS EXPANSES THAN THEY HAVE,,
IF YOU ARE TOO GREEDY AND ENVIOUS YOU WILL FAIL MISERABLY AND DISERVE IT,

@Nanny G:

like a Kosher family needs.

that’s a need I don’t have. And if Walmart has never stocked kosher, how does not shopping at Walmart affect that?

Wal-Mart does not carry prime or even choice beef.
They, like many markets carry ”select” beef, a cut below choice.

I’m not a connoisseur, but they sure have some ‘excellent’ beef. I don’t know what grade it is.

I use a large superstore (Smiths’ Marketplace) for most food,

There is a good foodmarket near me, but it costs at least 25% more. Not worth it.

Trader Joe’s is one I use, as is Pirate-O, an import food store.

Most towns that have a Walmart do not have many alternatives.

Hancock Fabrics beats anybody’s prices on hobby items and cloth/sewing goods

most Walmarts do not sell cloth. They stopped several years ago. (some have now started again) I live in an area with many Mennonites and they sew all their clothes. Walmart here doesn’t stock cloth, so if it’s not profitable here, I don’t know where it would be.

But then I never really ever shopped at Wal-Mart.

I have never been concerned about the politics of it all. I know when Sam Walton was in charge, if it was made in America, he wouldn’t stock foreign goods. Since he died, the rest of the family didn’t care so much. But they have the nicest, cleanest stores and they usually cost less.

Retire:

VERY nasty email back from Amazon saying that while they were happy to receive my input in the issue, they supported the sale tax push and if I didn’t like it, too bad

strange, because they have moved many of their shipping points OUT of states that required them to collect sales taxes and let it be known in states that were passing laws that allowed them to collect sales taxes on goods shipped from their states that they would move out if it was passed. That seems to be in conflict with what they said to you. I buy regularly from Amazon and usually they do not charge sales taxes.

so while you may think the shipping was free, you would be charged sales tax on the value of the shipping charges.

I’m a Prime member of Amazon and do not pay shipping charges OR any taxes associated with shipping. That must be allowed by the state they are shipping to. Texas, I can see, because of no income taxes, Texas has to get income some way.

And have any of you ever tried to return an item to Amazon?

One thing, one time and it was no problem. They sent me the label, soon as they got it, I got credit for it. And did not have to pay for the return shipping.

But I can order from Wal-Mart on line,

I’ve used that and their “site to store’ service and it is great.

and the left, continue to demonize Wal-Mart, I will continue to shop there.

I will also.

@A.Men: Walmart is trying to survive under the obomba boot on its neck.

Now that’s just damn funny stuff.

@Nanny G: I quit shopping at Walmart over 2 years ago for obviously different reasons than most here. I’ve come to learn that they’re not as inexpensive as many have come to think, even higher on many items.

Vince, I can understand your resentment over Walmart’s take on ACA (don’t agree with it by any stretch but I do understand how incoherently frothing you guys get over the subject). Minimum wage? Not so much. Is there just some deep seated hatred that Tea Partriers possess that it’s just not good enough for your fellow man to “go home and die”but that you seem to glee at the concept of them living in poverty? You are indeed disturbing people.

And I’m not sure why you chastise Walmart for simply wanting an even playing field with their low overhead competitors who can sell their products several % points cheaper. Like most of today’s so-called conservative’s arguments, that just doesn’t make a great deal of sense.

It’s as if the ODS has really taken it’s toll on you loons. Seriously! Hell just this week alone we have Gov Jindal making a total ass of himself, Arizona going total stupid on their hate bills (and don’t even support it after they supported it), the GOP continues to eat their own (McConnell), Michelle Bachmann now against a woman for president (WTF?), Rand Paul is “concerned” about Bill Clinton’s stumping against McConnell, your TP hero Scott Walker going down in flames(with you bobbing heads in denial) and you’re here babbling something about the evils of capitalist utilizing the government when you promote it at every level.

It’s as if you really seriously have no clue of what you advocate and then don’t even want it after you get it-as long as the less fortunate can lose coverage to go home and die and the underpaid can become even more underpaid because, because, well, “freedoms”, or, or some other really really stupid shit.

@Ronald J. Ward:

Gov Jindal making a total ass of himself

what did he do, I haven’t heard about that.

@Ronald J. Ward:

or some other really really stupid shit.

you need to get away from that self defecating stuff.

I quit spending money at Walmart about 10 years ago. I can count on one hand the number of times I’ve been in a Walmart since then. They refused to pay $250 for an error caused by one of their oil changing guys. They wanted me to prove that I had NOT gotten my oil changed somewhere else since having it done at their store. What idiocy!

So, I took my business somewhere else. They have lost out in profits many times over the $250. My wife loves Target and that’s where we’ve been shopping since. A much classier place.

Whether it’s products, poultry, or politicians, I don’t do Arkansas.
(No offense to the good folks there, but really…)

Ronald J. Ward
the stupid shit here is you,
nobody ask you for your opinion, and what you say is only ,
you this and you that,but you don”t say what you are,
you are nothing, you don”t bring nothing here, and before you attack here, you should look at what you say, just hate and shit, well you can roll in it it, your favorite subject to use on all your word,
that tell us that you are a piece of SHHEETT

@ilovebeeswarzone:

you don”t bring nothing here

You don’t know not even nothing, do you?

@johnnygeneric:

My wife loves Target

Do you get your oil changed there?

I only attack who is attacking my friends the best of all , AND THEY ARE THE CONSERVATIVES,
THE TEA-PARTY, THE REPUBLICANS, THEY HAVE A BRAIN,
AND A HEART,
THAT SHOW THEIR SUPERIORITY,
AND ABILITY TO BE IN CHARGE OF THIS AMERICA,

@inMAGICn:

I don’t do Arkansas.

who do you do?

@Ronald J. Ward:

You don’t know not even nothing, do you?

Are you gonna take a grammar class next?

the VETERAN AFFAIRS, should be fired for destroying the file older than a certain date,
someone should go in prison, this problem hurt the VETERANS, and no one except the one reporting it,
they don’t treat the sick VETERANS as they should and money are being stolen from the veterans while they wait for years now, shame on you ,AND I REFRAIN FROM CALLING YOU WHAT I THINK YOU ARE,
EACH VETERAN SHOULD BE RECIEVING IS CLAIM PLUS THE INTEREST ON ALL THE TIME THEY WAITED,
THERE IS NO EXCUSE FOR IT, NONE, YOU JUST HAVE TO HAVE HIRED MORE TO GET IN THE BACKLOG,THIS WILL NOT GET SILENT, WE WILL REPEAT IT ON AND ON, UNTIL IT’S BEING TAKEN CARE OF,
THIS IS THE BIGGEST ABUSE ON THE VETERANS EVER PULL IN HISTORY, IT LOOK LIKE IT’S INTENDED TO BE , THERE IS NO OTHER ANSWERS,
that should be a model to see how OBAMA CARE WILL BE RUN,
A BACKLOG OF MORE THAN 5 YEARS, BEFORE GETTING THE CARE YOU NEED,

Redteam

Who do I do?

Naughty, naughty.

redteam

Sorry : whom do I do? Musn’t engage the pedantry of commentary,

@Redteam:

I get it changed anywhere EXCEPT Walmart. Instead of general shopping at Walmart we now go to Target.

@DaNang67:
Uh, yes I did say that.

Are you wanting accolades for your reading skills or a cookie for your ability to copy and paste in order to create a new argument?

@Ronald J. Ward:
It’s just that you do it so often on this site. Hey, I’m an old guy and I’ve done it myself from time to time. But you seem to make a habit of it. In fact, It’s about all I ever see from you.

@DaNang67: Yet you prefer to run from or troll the argument rather than engage. Typical yet telling.

Ronald J, Ward
HE IS TELLING HE DOESN’T WANT TO GET DIRTY,

My biggest gripe with Walmart is that they are no longer customer friendly. Have a long line at the check-out? To bad, they won’t open another one. They’re becoming another K-Mart, where what I want, they don’t have.

Ice scrapers – GOOD ice scrapers? Not to be found. All cheap plastic ones that have uneven blades.

And now that I know that they’re for Obamacare (so they can dump all their employees on the exchanges?), I’ve a mind to never go there again. It’s the principle of the thing.

@inMAGICn: Well, you’re the one that made a public statement that you don’t do Arkansas. You may as well say who you do.

@johnnygeneric:

I get it changed anywhere EXCEPT Walmart.

I was just trying to find out if Target does oil changes? Have they ever refused to repair a car they damaged?

@John: Walmart is an American capitalist run company, their objective is to provide sales of goods to the public and to make a profit. They do well at both. In the true American spirit, everyone is free to take advantage of that, or do something else. I personally plan to continue to go to Walmart as long as there is not a better alternative.

John
HI,
THE ICE SCRAPER MUST BE PLASTIC,
or it will scratch your glass and your car body when you have snow on it too,
BYE

@Ronald J, Ward:

@DaNang67: Yet you prefer to run from or troll the argument rather than engage. Typical yet telling.

very good DaNang67, there is no such thing as engaging RJW, he’s a complete fruitcake. Might also be a fruit.

@Redteam:
There never was anything substantive to “engage”. He just came here with a handful of silly socialist talking points said a bunch of stupid shit and watched for a reaction.

WHEN YOU HEAR THE STATES LEADERS SAY,
THEIR IS A FUNDAMENTAL CHANGE IN OUR COUNTRY,
YOU BETTER BELIEVE THEM,
THEY ARE ALL AFRAID OF HIM, THAT’S WHERE HE WIN,