Skip to comments.The Price Is Right [Harvard business professor praises Wal-mart] (NYT Op-Ed)
Posted on 08/03/2005 12:54:00 PM PDT by summer
.... But to chalk up Wal-Mart's success simply to the exploitation of its work force, as many of the company's most ferocious critics do, is simply wrong, for two reasons.
First, Wal-Mart hasn't just sliced up the economic pie in a way that favors one group over another. Rather, it has made the total pie bigger....
Second, most of the value created by the company is actually pocketed by its customers in the form of lower prices. According to one recent academic study, when Wal-Mart enters a market, prices decrease by 8 percent in rural areas and 5 percent in urban areas.... And because Wal-Mart's presence forces the store's competitors to charge lower prices as well, this $16 billion figure understates the company's real impact by at least half.
These kinds of savings to customers far exceed the costs that Wal-Mart supposedly imposes on society...
... Is such pro-consumerism a good thing?
The answer depends on who these consumers are, and Wal-Mart's customers tend to be the Americans who need the most help. Our research shows that Wal-Mart operates two-and-a-half times as much selling space per inhabitant in the poorest third of states as in the richest third. And within that poorest third of states, 80 percent of Wal-Mart's square footage is in the 25 percent of ZIP codes with the greatest number of poor households. Without the much-maligned Wal-Mart, the rural poor, in particular, would pay several percentage points more for the food and other merchandise that after housing is their largest household expense.
So in thinking about Wal-Mart, let's keep in mind who's reaping the benefits of those "everyday low prices" - and, by extension, where the real conflict lies.
(Excerpt) Read more at nytimes.com ...
Very interesting post. Thanks. By the way, I bet this article has given Paul "slice and dice facts" Krugman the fantods.
I love Wal-Mart!
Thought you would enjoy this Wal-mart thread. :)
My pleasure. I thought it quite an interesting article, especially from a Harvard business professor.
There are many ways to look at the impact Wal-Mart has on a community and lower prices is just one of them. Often the easiest to measure. To measure the more insidious effects involves looking the "hidden" charges the community pays. And that is more difficult.
They are a big target because they are so successful without the need of a union. Also being conservative and business savy makes for liberal envy.
I buy cat litter and potato chips from Walmart because they're cheap. Then I go home, and me and the dog sit on the cat litter bag eating potato chips, while watching the cat dig a hole in the garden and doing his business.
It works for me.
Where I live, if you don't like Wal Mart, there's always Target, Fred Meyer, various department stores, and several mom and pop stores. Wal Mart hasn't driven anyone out of business around here. I don't shop there because I think their products are crap and their stores are an overcrowded mess.
I did...immensely. Thank you.
Are they hidden inside the black helicopters that are reading your brain waves?
The store near me is an overcrowded mess but the groceries are so cheap I can overlook that fact. The employees are nice too. I think they do so much business they cannot keep up.
No they are not, thanks for asking. They are in depressed wages and subsidies. Wal-Mart also pays so little that many of its workers rely on state healthcare subsidies, food stamps, housing vouchers and other public aid. They have pressured manufactures to go overseas to "keep the price low". That costs jobs. There are more but that's just a start.
In general I don't like shopping, but the local Walmart I now use is clena, bright, convenient, the staff is polite and helpful and the prices are good.
I don't know what kind of "hidden" charges to the community you are talking about - I know that in my area they are about the best paying private employer other than the poultry plants...and the difference isn't very much.
I heard an interview on NPR today by some human rights guy detailing the alledgedly deplorable conditions and wages and abuses etc.. that Pakistani workers endure to bring Americans cheap prices at Wal-Mart. Likewise Central America and wherever they employ sweatshop conditions. Like six year old girls working 14 hour days for seven cents an hour seven days a week. (one example) He went on for quite a while. If this stuff is true, I'd write letters to Wal-Mart asking them to fix some of these things.
I shop at both Walmart and Target and appreciate the fact that both are in my area.
That says multitudes about the manufacuring base in your area.
The Pakistani and Central American made products you find in WalmMart are no different than the Pakistani and Central American made products you will findin Target, KMart, Sears, Penney's, etc..........the price just happens to be lower in WalMart..........but they are the same proudcts.
And it's not even Saturday :)!!!!!!!!!!!!!!!!!
I live in a rural/agriculture/fishing area, not in a manufacturing area.
Walmart pays far better than any of the other retailers in the area. You don't have to believe me, but I know this for a fact.........but as I said, that is in my area, your mileage may vary.
Dude, you really need to get a TV...
did you even read the article? The author is spot-on - prices are lowered to the consumer (remember there are many multiples of consumers as compared to employees), but also, choices are increased - I challenge anyone to prove that the net benefits to any of affected parties is negative. The people working at Wal-Mart are also part of the lower/middle class consumers that shop there.
Another observation: I just read somewhere that manufacturers are finding overseas employees to be less profitable and are bringing them back home, but are using more automation. That is also a major factor in our changing economy.
There is not much difference in big box stores and mom/pop stores. They all carry things from all over the world...and some of it is cheaper at Walmart, and some of it is not. But it just seems to me that to blame changes in our economy on Walmart is a simplistic solution to a very complex situation.
Waiting for you to enlighten us.
I didn't make that charge. The author (and others) gushing over Wal-mart and how they are bringing prosperity to the consumer prompted my response. I am offering an opposing view - that it has a price. And that price is not so obvious. If you're willing to pay that price . .fine.
No worse than other retailers and better than most.
Thanks for the heads up. Can't wait for kellynla to put in his same old 2 cents about the "Chicoms". But I see we have a new one with the union talking points here, bipolar.
They all hate free choice. It perplexes me why they all think Walmart is the only company importing goods and not paying the same wages as other retailers. The union talking points fail to say who, other than the state, would be paying these employees if Walmart would just close up. It's hard to imagine that over one million people work for the company against their will.
The only real fact is that unions are dying and their last real hope is to unionize the retail industry and Walmart is the target, they need the dues and don't give a damn about the employees. The article did an excellent job of pointing out the benefits of the Walmart business plan to much of the country, the only loser is the union. Too bad.
It takes longer for it to soak in for some and there are only so many years in a lifetime, so . . .
It hasn't "soaked in" to you yet.
Wal-Mart is an American success story. Learn to live with it.
In other words, you truly don't know what you are talking about. Freedom of choice is a great thing, if you don't like the company-don't do business with them. But trashing them without knowledge just makes you look silly. It is amazing how you echo the union talking points though, almost word for word. Makes me wonder...
It is the same crap I see while lurking at DU.
Yes, it is the same leftist, union garbage. These fools think that their unions, which drove the jobs out of the northern states, will rescue them. What a laugh. Labor intensive jobs will always flow to the lower cost centers, but the union fools don't recognize that simple fact. And the left always hates success in private industry.
No more so than any other retailer.
Less so than most.
My point is simply that I have not seen Walmart ruin my own community which was predicted by the hysterical naysayers. In fact, the only business that has been hurt at all is a poorly run national chain store. And many of the employees at that store have gotten jobs at Walmart because they are treated (and paid) better.
The mom and pop stores, and the other big box stores did not offer any higher wages, did not offer benefits and the community had to pay for the "hidden costs" with those businesses as well.
I guess my greater point, on which we may agree is that all businesses offer the community something and cost the community something. In our case the benefits have outweighed the costs.
Are you too naive to understand the simple fact that ALL retailing falls in that simplistic statement?
Please explain the cost of these employees to the state if they did not have these jobs? Please explain the impact of the loss to the tax revenues Walmart and others generate. Obviously you haven't thought through your conclusion.
Incoming...I just bought two freezer Munchkins for the kid's lunchboxes at Wal-Mart. Looked all over the local grocery store and they had nothing. Strange since they had lunchboxes.
Oh, and one other thing. The HEB stores in our area give Wal-Mart a run for their money. We have read some interesting articles about how our HEB grocery stores can beat Wal-Mart at grocery prices and Wal-Mart actually loses money on it's grocery line in our area. Just wanted folks to know that there really is still competition out there.
What are "HEB" stores?
Walmart does so much business they can't keep up.
It's one of the reasons I shop there for food. Everything is fresh and new. I've bought "expired" stuff at Publix by accident - and that means the stuff was on the shelves for years. At Walmart, as soon as they get groceries on the shelves, someone's taking it down and putting it in their basket.
Old canned food is safe, but it starts breaking down - buy an old can of fruit from your local "we charge to the hilt" store then a can from Walmart. Both are safe, but the fruit in the old can will be mushier. Same with tomatoes and forzen foods.
Overcrowded is a fact, but it's worth it to get the better quality.
Where union elections have been held at Wal-Mart, unions have been rejected repeatedly. That indicates worker satisfaction with things the way they are. I am a 31 year union member (retired)
Wal-Mart employees like all other employees have a legal right to organize. They don't - that's their choice.
My wife works in a management position at Wal-Mart and travels extensively in the central and west central U.S. Everywhere she goes she finds Wal-Mart wages and benefits compare favorably with all other stores of its type.
Management employees are encouraged to discourage unions by all legal means. As a long time union member I have no problem with that policy.
By the way, she didn't start out in management. 5 years ago she started as a deli clerk,
HEB there doesn't come close to Wal-Mart for low prices.