For many years I have listened to Wal-Mart preach to me about a more efficient distribution system and cutting out the middle man retailing. About 2 years ago they finally sold me but more on that later…
Here is what I can tell you about the company in my lifetime.
Its founder, Sam Walton, believed in the Made In The USA label as a motto of his life at his stores.
After going to a publicly held company and his death, when he was considered to be one of the richest Americans, the store grew very fast using the tax incentive system of many locals to forgive/for-stow taxes in order to invite company’s to land their business with them. The problem being, the locals not only gave up the tax revenue but increased their costs as new water/sewer systems had to be created and road improvements to accommodate the traffic of the new store. At the same time the stores put a strain on existing small business (who got no tax break) putting most of them out-of-business and thus a loss of tax revenue both income and property.
A more Efficient Distribution System was another name for such a large retailer to determine the price of what would be paid instead of the maker of the product. This had no bearing on the cost of the product to the consumer unless there was local completion for the product.
Examples:
A national and worldwide producer such as Coka-Cola would not want to loose the tremendous visibility for their product in all those stores so they give-in. etc…
A maker of light switches signs a contract to produce switches 24/7 without working anyone overtime for say… $1.03 each but wal-mart says they would pay $0.99 for the same with only one catch… They are buying all the product, they could not work folks overtime to manufacture for other retailers. The effect of this is to guarantee a price far into the future at the same time as taking a large chunk of the product off the market thus increasing the cost for everyone else.
Now keep in mind I do not dislike Wal-Mart, just these type of practices and Wal-Mart does not have a monopoly on these practices as others have learned from them and execute them very well. Lowes comes first in my mind.
Ever wonder who was behind those state initiatives to raise the state minimum wage in only certain states in some 2008 elections?
Wal-Mart was. It was a means to increase the cost to competitors where Wal-Mart was already paying more than minimum wage (to steal talent from best competitors). These were made irrelevant by the raising the federal minimum wage that superseded the states wages by the Democratic Congress elected in the same.
Wal-Mart has been losing Album and Movie sales to the internet recently and have bought several company’s to try to make its own online audio and video retailer and all attempts have failed. They just trashed the company’s and still can not figure this out.
Hey… that’s just business in this unregulated capitalist society.
Yes brick and mortar CO’s always have to loose some serious money before they learn the game. It is because on the internet, they have more competitors so if you are going to play the game of “Monopoly”, you will lose. Its a new game in town called “equal” and its found on the internet. So now we can only go so far on price… it now comes back to service where it was to begin with.
So now Wal-Mart, you sold me. I no longer have any local independent businesses to purchase from. And you do not have a monopoly on goods from China.
I can get goods from China on my own and save even more ! Lots-a-luck-to-ya, The internet is a more efficient distribution system. Perhaps you should buy Comcast, Verizon, AT&T and Time Warner to create a monopoly on the internet.