mobileCategory: economics
06/28/09 03:51 - ID#49108
The high cost of doing biz with Walmart
It also is not unheard of for Wal-Mart to demand to examine the private financial records of a supplier, and to insist that its margins are too high and must be cut. And the smaller the supplier, one academic study shows, the greater the likelihood that it will be forced into damaging concessions.
Wal-Mart has also lulled shoppers into ignoring the difference between the price of something and the cost. Its unending focus on price underscores something that Americans are only starting to realize about globalization: Ever-cheaper prices have consequences. Says Steve Dobbins, president of thread maker Carolina Mills: "We want clean air, clear water, good living conditions, the best health care in the world--yet we aren't willing to pay for anything manufactured under those restrictions."
Also has an interesting discussion of Levi's entrance into walmart.
This video discusses similar things from a broader perspective.
What is the Story of Stuff?
From its extraction through sale, use and disposal, all the stuff in our lives affects communities at home and abroad, yet most of this is hidden from view. The Story of Stuff is a 20-minute, fast-paced, fact-filled look at the underside of our production and consumption patterns. The Story of Stuff exposes the connections between a huge number of environmental and social issues, and calls us together to create a more sustainable and just world. It'll teach you something, it'll make you laugh, and it just may change the way you look at all the stuff in your life forever.
Thoughts?
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Let me unclothe one more anecdotal skeleton from my closet.
Three years back my friend and I had a major disagreement over my shopping habits. My friend saw the walmart documentary and kept insisting that I should be not be shopping at walmart. She started her own personal boycott. We used to shop together but my constant dread of being judged as insensitive, lead me to make stealthy trips to the walmart store when she wasn't around!
It was getting to a point where I was making double grocery trips because wegmans prices were nearly making me bankrupt and I didn't want to seem like I was completely indifferent about the "evils of walmart". Finally, I decided that I had had enough of a hard time for just shopping at a place that helped me meet my nutritional goals. My friend and I went through a "grocery-shopping divorce".
It was winter when this happened - my second winter with snow. In the two months that I didn't shop at walmart, I lost my inclination to cook because all that was affordable were root vegetables and bananas. I don't remember anything at wegmans ever being less than $2.49 a pound those two months. Milk prices climbed to $2.99. I couldn't eat salads because the prices of spinach and greens (other than lettuce - that I don't like) were atrocious.
So yes, those two months were the worst in terms of my eating. I never felt so poor my entire life. I was taking a class on nutritional epidemiology to top all this and I got bitter and resentful about costs in a new country. When you are trying to get by on $20K/year, I don't think you can EVER honestly say that you despise walmart. I never will and I am puzzled that people have such hatred toward them.
I really like my friend a lot. She is an awesome person. My motive behind joining the argument here was not to be divisive or condescending. It was to understand why those two months were so painful as they were. I completely did not understand her and I still am not sure why that documentary influences people so much. Yes, I have watched the documentary and read all of (e:Heidi)'s links but their arguments seem cerebral and remote to me and unaware of what's really the truth behind the success of walmart.
That and all you guys are awesome at even-handed in-depth argument. You remind me of the debating society I was in, back home. :)
Nobody has made a personal attack, and nobody has said that people shouldn't criticize Wal*Mart. It isn't necessary to break an argument and isn't productive. Nobody is above criticism - even the critics. I certainly don't approve of many of their business practices and vote with my wallet like you do.
The basis of Wal*Mart's success, and this will help to explain the "What have they ever done for anyone" question, is their position as a cost leader. What they do better than anyone else is enable a wide variety of people to stretch their buck further, improving their quality of life.
For someone to suggest that people worry too much about the cost of the things they buy is to fail to understand why people shop there to begin with. And yeah, I have a problem with criticism that doesn't lead to a constructive solution. If the Wal*Mart critic's position is that the company shouldn't exist, whether they realize it or not they are telling millions of American families "screw your lifestyle". There had better damn well be a constructive alternative to solve that problem because the consumers have already spoken concerning what they want.
Now - it was probably unfair of me to say that the activists are behaving in a condescending manner. I'll take that part back, but not the aloof thing, which to me is plainly evident. They aren't looking down on the low income shoppers concerning this issue, but their lifestyle is merely a secondary concern at best. It isn't an ill considered argument when people like the author plainly say they don't understand why people worry about money or why people shop at the store.
I'm not so sure why we should not criticize Walmart. Nobody really has said why our life is so much better with them. It is almost as if poor people had no place to shop before Walmart came and saved them. It is more divisiveness and personal attacks as usual.
(e:heidi), I think the article and the documentary explain why Walmart and their psychology is damaging to poor people, to consumer choice, the environment and availability of quality products.
I'm not particularly offended by them. Shitting on Wal*Mart is not the common man's endeavor. It's the milieu of upper-middle to upper class activists who can afford to not shop there, and probably would never consider shopping there anyway. I'm sure Wal*Mart feels very worried about toothless threats. How aloof does someone have to be to say that people worry too much about the cost of things? Where's their fucking head at? It has the unmistakable stench of condescension towards poor people, wrapped around them like a blanket. I'm more inclined to tell them to take a hike than to tell the less fortunate among us where they should be shopping and why.
Now - the sex discrimination stuff - if the plaintiffs turn out to be correct, in a company consisting of 2 women for every 1 man, I'll be right alongside you giving them hell for it. Will it stop me from buying TP or Deodorant there when it's on the way? Probably not.
I don't shop at walmart anymore simply because its too far away and I can get all my perishable groceries here. Before pricerite came into the picture, living in Buffalo was nearly 2.5 times as costly as living in Rochester because (and just because) of my grocery trips! I think it would not be a stretch to say that I lived the past two years nearly cheque-to-cheque.
I guess people might say that maybe I could eat cheaper but that is not a option I am willing to consider at any cost. So yes, eating healthy and balanced does cost this much in the US and in my limited view, walmart helped me eat well when I couldn't afford everything at Wegmans.
As for its impact on the economy, I honestly am making some assumptions as you point out. I don't know all the reasons why people seek jobs at Walmart. However, from your anecdotes, can you honestly claim that its walmart's fault that these people are employed with walmart? It seems to me like walmart is viewed as a sort of fallback/extra-cash job when things are not going so well in life. In this scenario, if I were to seek a job at walmart, should I expect that they pay me according to my qualifications, reagardless of the job I am employed for?
I am aware that sounds like reverse argument to just support my stance, but I really am very interested in this whole argument. I am interested in knowing why people think that pointing fingers at companies who monopolize a certain sector of the economy is okay while persistently ignoring the lack of regulations in that particular sector. Is it not possible that the lack of of definite standards and regulations have lead to this monopoly in the first place?
To present an analogy, if there are no regulations in place for who can buy an electronic cigarette at this point, and if kids <10 years end up getting those cigarettes, would you blame the cigarette company? or the lack of regulations?
Similarly, if people are not getting the benefits they "deserve" for a particular job, who is setting the rules for what they deserve? The argument that walmart is a "trendsetter" doesn't make any sense to me because by claiming that, in essence, you are saying that regulations have allowed walmart to do whatever they please. In a capitalistic economy isn't that what companies do? Gain the maximum profit without breaking rules?
All this actually leads me to another thought. So this uprising against walmart is not really what it seems on the surface. Maybe it is an activist statement against the lack of regulations in the industry. This fight is perhaps best fought with the governing administration, not walmart. (Of course, there is always the whole evil facet of industry lobbying and I have no idea how that will factor into the outcome of all this activism.)
For a more statistical view: :::link:::
About the walmart sex discrimination case
:::link:::
Quite recently, there was this whole discussion about how employees in auto companies make several times more money when compared with people employed in other industries with the same qualifications. We all know where that insane ship is headed. Who decides what is the right compensation for a particular qualification or job? Does US have national standards? If not, shouldn't there be national standards for compensation so that companies cannot flout them? Does the responsibility to ensure proper recompense lie with a private corporation alone? Is this evil coercion you talk of reflect a market which is wildly de-regulated and out of control or just the evil measures of one corporation alone?
The bottomline is, while concentrating our sabres at walmart, are we all missing that the governing administrators and regulators of industry are clearly not doing their part?
Is it sad that someone Making clothes gets 12 Cents and day or what ever, yes that is. But what ever those working conditions are, they are the standard for that country. People like to say things like how bad it is for those people and this and that, but what if Wal-Mart didn't buy from them and they had no Job that would be a lot worse.
The Aurgment of well they come into a town, and then all the local places close is very true. But see it isn't that simple. Why did this people in the town instead of being loyal to the local place that sells Nails and Hammers and saws go to Wal-Mart?
It is true that Wal-Mart is Very Damaneding and that some companies have gone out of business doing to much stuff their way. But why did that company decide to do that?
Things aren't all ways as cut and dry as they seem is all I'm saying.
An idealistic scenario to me would be to eat NO artificial components and cook everything from scratch, use minimal amount of oils and boil everything. However, all this research and thinking and knowing doesn't stop me from indulging in crazy junk food at times because I am not perfect. I cannot discipline myself all the time. I try but I fail. That doesn't mean I didn't have a choice. I had plenty!
The other side of the coin was when I was on an 8 hour Greyhound trip. For some inexplicable reason, Greyhound trips have some shady deal with Burger King. That's where they stop all the time - every single stop. I had 3 apples and I ate them all. I desperately wanted some energy to keep going, so in one of the stops, when I ran out of apples, I had to buy a pack of french fries. Idealistically, I would have packed all my food in advance and foreseen this scenario. However, I didn't do any of this and ate those fries anyway because I was irresponsible earlier about not respecting my idealistic goals about eating.
If I was 100% idealistic all the time, can you imagine the change I could bring into my life? Can you imagine the change that ALL of us can bring into our lives?
I agree with you that everyone (regardless of how limited or unlimited their resources are) has moral values and personal judgements. You may well disagree with someone's policies and yet do business with them (either as a consumer or as a seller). However, constantly placing your moral values above and over your financial means is idealistic. In wavering from your moral judgement, you just demonstrate that idealism is not always practical.
Yes, it is idealistic to expect change without taking any action. What if you can't take any action because you are limited by means? Then the whole concept of action is a worthy idea but not really practical for some people. It is also idealistic to expect that corporations would change just because there are objections being raised about their business model by a section of the population that doesn't primary do business with them. I don't know if this whole issue has a solution because boycotting Walmart is an idealistic but impractical option for many.
In fact, if you think beyond country and continent lines on a global scale, this is just the dynamics of a a capitalistic economy playing out. Those who can meet the demand with plentiful and cheaper supply survive, and others lose. A socialist economy is idealism in this scenario - very desirable but imminently impractical because some of us are too human, some are too flawed, some are too greedy and yet some are too limited to embrace worthy ideals.
Change is highly desirable but we cannot achieve it till the majority have the resources and act on their moral values ALL the time.
People have this perception about Wal-Mart being this monolithic brut with the people that they buy from, but by and large it is absolutely ridiculous. Almost without exception, the criticisms come from union organizations or NGOs with a similar axe to grind. I'm puzzled at how the article presents certain business practices as if they are unusual or unethical; for example, telling a supplier what they're willing to pay for their product, or being picky about the packaging, etc. That stuff isn't unusual to ANY degree.
Some of the items in this article are utter fabrications (such as Wal-Mart examining private financial records of suppliers to scrutinize margins being "not unheard of" - NOT TRUE). Quoting academic studies they won't name is pretty flimsy as well - I can tell you from personal experience that these large, monolithic companies also keep scores of American small to mid-size businesses afloat. "Damaging concessions" is union speak.
The article mentions price vs. cost - only people that can afford to shop elsewhere have the luxury of considering these things, which is an astute point that (e:tiny) made. For all of the ridiculous loony talk about Wal-Mart being an evil corporation, I think the millions of people who rely on W-M would disagree about the necessity for a cost leader in the market. People refuse, REFUSE! to accept that W-M actually has done a lot of good for poor people in our country because of their opposition to globalization, which in my own personal opinion is really weak. It's as if the fact that W-M facilities a better lifestyle for the more destitute among us, at some point, will become irrelevant because in some eyes the "costs" eventually outweigh the gains. Tell that to single parents or seniors on a fixed income - this is why people opposed to W-M constantly make counterintuitive arguments that are ultimately ineffective.
Now, the effects of globalization are real and people should consider them. One of the regular criticisms about W-M (or really, multinational corporations) that is absolutely true is that at some point the cost competition gets so severe that American companies can no longer compete. I've been to American factories where literally the machines were being boxed up to be sent to China as I was there. It's sad and not pretty too see.
To a degree I'm with the libs on the globalization front, but for me the most important thing is to be realistic about what can ultimately be done about it. The cat is out of the bag, so to speak, with respect to globalization. The article quotes a manufacturer who suggests that people want this or that but don't want to pay for it - exactly. I'd suggest that the average person who frets about globalization and making that criticism also don't want to pay for it. I don't see anyone up for paying $60 for a 5-pack of plain white t-shirts, etc. regardless of ideology.
It's a very idealist thing to say that we need to change our attitude as a consumer. However, the ones who would usually be receptive to change are not the customers who are forced to shop at walmart.
Tackling this problem at its roots involves examining just why it is that people shop there anyway. The answer is frightening close to the answer to why people spend more than they can or need. The answer is an unwillingness to sacrifice some things for others. The answer is peer envy and societal "standards" that are terribly hard to meet without a certain amount of wealth. The answer is changing our personality enough to live with extreme discipline. Can anyone do all of this when they are hungry and their 5 kids are screaming for school supplies? I don't know if that question has a clear cut answer.
a) They don't provide any benefits to their employees. Well, these employees are at walmart because they have accepted those conditions. When a company is not oppressing its employees by fining them if they choose to switch jobs, I don't see the un-ethical part of it. It's a thankless job that pays less. But its much better than being unemployed.
b) They source their products from abroad. Yes. That's how they keep their prices low. If you have a problem with that, just don't buy from them.
c) Conditions of overseas workers are no good either. That is true as well. But have you ever stopped to consider what the condition of any such worker in any manufacturing job is, overseas? This is not to say that I am supporting these conditions. This is to make a point that painting walmart as a sole villain is an unfair thing to do.
If people want lower prices, and a company is able to give them these lower prices by applying a global business model, then I think the company has achieved it's goal. The world is not populated by the rich alone. I see walmart as creating an economy around the poor across continents. If you can afford higher prices, walmart is completely out of your sphere.
If you have ever been in a position where buying a pair of shoes puts you in a financial position where you are wondering if you would be able to make it through meals for the rest of the week, then walmart comes to your rescue. Try being concerned about where these shoes are coming from in that position.
That being said, I just bought water shoes for Zoar Valley at Walmart. The reason being is that both Target and Payless did not have them or anything similar in anything close to my size. I needed them right then so I made the choice to go there. There are also times where I have been desperate for a lower price and have gone there. All in all I have not spent a ton of money at Walmart and I don't plan on going there if at all possible in the future because I do think they are a horrible, horrible company.
I posted about Wal-Mart a while ago. :::link:::
Precisely. Nothing in Walmart that is cheaper than the usual is manufactured under any of these restrictions...