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Wal-Mart Without Worries

BY Kevin OhannessianFri Dec 9, 2005 at 2:23 PM

Interesting story in today's New York Times about how U.S. consumers don't trust big businesses (free registration required). Yet, in the case of at least one company, Wal-Mart, that trust may have little or nothing to do with loss of business.

According to Wal-Mart vice chairman John Menzer, in an interview on CNN.com, the company has seen higher sales this November than the same time last year. Wal-Mart officials also expect December sales to be just as good. And yet, Wal-Mart is among the most negatively-covered big businesses out there -- there's a critical documentary in theaters now ("The High Cost of Low Price"); harsh books ("How Wal-Mart is Destroying America," "The United States of Wal-Mart"); and skeptical articles. You might think the retail giant would be impacted by consumers turned off by its business practices. Yet, holiday sales are meeting expectations.

So what does this say? Are American consumers just slavish devotees to a good, everyday-low price? Or is all the hype just that -- and a lack of trust irrelevant when it comes to doing business.

Topics:

Work/Life, ethics, Wal-Mart Stores Inc., United States, The New York Times Company, John Menzer


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Recent Comments | 29 Total

December 9, 2005 at 7:28pm by Mike G

Wal-Mart offers the lowest prices in the vast majority of cases. Why would Americans shop elsewhere?

December 9, 2005 at 8:49pm by Chris G

Take a look at the demographics of your average everyday Wal-Mart shopper: most wouldn't be able to give you the definition of 'boycott', much less be able to go ahead and partake in one. And as for the rest? Well, after reading countless articles about how the REAL millionaires are the penny-pinching variety, they really think saving themselves 20 cents on an 8-pack of toilet paper will make them rich. Money - both the pursuit and the hoarding of it - does some very unbecoming things to people. And if Wal-Mart is the epitome of capitalism, it's no secret that they are doing absolutely everything right: they represent the future of every corporation (the ones that are left, that is). Future looks bright, don't it? At least we'll all have cheap toilet paper. I can hardly wait for the next decade. And we wonder why we have disillusioned youth.

December 9, 2005 at 9:05pm by SgtSally

Why wouldn't you shop there?
1. They use slave labor in 3rd world countries.
2. They abuse their workers with low pay and near zero benefits...except for upper mgmt.
3. Strong arm suppliers to go off-shore.
4. Environmental crimes.
5. Local businesses driven out of business.
6. Illegal workers.
etc.

December 9, 2005 at 9:06pm by Brady

My thoughts exactly. I don't understand people who say it is so bad as a store. The people who work there don't appear to be too pissed. There are never new faces when I go, always the same happy people waiting to help. The prices are awesome and the products are reliable. I will shop there until something gives me a viable reason not to.

December 9, 2005 at 9:15pm by Business man

Wal-Mart is a the world's largest retailer. THey sell everything from food to electronics. If you operate a small electronics business, there is no way you can compete with Wal-Mart, thus putting you out of business and you have to find another way to get an income. The evils of Wal-Mart!!

December 9, 2005 at 9:56pm by Big Joe

Just because people don't trust a store doesn't mean they won't shop there. I don't trust some of the burger joints, but I still get lunch there every once and a while. Furthermore, in some parts of the US, people are without much of a choice. Many of the small local stores have been swallowed up. People love low prices and need to buy necessities as an earlier poster said...
I try to shop where I wouldn't mind working if I had to. If there was only one business left in town someday, odds are you might end up working there. Some businesses charge more, but they also take really good care of their workers. I haven’t shopped in a Wal-Mart for 5 years, so I am assuming the same shoppers are just buying more.

December 10, 2005 at 8:03am by namnum

Come on. WalMart is not evil, people don't distrust it. The workers are not routinely beaten in the back room.

Workers get a fair wage and a decent working environment. Consumers get good products at good prices.

NYT doesn't represent average America.
Chris G I'd have more respect for your opinion if you'd not insult your fellow citizens while making your point.
SgtSally I can't deny, b/c I have no proof (don't make my living studyiong WalMart) but if you're going to accuse, maybe you should present some proof.
Business man, I'm sorry, but as business people you and I both know that this is the cycle of business. I'm sure the Vinyl Record Album people said the CD people were evil too. I wish you luck as you find a way to compete.

Just my 2 cents.

December 10, 2005 at 9:06am by Catmc

WalMart's opponents ...those who understand words like "Boycott" and view documentaries about the evils of capitalism...are not the people who benefit most from WalMart...the working class.

Those quaint little Mom and Pop shops downtown didn't treat their employees any better than WalMart. In fact, sometimes they treated them a lot worse. Where was the outrage at the treatment of workers then?

Sometimes I think that the WalMart issue is really about the educated classes trying to keep goodies away from the working class. I mean, how impressive is your new DVD player when everyone in the Mexican part of town has one too?

When the outraged come up with a more viable solution for working classes, I'll embrace it. But until then, viva WalMart!

December 10, 2005 at 10:21am by slotto

sounds like the typical back stabbing american way of life. Step on the backs of the poor and struggling to make a buck. Everyone wants to be on top. After a million what is it all worth, Grreeed.

December 10, 2005 at 10:30am by ceebee

Why is it that noone bashes Microsoft where they have 95% of the worlds operation systerm

December 10, 2005 at 2:27pm by mothra

this assault on walmart is more about unions and how they have lost control of labor. greed makes the world go around, without it there'd be no business, we would still be agrarians.

salaries are based on what the market will bare and nothing more. walmart or any other company has no obligation to pay benefits, healthcare or any other sort of compensation other than what they are currently paying in salaries.

i agree with walmart's no union policy, look around at all of the major union run companies, they're are going bankrupt, and will continue to until they square how the company is run with how the rest of the world works.

look at france and germany with it's heavy union socialist policies, 10 percent unemployment, with a third of the population. i don't think we want to go in that direction.

December 10, 2005 at 2:59pm by tiffany

WalMart's customer base are lower-middle class Americans. The median household income of shoppers is $35K, versus $50K at Target and $74K at Costco.

WalMart wins because it provides so much for so little to so much of lower-middle class America. Poorer people feel just as entitled to own luxury crap because WalMart makes it "affordable."

@Namnum: WalMart employees do not earn a fair wage, nor do they have good working conditions. Most of their employees are making minimum wage, which means you don't even clear $10K per year for a 40-hour work week. Their wages are the lowest in retail. And I won't even get into the sweatshop issue.

Furthermore, WalMart's prices *ARE NOT* the lowest. Do some price comparisons on the same product and see what you find.

December 10, 2005 at 3:35pm by Eli

Let's face it - retail stores get greedy without Wal-mart in the mix. Going to a Rite Aid for a quick purchase I paid $10.99 for an item that I needed in a hurry. The week after, I stopped by WMT - and the same item - sale was 40% cheaper. Would I pay 20 cents more for a local Rite Aid, sure, but 40% or $4 NO WAY! The consumer votes at the check out - and until other retailers "get it" like WMT has, I'll be voting WMT. I only wish that WMT would open Gas refineries - you wouldn't see the gouging at the pump after the recent hurricanes.

December 10, 2005 at 6:01pm by Justin Kownacki

Wal-Mart provides me with some of the most miserable shopping experiences of my life. The customers and the employees both seem unhappy with their lives, and the fact that they have to shop / work at a Wal-Mart. I would gladly pay a bit more for the same item in a Target, if only to escape the Wal-Mart drudgery.

That said, Wal-Mart is a genius business. I've read enough accusations to know that they're doing a horde of miserable things, but no one cares. Money, and the savings thereof, is the only article worth discussing here. Sweatshops, poor wages, environmental abuse, censorship and discrimination mean absolutely nothing when you're looking for cheap housewares. Until someone can prove -- not just surmise, but PROVE in a way that relies on something tangible rather than extrapolated facts -- to a guy making $25K a year that shopping at Wal-Mart is actually worse for him than shopping at Target or at the local store, Wal-Mart will continue to grow.

December 10, 2005 at 7:52pm by ceebee

If you don't like shopping Wal-Mart why do you? The people that work for Wal-Mart can always go work somewhere else

December 11, 2005 at 3:34am by John Moore

Let me tell you about Wal-Mart.

I went there and bought a Creative Zen Micro for the prevailing market price of 189. It was the cheapest price on the internet, and I didn't even have to pay shipping. It beat out the nearest local competitor to the extent that for the same price, I got the 120VAC charger as well.

Anyway, nickel and dime stuff.

Creative Labs figured they would save 10 cents per unit by soldering the headphone jack piece direcltly to the main PCB of the unit. This of course puts pressure on the solder joint every time you use plug in your headphones. I discover this about 2 months later when I can no longer get my left ear to work. I take this thing back to Wal Mart, no documentation, no software, no packaging, and the screen is all schmegged up. This fifteen year old kid, the "manager", has been called over to consult on the matter. He listens to my story, and after a half second of consideration, he tells the woman handling me to refund me the purchase price.

Capital counts. When you have a corporation as big as Wal Mart, they are in the lofty position of being able to look at the big picture. They don't have to sheist customers out of 200 bucks who are worth at least that much per year in perpetuity. They will consider your case, and if it makes sense, a fifteen year old judge can take a bad product and shove it back down the throat of the manufacturer, without fear of losing his/her precotiously obtained position.

As spiderman's uncle said, with great power comes great responsibility. I would like to at that yes, absolute power corrupts absolutely, but mere great power infuses great responsiblity. In a free market economy, the latter prevails.

December 11, 2005 at 3:53am by nf

No one ever seems to remember that Walmart started out as a small mom and pop type operation. Remember Kmart, how about Gaylords, or lets say even Woolworths. These were all BIG corporations back when Walmart was nothing. How is it that Walmart managed to grow when these EVIL giants controlled the market place. I'm sure there are many answers...but the bottom line is...the larger a company gets the bigger the target it becomes and the more opposition it seems to encounter. Food for thought..I rarely hear entreprenuers crying about walmart. It's usually people who have an employee mindset that can't seem to GET walmart. Every large company that I've ever spent anytime digging into has it's misdeeds and missteps. The larger the company the more dirt. But, Walmart is just another example of a real successful company that is at is peak. Hopefully, the dumbing down of America (which definitely isn't Walmarts fault) hasn't strangled out the work ethic and ingenuity in our children so that they may have the same spriit and drive to be as successful as people and companies before them. I certaintly wont happen with role models that don't have the tools nor the attitude necessary to do something significant. If all the you can see is the problems...Don't blame walmart....look in the mirror.

December 11, 2005 at 9:07pm by st_germain

The tragic flaw in the attitudes of business, education, unions, and government is the disconnect each has with the quality of the workforce: the education each 'worker' gets, the skills and knowledge each brings to the market-place, which recompenses accordingly, which then provides a given amount of money 'consumers' have with which to purchase goods and services. With Walmart, 'trust' is irrelevant. Most of the two lower quintiles of the U.S. workforce cannot afford to shop anywhere else for the preponderance of what they need. Today's Walmart shopper was yesterday's layoff at GM. Last week's retired person who found his pension and/or promised health care had just been canceled by the company he'd worked 30+ years for.

Today's Walmart shopper is also last month's layoff due to
outsourcing even middle management jobs; and is last year's minimum wage worker whose cause yearly dies before Congress, on the thought that business cannot
afford it, but without the thought that minimum-wage Joe
can't afford to buy their products either.

Finally, today's Walmart shopper is the several-years-ago high school dropout who doesn't have a prayer of having a legal, consistent, high paying job in sufficient numbers to arrive with his cohort at the door of Nordstroms, much less Nieman Marcus.

In fact, the only customer base more certain to return week
after week, month after month than Walmart's base, is the
customer base of physicians who have their patients on
valium, xanax, vicodin or other 'schedule' medications,
where the law requires they be 'seen' by the prescribing
MD every six months -- in some cases every three months.

Not hard to see why the physicians are doing better than the Walmart shoppers, yet in turn are light years behind the Walmart family. Built-in repeat business on a large scale is today's version of a real American dream. The one that actually could pave the streets with gold! -- at least those
in the neighborhood of a Walmart Superstore, which might
then ameliorate the negativity with which increasingly they are greeted, at least here in Colorado.

December 11, 2005 at 9:11pm by tomcat

I will gladly pay 10% more and not shop at Wal Mart as it just seems the right thing to do.

December 11, 2005 at 10:04pm by Sparc

Greetings from Australia !

We have a similar retailer here called ALDI, all i am going to say is 5 minutes in the car park can tell you the demographic these type of retailers attract. Common people. This is mass market stuff, e.g. where 90% of Australia / USA is, therefore where would you place your eggs when creating a business model

December 12, 2005 at 8:43am by wshill

i like 'em. they give me lower prices.

NF- great comments on the employee mindset individuals are the ones always griping about walmart. business people for the most part don't.

st_germain - your comments on the average Wal-mart shooper being only working class maybe right for CO but are dead wrong for the SE. In the Southeast all demographics shop at Wal-Mart for basics.

For you Wal-Mart haters here is some food for thought.

1.if you want to compete against them - don't compete on price
2. give high quality service
3. have greater upscale products (ex. Don't sell remington 870 Express sell the wingmaster version) This is why Targets competes with Wal-Mart
4 grab a niche- don't cater to the masses.
5. make your customers love you and you will never go out of business

If you don't like Wal-Mart -- don't shop there ( capitalism at work)

If you don't like their wages and benefits - don't work there. ( i can't see how they get any employees at mininum wage - i can't get someone to sling a bush axe at $7.00 hour.)

Wal-Mart is big enough they will implode in time. they probably have begun (stock price is down for the last 5 years). They can't be all things to all people either.

All behemoths fall over time GM, Sears, Pan Am because they refuse to become as efficient as their new competitors emerge.

December 12, 2005 at 12:16pm by Frank

Walmart doesn't cheat its employees or pay them minimum wage. I know cause i work there. When i started out as a cashier i made $1 more than min wage and after a year i make almost $3 more. I'm not rich, but i'm not struggling with min wage pay either. As for the mom and pops - you cant cry about not being able to compete with a company. There's no crying in business. If you can't get customers, get another business. That's how it works.

December 12, 2005 at 1:34pm by MrsMC

People are saying the people at Wal-Mart look happy? I've been to 3 Wal-mart's in my life & I don't think I saw anyone "happy". I think they were just people working in the Wal-mart trap. Pay them nothing so the only place they can afford to shop is Wal-mart. Then, not give them any benifits, so if they are lucky & have kids they can get insurance through the state, which they are paying for with their taxes anyway or, not have a family & not get any insurance at all,but still pay for the higher taxes so the state can afford to give their co-workers with families insurance. Say they don't get any insurace, they get sick have to go to the doctor, which is futile. Doctor offices generally will look at you for the $100.00 fee but not do any test becuse there is no insurance to ensure they will get paid for the test. The uninsured can always go to an emergency room, but that will cost them about $300.00 & who can afford that on top of medicine, food, rent, & bills on minimum wage. Talk about shooting yourself in the foot or Wal-mart shooting you in the foot, however you care to look at it. That would make me real happy to work at Wal-mart.

December 12, 2005 at 3:54pm by Frank

People DO trust Wal-Mart.

They trust them to give them the lowest price possible.

That sure as heck beats many other stores where people will buy something today and see it on sale for half the price the following day. (Most notably in food, but in other categories as well)

Studies have shown that on a given day Wal-mart DOESN'T always have the lowest prices, but consumers TRUST that they are getting a good deal.

You wanna talk about trust?
How about other retailers not playing games with customers on price? I'm guessing that lowers consumer "trust" much more than any "scandal" involving low worker pay.

December 14, 2005 at 1:08pm by Jeff

I maintain that most people in the United States speak to having a moral compass but in the reality of living they are motivated by greed. We speak with social concern and buy based upon our budgets. The power of our wants and needs vs. our ability to service them represents the great struggle that is in the minds of most of us. It's like us all driving big SUV's until gas prices increase beyond our ability to pay. Then our need seems to change. The next WAL*MART will be the guy who figures out how to offer even cheaper prices. All of us would like to have that perfect moral compass but our budgets get the last word in the conversation.

December 21, 2005 at 4:57am by Miah

You all make some very good points, but remember that not all Wal-marts are like the ones you see on the news. I work for Wal-mart and at my store there isn't any discrimination, starting pay is above mininum wage, and most of the people are happy to work there. About 50% of the hourly associates have insurence, and the others are taken care of if something should happen. Most of the stores I have been to are like large families; a lot of bickering, and also standing up for eachother. I personally don't like my job, but it isn't the business. It comes down to rude customers who complain because Wal-mart is so big and should carter to there every whim, instead of running itself like all the smaller businesses around it.

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