Thursday, February 09, 2006

The Wal-Mart Effect--Part II

This is the second in a planned series of blogs on Wal-Mart. This series is prompted by the new book, "The Wal-Mart Effect" by Charles Fishman, but will include other sources of data along with my personal observations. I'm presently in Chapter Four of Mr. Fishman's book, about a third of the way through it.

On February 5, in my first blog on the subject, I quoted Fishman saying that in 2005, ninety percent of Americans lived within fifteen miles of a Wal-Mart.

Yesterday, the Associated Press reported that "Wal-Mart Stores, Inc. plans to open more than 1,500 stores in the United States in the coming years, on top of nearly 3,200 it already operates . . . Wal-Mart opened 69 new stores and Sam's Clubs in January [2006], a company record for one month."

The growth of this company is simply phenomenal.

One of the things that has struck me thus far in reading Fishman's book is how quintessentially American the values were on which Sam Walton founded his company in 1962. Fishman says Walton believed "[s]ell stuff that people need every day just a little cheaper than everyone else, sell it at that low price all the time, and customers will flock to you." This single core value of controlling costs is what has made Wal-Mart what it is today.

Fishman quotes a contemporary of Walton as describing the founder thus: "'Sam was a workaholic. He wanted to be the best at whatever he did. He was not driven by money, but by competition. Sam was one of the most competitive tennis players I've ever met. He could be playing a one-legged man in a wheelchair, and he would show no mercy.'"

No wonder Wal-Mart provokes such conflicting feelings in Americans despite the hordes of naysayers who criticize it. The company is a reflection of its founder--and all those virtues that America holds so dear.

Key to understanding the company is Mr. Fishman's contention that "Wal-Mart has outgrown its culture, it has outgrown its personality, but it has not yet come to terms with that new reality."

The author is absolutely on target. It is impossible to reconcile Sam Walton's dream with the reality that is Wal-Mart today. I keep finding myself wondering how Mr. Walton would have countered the criticisms that his company engaged in practices such as locking employees in the stores overnight in order to prevent them from stealing (while claiming the reason for the lockdown was to protect employees in high-crime neighborhoods). Although Wal-Mart management claimed these were outdated charges, the New York Times did a story on 1/18/04--only two years ago--in which employees claimed the practice had continued until very recently. Of course, Walton was still alive when an overnight stocker, who had collapsed, died in a Wal-Mart in Savannah, Georgia in 1988 when paramedics couldn't reach the man because the doors were locked, and no one was available with a key to let them in.

Then there were the studies indicating that Wal-Mart female store managers earned $16,400 a year less than their male counterparts, which led to a federal judge ruling in 2004 that the women employees could go forward with a class action lawsuit claiming wage and promotion discrimination.

That "control costs" mantra is a two-edged sword when it is wielded in an indiscriminate (or discriminatory) fashion.

Blogger is getting ready to shut down the system for an outage. We'll talk more next week in Part III . . .

1 comment:

Pink Pen said...

oh, sigh, I could tell you stories... like the two-month period the marketing department wasn't allowed to buy pens or paper for the photocopy machine becuase they were trying to keep costs down as finished year end. the marketing department that produces the flyers. on paper. oy.