COLUMN: Wal-Mart: Always low prices, always loathsome policies
December 1, 2004
Short on cash? Looking for the cheapest deals? Everyone knows where you need to shop: Wal-Mart. When people want low prices, they shop Wal-Mart because Wal-Mart means “Always Low Prices.” It’s the most admired company by Fortune magazine, it’s a leader in logistics and it generates more than $26 billion in sales each year. No one can compete with Wal-Mart — but how could someone compete?
People want low prices, so Wal-Mart makes sure to buy the cheapest products and make the profit it wishes. When suppliers in the United States cannot meet the prices set by Wal-Mart, the most efficient company in our history starts buying the cheapest possible imports. This means suppliers from the United States cannot compete with cheap imports from countries like Mexico or China, and U.S. companies with well-paid, unionized jobs close down. Everyone who supports free trade applauds.
Thanks to free trade and Wal-Mart’s low prices, some citizens of our country have lost their jobs when the companies they worked at had to shut down and move to another country. The companies can provide the new workers with extremely low incomes and no health or any other type of insurance; instead of paying U.S. workers $14 an hour, they can pay a worker in South America $35 a week.
But maybe we should not worry too much about people who lost their jobs; a Wal-Mart might open within the next couple of months in their town. That means low prices for the community and, of course, new jobs! Don’t get too excited, though. If these people don’t make it to a managerial position, on average, they will earn $9 an hour, they will not be able to unionize and they might not be able to afford the health insurance that Wal-Mart “offers” its employees.
We all know the prices are irresistible, but don’t be fooled. Watch out for the “opening price point.” According to an interview conducted by Frontline on PBS, Jon Lehman — a former Wal-Mart manager who worked with the company for 17 years — said the opening price point “is just like fishing.”
Here’s how it works. When you walk into Wal-Mart and see the display with the lowest possible price for an item, you might think that everything in the store holds the lowest possible price in town as well. You might be fooled — the “opening price point” is about placing the cheapest item on display with the cute smiley face, and, if you want a better-quality item, you end up picking another brand, still thinking it is the cheapest price in town. But it isn’t. You might end up spending $50 more. That’s marketing, my friends.
When we want to save money, we shop at Wal-Mart, and, unfortunately, there are some people who cannot afford anything other than the “opening price point” items at the store. I know people who refuse to shop at Wal-Mart, but I am guilty as charged; I have purchased products there, too. But the more I learn about the company’s relationship with its suppliers and employees, the more disgusted I am. It is a store that has caused around 25 regional supermarkets to close, leaving around 12,000 people without unionized jobs because of its Supercenter’s low prices. It is a store that, according to the Los Angeles Times, had more than 40 cases awaiting trial in 2003 and has cheated workers out of overtime pay.
Can we afford to stop shopping at this store? Some people might, but there are still others that do not have the income to stop their trips to Wal-Mart. But is it really necessary to stop buying from the distributor with the bully reputation? What is really needed is better treatment of employees and suppliers. Not buying from them might save their competition, but, sooner or later, it will force them to either play it safe or make it worse; unfortunately, we can’t tell. Just don’t forget that every retailer knows how to persuade its customers.
Be a smart buyer; better yet, be a local hero. Like something I read the other day — buy local; if you can’t buy local, then buy regional; if you still can’t buy regional, then buy national; if you can’t find national, go international; and when international is impossible, then go ahead and go corporate. Go ahead and go to Wal-Mart.