See page one article in today's Wall Sreet Journal (9-25-06), "Seeking Growth in Urban Areas, Wal-Mart Gets Cold Shoulder".
Those who bash Wal-Mart usually fail to comment on the billions of dollars Wal-Mart annually saves consumers in the cost of goods (and increasingly of services), freeing up monies for consumers to spend on various experiences. Dollars saved on clothing, food, home furnishings, and the like allow many consumers to take in a NASCAR race now and then, make a once-in-a-lifetime visit to American Girl Place, join a Life Time Fitness club, or splurge in a Mac Cosmetics make-over before their (thousands of dollars) weddings.
It's most interesting how Target manages to avoid much of the venom directed Wal-Mart, when Target represents just as significant a force in the commoditization of goods and demise of local goods merchants. When a Target opened near me in University Heights, Ohio a few years ago, it led to the closing of locally-owned John's Furniture & Toys (at least the proprietor had claimed), much to the disappointment of many of my Shaker Heights neighbors. But John's never progressed from selling goods to offering services and experiences that might allow it to successfully compete in the toy business, say by selling memberships to a John's Toy Club or staging homespun birthday parties. Frankly, it deserved to close. And I, like many others, in the process benefited from the reduced sales prices that accompanied the closing, stocking up on future gifts (for all the birthday parties my kids go to) and everyday items (for us, whiffle balls) and other toy supplies, as discounts rose from 25% to 50% then 75% and finally 90% off over a multi-month period.
Indeed, Target seldom meets with the opposition that Wal-Mart so often encounters. As the Journal points out, credit Target with a greater appreciation for design and the esthetic value required of retail experiences today. (The nearby Target mentioned above came complete with an innovative escalator designed for one's shopping cart!)
Also appearing in today's Wall Street Journal is an op-ed piece written by U.S. Senators Schumer and Graham, complaining about the artificially low value of the Chinese yuan due to Chinese government intervention. Those who complain about such behavior on the part of the Chinese, like those who complain about Wal-Mart, usually fail to comment on the billions of dollars saved annually by consumers in the cost of goods from China. An artificially low yuan benefits U.S. consumers by further freeing up monies to be spent on various experiences.
These two pols, like so many others, mistakenly look to protect U.S. manufacturing jobs, when the preponderance of new economic output and job creation in the years to come will result from the emergence of new experience-based business. One simply needs to read the current issue of FC for testimony that such is truly the case.
Related Stories: | Topics:Management, customers first 2006, Wal-Mart Stores Inc., Target Corporation, United States, Birthdays, Culture and Lifestyle |
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Recent Comments | 8 Total
September 25, 2006 at 4:01pm by beri
Jim,
Destroying competition doesn't make for better business. It makes for monopolies.
And those 90% discounts? Those were bad buys on the part of the Target toy buyer. Did you really think that your local toy store could afford to absorb a loss like that?
And I'm sure that YOUR job is not one of the manufacturing jobs going to Bangadesh, leaving you with no job opportunities but Mcdonalds.
September 25, 2006 at 8:45pm by JIM GILMORE - SPINMEISTER JACKASS
Jim,
You are only telling one side of a multi-faceted issue. It's seems that you have a vested interest in the status quo.
China is not just hurting american manufacturers and workers by having an undervalued yuan, they are hurting ALL countries that compete with china.
This excellent article by Professor Morici will hopefully make you feel ashamed of your biased, simplistic, and naive "analysis".
http://www.enterstageright.com/archive/articles/0806/0806paulson.htm
September 26, 2006 at 10:56am by Jim Gilmore
First a reply to Beri:
What monopoly? Wal-Mart faces competition from other mass merchants like Target, BJ's, Sears, even struggling K-Mart, as well as category-specific merchants such as PetSmart, Best Buy and so forth, not to mention untold online retailers.
And I think you misunderstood:the 90% discount was the final sales price for John's, not any predatory pricing by Target. Target's pricing is and remains most fair, it really differentiated by having more selection, wider and cleaner aisles, and pizza (that my kids really like!). John's took no steps -- long before Target came to town -- to differentiate, and in ways that Target et. al. would never consider because of size. It would appear John's owner never even invested in a copy of Paco Underhill's "Why We Buy" let alone think richly about staging new experiences. John's deserved to go under.
Your hyperbole only makes evident the lack of understanding about what's in play: manufacturing jobs have already disappeared (less than 15% of Americans work in manufacturing), today service jobs (like McDoncald's) are next to be automated. And yet we seem to be doing quite nicely! Why? Because we're creating new experience-based jobs.
September 26, 2006 at 11:27am by Jim Gilmore
Now to address my apparent alter ego:
It is not me with a vested interest in the status quo, but those who bemoan the loss of manufacturing and service-delivery jobs associated with goods and services. I'm pleading for recognition of a new genre of output, namely experiences, being taken into account as these matters are considered.
I agree that China's manipulation of its currency is unwise and should be discouraged. But the nation most hurt by such actions is China, at least in the long-term.
My point is simply that all the talk of China, and of any international "outsourcing", is typically made without recognition that a fourth genre of economic output in the form of experiences exists, and that it provides the key to continued economic prosperity.
An artificially suppressed yuan does help drive down the price of Chinese goods, but this has a global deflationary effect on goods. While it may also have a inflationary effect on (some commodities like) oil, due to inefficiencies in production -- as Morici points out -- the impact of more Chinese yuan chasing oil pales in comparison to the effect of worldwide speculation in oil. And the real inflationary effect comes from more dollars (saved from buying lower cost goods)chasing fewer experiences. The relative cost of commodities, and commoditized goods and services, is going down over time (and is thus deflationary -- need I resurrect Julian Simon here?); the relative cost of experiences is rising (and is thus inflationary).
September 26, 2006 at 9:03pm by Christopher Hastings
First, an innovative escalator? I've taken a shopping cart up an escalator at Sears once - and they didn't appreciate my innovation one bit. The other customers were highly amused. (That being said, there was no way to get the heavier objects from one floor to the other without doing so, poor store planning.)
Second, it sounds like you limit the customer experience. I live in a small neighborhood in a large town. It has shops you can walk to - that is the experience. Walking in and buying what you needed, much like a regular mall, and talking with different clerks each place is a pleasure I enjoy. The downside? Multiple lines to wait in. But I get to meet my neighbors.
The Targets and Wal-marts, both places I shop focus on the consuming as experience not rather consuming as part of experience. Your toy store needed to build more into their service, not neccessarily create new revenue streams from pre-planned birthday parties.
Christopher
September 27, 2006 at 12:43pm by Mike Martin
I should couch this comment by saying I like to save a buck just like the next guy and can be seen just about every Saturday at Costco.
Having said that, a short time ago I read several articles about the benefits of spending money at locally owned and operated stores as opposed to the big box guys.
http://www.livingeconomies.org/localfirst/studies/
http://www.blueoregon.com/2005/11/buying_local_an.html
Besides th assertion that locally owned and operated stores tend to pay their staff better, considerably more money stays in the town when money is spent at a local establishment. The ecomonic benefit to the city is considerable.
September 27, 2006 at 9:00pm by Kim K
Is China hurting american manufacturers and workers by having an undervalued yuan? They are hurting ALL countries that compete with china.
Kim K
March 20, 2007 at 9:12pm by Micah Smith
Sure we might save money on chinese goods in the short term; however, this does not free up money here in the U.S.. We are sending our money overseas to the red giant. There is only so much money in the pot of gold called America. American dependance on the Chinese manufacturing machine will slowly and methodically drain this pot. That is the problem with Americans nowadays...short term thinkers, afflected with short term memory. BUY AMERICA, SELL AMERICA!