Thursday, February 23, 2006

The Wal-Mart Effect--Part III

This is the third in a series of blogs on Charles Fishman's book, "The Wal-Mart Effect."

This book is utterly fascinating. It talks about the unintended consequences of a company as large and as powerful as Wal-Mart.

For instance, Wal-Mart aggressively promotes itself as creating new jobs for Americans. This, according to Fishman, is absolutely true. He points out that, from 1997 to 2004, the United States added 670,000 new retail jobs. Of that amount, Wal-Mart created 480,000--over 70% of all new retail jobs. That's an amazing statistic and, by itself, would lead one to think that Wal-Mart is helping Americans by creating new jobs in this country.

Fishman takes his investigation to a deeper level. "Most of what Wal-Mart sells us are consumables, things we use up in the course of daily life and need to replace: toothpaste, paper towels, laundry detergent, medicine, groceries. When Wal-Mart opens a new supercenter, people don't buy more Tylenol or Tide or Special K just because it's cheaper at Wal-Mart. They just shift where they buy those staples; much of Wal-Mart's growing U.S. business comes at the expense of other retailers."

How many of us have seen smaller operations close down when Wal-Mart moves into town? Every time a grocery store or a K-Mart closes its doors, people lose jobs. In order to understand the Wal-Mart effect, we cannot just count the jobs Wal-Mart brings. We have to consider the jobs that are lost as a result, too.

Additionally, Wal-Mart, in its relentless push to lower prices, asks its suppliers to consider moving their factories overseas. Many suppliers--fearful of losing Wal-Mart's business--comply. Fishman points out that, "during the last seven years, a remarkable milestone has passed all but unnoticed: in 2003, for the first time in modern U.S. history, the number of Americans working in retail (14.9 million) was greater than the number of Americans working in factories (14.5 million). We have more people working in stores than we do making the merchandise to put in them."

Of course, Wal-Mart is not the first or the only company encouraging manufacturing jobs to leave this country. Bottom line, labor is so much cheaper overseas that many corporations are taking this route.

Fishman investigated corporations which took Wal-Mart's suggestion to move their plants out-of-the-country. He also talked to the man who refused the suggestion. The next time we talk about this subject, we'll look at "The Man Who Said No To Wal-Mart" and why he did so.


Sherrill Quinn said...

This is really fascinating, Maya. I'm so glad you're blogging about it. And let's not forget that, while Wal-Mart is "creating" all these jobs, most of them don't pay very well. :(

just_steph said...

This is an interesting topic. I remember reading an article about a small community on Canada's east coast who petitioned to have a WalMart store built in thier area. There reasons were that the towns people were doing all of their business in a neighboring community that had a WalMart store. In additon to shopping at WalMart, they were buying groceries, gas and eating in restaurants in this other community thereby taking revenue away from thier home community. The town also commented on the fact that once a WalMart store is established in a community, other business tend to follow ~ ie. Staples, Marks Work Warehouse, Reitmans, Sobey's etc. It was quite interesting.

Maya said...

Sherrill: There are all kinds of consequences to being the largest retail store in the world.

Steph: And Wal-Mart's expansion program continues unabated. They plan to open 1,500 more stores in the U.S. on top of the nearly 3,200 they already operate.

Yasmine Phoenix said...

Wal-Mart so far has been unable to open a stor in Chicago. So, they've opened stores AROUND the perimeter of the city. Labor unions and all that good stuff have stopped Wal Mart. When a new Wal Mart superstore advertised for employes, 1500 positions, I believe, they had over 20,000 applicants! Yes, I buy from Wal Mart, but I also try to find the same products for the same or slightly higher at my neighborhood stores. I don't think they should have so much control over where their suppliers are located. As for Target, they've gone upscale in their stores. Yes, girlfried, I'm still around.

Maya said...

Yasmine: I'm glad to see you!!!
I enjoy reading your blogs so much.

I have to admit, since I've started reading "The Wal-Mart Effect," I find myself shopping in Target more often for my staples.