Wal-Mart's Big Squeeze Play

[MORTARDUDE]

http://www.sfgate.com/cgi-bin/articl.../hsorensen.DTL

Wal-Mart's Big Squeeze Play

Harley Sorensen, Special to SF Gate Monday, December 8, 2003

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Question: When is big too big?

Answer: When it's Wal-Mart.

About 50 years ago, when I lived in Seattle and worked at Boeing, I stumbled one day upon a Luther League forum debating this question: "Is it possible to succeed in business using Christian ethics?"

We didn't have rabid liberals and rabid conservatives in those days -- or, at least, not many of them -- so most of the people involved in the forum were what we now call "middle of the road."

The conclusion they reached at the end of the hour was a woeful no. Nobody wanted to admit that the Golden Rule is not a good business rule, but "facts is facts," and the forum was an honest one.

Which brings us to Wal-Mart. To the best of my limited knowledge, Sam Walton did not break any laws building his fantastic Wal-Mart empire, and his low-price philosophy certainly helped a lot of people. But Walton's success was ruthlessly created on the backs of fragile human beings, a good many of whom are worse off for the experience.

So, on balance, is Wal-Mart more good than bad, or more bad than good?

Sam, who started it all, is gone to his heavenly reward now, but his empire is about to invade California soon in a way that will change our state more than has the mass migration from Mexico.

Starting next year and continuing over four years, Wal-Mart plans to build 40 grocery-store "supercenters" in California. What that means in one respect is, "Hello, Wal-Mart, good-bye, Safeway and Vons and Albertsons and Ralphs and Raley's and the other supermarket chains, and good-bye 250,000 excellent union jobs statewide."

If you're a journeyman checker at one of the supermarket chains in California, you make around $19 per hour with excellent health benefits, even if you're a part timer. That's not enough to buy a house in Northern California, but it's a living. However, the same job at Wal-Mart pays about $9 per hour, with health insurance so pricey that many employees can't afford it. That's low enough to consider living in your car.

The Los Angeles Times ran an outstanding three-part series on Wal-Mart, beginning Nov. 23. If you're registered with the Times, you can find that series on the Web: For part I, click here; that article has links to parts II and III.

Most of the information in this column is taken from that series.

Wal-Mart is the 800-pound gorilla hiding in the shadows behind the 70,000-worker supermarket strike and lockout in Southern California. The workers are simply trying to maintain their wages and benefits, but management, mindful of rising health-insurance costs and the forthcoming invasion by Wal-Mart, is holding out for take-aways, higher co-pays and a two-tiered income structure that threatens to ultimately decrease wages for all workers.

It's a mess. The workers' concerns are legitimate, but so are management's. Wal-Mart is already the nation's largest grocer, and when it comes swooping into California, all hell is going to break loose in the grocery industry.

Shoppers will love the prices. Wal-Mart puts such a tremendous squeeze on suppliers that it can, in fact, buy and sell for less.

However, California growers and other suppliers will not be happy. Wal-Mart is about to squeeze them like they've never been squeezed before.

Putting the squeeze on is what Wal-Mart does. Every year at contract time, it demands that its suppliers provide more for less. This pushes suppliers into their own squeeze tactics -- paying their workers less, cutting benefits and now, with the global economy, seeking out workers elsewhere who will work for less.

So production moves from America's Rust Belt to the Deep South, to Mexico, to Central America, to the Far East, and, most recently, to remote provinces of China.

Every time it moves, production leaves empty factories and unemployed workers behind. While producing customers for itself, Wal-Mart does a terrific job of destroying customers for everyone else.

Who benefits most? Well, five Waltons are tied for fourth place in Forbes magazine's list of the richest Americans in 2003: Alice, Helen, Jim, John and S. Robson Walton, each worth an estimated $20.5 billion. (The top three are Bill Gates, Warren Buffett and Paul Allen.)

Therefore, Wal-Mart presents some perplexing problems. As Americans, we applaud entrepreneurship, so, to many of us, Sam Walton is a national hero. We also enjoy the reduced prices Wal-Mart provides.

On the other hand, capitalism is a system of winners and losers, and Wal-Mart has left a bloody trail of losers behind. And it's acquired too much power, if you consider that one company with the capability of destroying thousands of jobs has too much power.

Wal-Mart has become so powerful, in fact, that a measurable rise in U.S. productivity can be attributed to it. Further, it has become so powerful globally that it is now affecting the policies of some foreign governments, which kowtow to its economic might.

In a republic such as ours, where the will of the people is supposed to reign supreme, such giants are to be feared, in my opinion, and curtailed. There's nothing wrong with big. But there is such a thing as too big.

Wal-Mart won't limit itself, but you and I can slow those people down. I won't shop at a Wal-Mart. I don't care how much money they can save me, I won't enter one of those stores. If they ever start paying their workers decent wages and giving them first-rate benefits, I will reconsider.

I'm not much of a consumer, so my personal boycott doesn't affect me much, but one does what one can. People who worry about Wal-Mart's size and policies might influence the giant by letting it know how they feel. Letters and e-mail.

As Californians, I think we should support our grocery workers on strike and lockout in Southern California. If they lose, we all lose eventually.

On the other hand (and this is where it gets complicated), we should at the very least sympathize with supermarket management. If not for their fear of Wal-Mart, they'd be willing to settle with their workers.

Maybe the California Legislature can repass the bill outlawing big-box stores (i.e., Wal-Mart). Maybe Gov. Arnold Schwarzenegger will sign such a bill. His predecessor, Gray Davis, vetoed it last time around. Schwarzenegger is more honest than Davis, but, then, who isn't?

You and I can save money by shopping at Wal-Mart. We also can save money by stealing. The question becomes, Is money the most important thing in our lives, or do we have higher values?

[SEATJERKER]

...FIRST HAND,...

..."WALMART SUCKS",...

...AND ALONG THE LINES FROM THE BIRDMAN FROM LEVINWORTH,...

..."I WISH WALMART HAD A NECK SO I COULD STRANGLE IT",...

...

[MORTARDUDE]

I did all my Christmas and Birthday shopping for December ( 6 gift certificates ) at the Wal-mart Neighborhood grocery store a mile from my house, and bought some 49c greeting cards and was done in a few minutes. That will be last thing I buy in any Wal-Mart store, unless my wife makes me...LOL

Wal-Mart does truly SUCK !!!

Larry

[Stick]

Since we own a 'Mom & Pop' gift store I feel the Wal-Mart squeeze a whole bunch, especially this time of year.
Fayetteville is a small town but it is also a suburb of Atlanta and growing. When I retired from the car company in ?94 there weren?t any shopping centers here so following up on Joanne?s lifelong wish of owning a gift shop seemed like a good idea and doable in a small town. We opened our doors in October ?94 and quickly made friends with other storeowners and members of the local Chamber of Commerce. One of those people was Herby Young who was the manager of one of the only franchise stores here, Belks.
Herby quickly took us under his wing to teach us some good business policies and how to get and keep customers. He also taught me a lesson on ?shrinkage? in business. Shrinkage is the loss of stock through either breakage or theft. Herb?s shrinkage at Belks in 1993 was .03%.
In 1995 ground was broken at the Fayette Pavilion Shopping Center, about a quarter mile north of town. Anchors were to be Home Depot, Target, and Wal-Mart. The shopping center opened for its first full year in 1996. In 1996 Belks shrinkage went to 7%.
Belks transferred Herby to Outer Slobobia in 1997 where he had to retire.
Damn, I wish my shrinkage was 7%.
Wal-Marts selling a whole bunch though. What changed?

[reeb]

ONE of these days, these , "white collar " workers are going to thank stores like Wal mart.

They will be out of a job also, and have to resort to the STANDARD living of NORMAL Citizens now a days.

Think about it !!!!!!!!

enough..........

[melody1181]

Well in my fair city we have almost 3 super wal-marts with a 4th one in the works. Way to much. The 3rd one is built and will open next month. I hate the stores but can't beat there prices. I can tell you that the 2 that are open now are always packed always! We have 2 other grocery chains here, United which is nice but pricey and albertsons which the ones here sad to say are nasty dirty little stores(been to one up in montana that was a world of different.) My point is that there is many people who would rather pay more than go to wally world. I shop there, i'm not afraid to say it because I don't have alot of extra mola to blow on things thats like 2 bucks more than at wally world.

You have to give them credit, they have one heck of a strategy. Though 4 in a town of 175,000 is a bit much, those things are honkin huge.

I LIKE Wal-Mart!
Far as I'm concerned,that article sounds a lot like a combination of sour grapes and typical Calif. weirdness.
Worked as medic and nurse for almost 30yr. and never got the $9/hr. that fella was talking about.I'm supposed to feel sympathetic for a checker that's makeing $19/hr. with good bennies?Oh please!

A point that being missed or ignored here is that Wal-Mart-to my way of thinkin-owes a lot of it's success to being friendly to folks who don't have or make a lot of money.Prices are an obvious part of that but are not the whole story by any means.As might be infered from above,I'm not the richest man alive and I'm unlikely to be found running around in a suit and tie.Ever go into a retail store and have a salesman(after a quick look around to see if there is a "real" customer he can talk to)come over,throw his head back so he can look down his nose properly,and say:"May I help you...sir(snicker,snicker)?"?Wal-Mart has a "greeter" at the door who doesn't seem to care what you're wearing.Very likely the greeter is an old fart or fat lady who likely couldn't do any sort of hard work and I think it's kinda nice that Wal-Mart would pay them-even if it's not much-to say hi to me.A little is a lot better than nothing.

Then there's the matter of service.Almost all my working life I've worked nights includeing weekends and holidays.Don't know about your area,but in mine Wal-Mart is the ONLY place you can go to at 2AM on a Mon. morning and buy a gal. of milk,sandpaper,a I'm-sorry-I-forgot-your-birthday card,a box of .30-'06 ammo,a fishing lisence,and a carton of nightcrawlers;all without seeing more than 2-3 other shoppers(don't care much for crowds).I appreciate Wal-Mart being there when I want to shop.

Wal-Mart gets my business because they've gone out of their way to earn it.

[Stick]

Fact 1: Wal-Mart provides life insurance for all of their employees.
Fact 2: Wal-Mart is the beneficiary on that life insurance policy.
Fact 3: Old fart or fat lady Wal-Mart greeter.
Fact 4: When Wal-Mart moves into a community, that community looses approximately $17 million in income taxes and lost community owned businesses.
Fact 5: I thoroughly enjoy our customers and can?t afford to hire anyone. Doesn?t matter because, when a customer leaves the store they?re happy. We won?t look down on anyone.
Fact 6: The cost of doing business in our store is $2,000 a month BEFORE I purchase any inventory.
Fact 7: When a customer makes a purchase I have to reimburse the state for the tax I have to charge AND pay income tax on anything over wholesale that I have charged.
Fact 8: At the end of this month I will have to pay tax on every bit of inventory that is remaining on the shelves unsold. AND I have to pay taxes on the shelves, cash register, lights, computer, cameras, signs and any other equipment that makes a store too.
Fact 9: My pen has run out of red ink doing the books. Where?s the aspirin?

[reeb]

Stick,

Doesnt the same apply to Sears, JC Penny. Kohls, Target, Liquor Stores, Albertsons, Kroger, etc, etc,.......

enough..............