Wal-Mart is one of the most aggressive retailers opening hundreds of new stores during 1990s. You, probably, do not know that Wal-Mart positions itself as a wholesaler, catering to the professional trade rather than as a retailer selling to final consumers. Do not sleep and be alive! Wal-Mart is a dangerous place where people spend their money unable to stop doing so. Wal-Mart is often criticized for its unethical practices which threaten local economies and ruin local businesses. Most of Wal-Mart’s customers are purchasing for their own use, not for a wholesale use. Thus, Wal-Mart is detrimental for America because it shifts American jobs overseas. The book by Ehrenreich and the documentary by Greenwald prove that we, as consumers, know nothing about retail business and its impact on the American economy.
Ehrenreich admits that Wal-Mart has a negative impact on local economies and retail industry in general. I guess that Wal-Mart’s strategy is to penetrate both urban and rural areas and become a market leader. Mal-Mart proposes low quality products of different types at low prices reducing competition and rivalry. As a result, many local companies and stores bankrupt unable to propose low prices and remain profitable. The mission reflects this policy: “”Always low prices, always!” (Wal-Mart Home Page 2008). Recent years, Wal-Mart has launched a range of value lines. Following Ehrenreich: “When someone works for less pay than she can live on… she has made a great sacrifice for you… The “working poor”… are in fact the major philanthropist of our society” (Ehrenreich 221). I agree with the author that Wal-Mart is dangerous for local consumers and working poor because of its unfair and fraudulent policies and marketing strategies exploiting local consumers.
Do you know that the majority of Wal-Mart products is aggressively priced and is expected to impact retail competition? Reading Ehrenreich, I can say that Wal-Mart is a giant company which has to dismiss its employees in order to save operational and inventory costs. Retail buying is centralized for three reasons: (1) to achieve economies of scale in buying; (2) to be able to employ specialized, high caliber staff in buying positions; and (3) to enjoy greater bargaining power with suppliers (Ehrenreich 44). I found that Wal-Mart shows that modern labor unions are unable to protect employees from exploitation and introduce effective policies for the American workforce. Wal-Mart requires new and strict legislation and legal norms able to protect national workers from unemployment. “I had gone into this venture in the spirit of science, to test a mathematical proportion, but somewhere along the line, in the tunnel vision imposed by long shifts and relentless concentration, it became a test of myself, and clearly I have failed” (Ehrenreich 48).
In the documentary, Greenwald persuades viewers that Wal-Mart was a pioneer in retail market creating a new business model, the big box retailers. The US is often cited as an attractive market for discount stores. I agree with Greenwald that the margin for goods is high in the USA, although the reason for this difference with the continent is not necessarily greater. More likely it is a result of the evolution in retailing. Data from the United States suggest that private labels increase through both economic ups and downs. Current private label programs are not focused on reducing price, but at offering higher quality for the price. It is impressive fact that the model introduced by Wal-Mart and adopted by other retailers allows consumers to buy more goods they need but it creates new demands for low quality cheap products. Low pricing is when a retail store uses advertised specials to convince consumers that they are receiving an excellent retail bargain. This type of technology allows the capture of information for the use of the retailer in market positioning and product planning, therefore shifting power from the manufacturer to the retailer. The other problem connected with production overseas is that it prevents many small retailers to compete with such giants as Wal-Mart. In its turn, this situation leads to decrease consumption of the national products and goods. The national manufactures will have to cut production and close their factories. Using vivid examples and impressive facts, Greenwald persuades the audience that the only benefit of the Wal-Mart strategy is that it allows low classes to improve their standards of living and consumer more products. Vertical integration and merger activities have reduced the number of major retail buyers to five. This means that the purchasing retailers have tremendous power through introducing bulk purchasing and more efficient logistics systems. Distribution centers, higher delivery frequency to stores, and the adoption of optimal shelf-stocking techniques have streamlined the logistics of distribution. Again, the benefit of lower price proposed by Wal-Mart is that unemployed people will be able to buy cheap goods and products manufactured overseas. The main argument for the Wal-Mart strategy is that it is not the only US-based company which turns its production abroad. It does not have a crucial impact on national unemployment, so its strategies benefit low class and poor citizens (Greenwald 2005).
I agree with both authors that Wal-Mart bases all its activities on technology and Information Technology. Wal-Mart plans its operations and management activities taking into account benefits and limitations of technology, its advantages and possible threats. The main advantages of the modern era, such as technology and the Internet, become the main driven force of Wal-Mart and the threat for working poor. In organization, the rise of the computer-mediated economy in which all design, production, and distribution systems are based on information-processing and communications systems can also be linked to the relative decline of the traditional manufacturing base. Technology is used to cut down on and, in some cases totally eliminate, materials, energy, and paper in certain stages of production processes. Greenwald uses vivid examples and impressive facts in order to appeal to viewers and their emotions. Wal-Mart uses technology in supply chains and stock control, financial operations and inventory management. Wal-Mart uses technology in leading processes to create and take advantage of new business opportunities by penetrating new geographical and product and service markets in every sector of the economy.
In sum, Wal-Mart creates a great threat for local business as it exploits working poor and ruins local businesses. The contemporary retailing is a product of a new economic and social environment, of a contemporary culture that demands a strong sense of social principles, responsiveness, and promise. Rather, its principle seems to be that the tasks of retailing and its simultaneous responsibilities are much broader than purely economic concerns. It views the retail process as one of the controlling elements of the world’s social and economic growth. Because retailing is a social instrument through which a standard of living is transmitted to society, it is a social discipline with commensurate social duty that cannot just be the exclusive concern of retailers and their customers, but involve governments, stockholders, and the public at large.
Ehrenreich, B. Nickel and Dimed. Holt Paperbacks, 2002.
Greenwald, R. Wal-Mart: the High Price of Low Cost. 2005.