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During the past several years a number of organizations in the US have criticized Wal-Mart Stores Inc.
for a range of problems that Wal-Mart has supposedly created around the country. I have watched a variety
of people that are supposedly educated and intelligent appear on business or straight news programs and tell the
world why Wal-Mart is an evil company and imply that they are "bad for America". How often have you heard
"We don't want a Wal-Mart in our neighborhood!" type statements on television from community advocates in various
cities.
Wal-Mart has been accused of not paying its people an acceptable wage and not providing its employees
sufficient medical insurance. It also has been accused of forcing its suppliers reduce their prices to very
low levels. It is has been accused of importing too many goods from China as opposed to buying them from US suppliers.
Wal-Mart has been accused of forcing small retailers out of business. It has been called a category killer as it diminishes
the market share of specialty retailers that cannot compete.
Many experts state that Wal-Mart's primary
customers are low income persons and families that need Wal-Mart's low prices to help them exist in todays economy.
I guess this is true to some extent but I don't live in an area with many low income people and our local Wal-Mart
is always full of customers. I have never heard anyone accuse Wal-Mart of making too great a profit as a percentage
of revenue. Wal-Mart's net income is consistently less than four percent of revenue.
It amazes me how
few people have been willing to take on this issue and talk about the reality of how Wal-Mart became the largest retailer
and private employer in the US. The truth is that during the past sixty years Sam Walton, Wal-Mart's
founder, and the Wal-Mart management team developed a general retail business model and operating structure that
is superior to any other in the US.
Wal-Mart came out of nowhere from the backwoods of Arkansas long after
others had a big head start and won big. This is one of the best examples of creative destruction in a business
sector in the history of our nation. Wal-Mart found a better way to compete for our business and
they grew and others lost because we the consumers awarded them our business. Wal-Mart won fair and square.
Sam Walton's focus on every day low prices was the key to attracting a broad customer base and keeping that
customer base coming back to his stores day after day and week after week. It was essential to Wal-Mart's
success. In order to continually offer very low prices a continuing process of optimization of the type and cost
of the goods sold in the stores was required. Wal-Mart has never allowed its own profit margin to get
high enough to impact its ability to compete. It passed on its lower costs to its customers.
Wal-Mart developed
the finest information technology and communications network in its industry. Wal-Mart developed the best logistics
network in its industry. Wal-Mart developed the lowest cost vendor network in its industry. It went all over the
world, including China, to find providers of goods that would meet its price point. The primary beneficiary
of all of this effort was - Wal-Mart's customers.
Many people are upset at Wal-Mart's compensation plan
for its retail employees. Wal-Mart determined years ago that the jobs that most employees have in the retail stores
is essentially unskilled labor. There are huge supplies of unskilled labor available in all parts of the country.
When a new Wal-Mart is built people line-up to apply. This situation is occuring at a time when the national
unemployment rate is about 4.5 percent. If its employees were not paid a competitive wage Wal-Mart could not
staff its stores. The employees would leave Wal-Mart and go work for other organizations. I have never
been in a Wal-Mart store that I felt was understaffed. The employees are satisfied with their jobs
at Wal-Mart, at least for the current moment
The problem with Wal-Mart's pay scale is that it very visibly
shows the political leadership of our nation that many people simply don't have the skills to compete for better
jobs. Every citizen of the US must compete for a job in our economy or the world economy. The reality of competing
with millions of low paid production workers in China or other nations is upsetting to people that don't have
the skills to compete or the desire to compete. Wake-up people! We have one global economy and everyone
must be prepared to compete in the global economy or be left to compete for a job at Wal-Mart.
Wal-Mart is not a perfect organization and it has made mistakes along the way. It is impossible to
manage about 1.8M people perfectly. It is critized every day for not being the best place to purchase clothing. Many
people don't like the layout of merchandise in the stores. Some people don't like the ambience of the stores.
Collectively, we the consumers of the US, and other nations around the world where Wal-Mart competes, have Wal-Mart's
destiny in our hands. Every day we go shopping we decide who will get our business. I will go to my neighborhood
Wal-Mart and pickup the items I know will be sold at the every day low price that I want to pay. I will continue to
go to Wal-Mart until some other organization provides a better alternative.
P.S. I have never worked for
Wal-Mart or had a financial interest in Wal-Mart Stores, Inc.
Copyright 2006 by TPM
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