... the fall has begun, more people will need the walmart low prices, which screws the economy even more causing more people to turn to walmart in a vicious cycle til Walmart start having doctors and pharmacists working there, no wait, they already have pharmacists! And they are planning on employing doctors in their clinics, uh oh...

Hmmm, seeing as Walmart ruined the economy...

Walmart is the best example of business entropy. My guess is that historians will look back on Walmart 100 years from now and discuss the demise of a giant retailer that was addicted to cheap oil.

Regardless if you love, hate or are meh to Walmart...there is no denying that the basis of Walmart's staggering growth and success was cheap oil. Moving those products from China and elsewhere around the world was almost singularly placed on cheap oil and all those cheap inputs derived from oil products. True, cheap labor can be found all around the world but only cheap oil moves those products across the oceans, loads them on semis and delivers them to local shop.

Of course there are lot of other companies that do exactly the same thing as Walmart. Let's be honest though, all the retailers in the field are just imitators. Walmart just set the standard for everyone else to mimic.

Here's to Walmart, the new future dinosaur before our very eyes.

@darkclawsofchaos:

then soon, perhaps Costco will have a law school?

The sad part is...the only person worried about the economy is a fucking retailer. If only our own government would open their eyes.

@hhole: So word. Totally.

Of course, the same can be said of how cheap oil accounted for the housing boom, the city with no tall buildings and no life after dark and the latest round of commuter-rail-free suburban sprawl....

@Rando: Yeah, boo-hoo we need some one to step in and help us. Of course, we'll complain they we do. Boo-hoo two.

@darkclawsofchaos:

"more people will need the walmart low prices, which screws the economy even more"

Mr. Claws , Could you 'splain that for me,please ? If I can buy something for less money , I'm almost certain that that will leave me more than I would have had otherwise to spend on other things...Like feeding my ankle biting , crumb crunching curtain climbers. Or should I pay more and have less ? Don't really get that. Do you not believe that in a world without a Walmart -type leviathan , that when the economy turned down , other retailers would try to keep their profits up for their shareholders by squeezing the only source of revenue that they have (you and me,brother) ? Indeed , this is happening in another business right now. Scroll up to see the story about how Bank of America is putting the screws to their customers to make up for their subprime stupidity. But first, please, justify me paying more for stuff...

@Snarkysnake: Since you asked nicely:
[www.fastcompany.com]

Take notice that the source isn't some left-leaning protest site.

@Snarkysnake: He's saying that Wal-Mart is so large that it impacts the economy on a large scale -- for example, when Wal-Mart demands its suppliers lower their prices, they are forced to (because it's such a large retailer, they can't afford not to do business with them). Then, because the price drop they've offered to Wal-Mart eats into their margin, they must turn to other ways to save money (off-shore labor, purchasing materials/goods from overseas companies). This leads to Americans losing their jobs (generally in sectors wherein the people do not have a high degree of education, like manufacturing or textile work). Those people, now unemployed or underemployed, must now shop at Wal-Mart, because they have no money. But because they have very little money, maybe they aren't buying as much as Wal-Mart wants them to buy, so Wal-Mart's not making enough money. So Wal-Mart demands its suppliers lower their prices, they are forced to (because it's such a large retailer, they can't afford not to do business with them). Then, because the price drop they've offered to Wal-Mart eats into their margin ...

Repeat ad infinitum.

@kimsama:
Then these people that you mention that have no money should go to places that charge them more ?

Wal-mart is going down and taking a large chunk of the economy and people with them.

@Snarkysnake: No, that's a straw man argument. The real issue is that Wal-Mart should stop trying to make its billions of dollars by undercutting every supplier so much that it creates a race to the bottom that will eventually consume the foundation of the U.S. -- its middle class. By slowing eroding the incomes of the working masses, they are creating a situation in which you can't shop anywhere else, because you don't earn enough money. Then and only then will the necessary condition for your question (i.e. everyone lacks the money to shop anywhere else) exist. I am stating that we need to prevent that precondition. Perhaps by allowing Wal-Mart workers to unionize? Or by forcing it to pay larger corporate taxes to offset its negative externalities? There are possibly many ways to fix the problem.

Walmart, SUVs, McCastles, ARM & interest only mortgages. It is like a giant ship slowly tipping over before it goes upside down.

The translation for Walmart's recent comment is that their strategy that everyone was going to shop at Walmart when times got tough didn't happen. Instead everyone scaled back on spending.

@kimsama: well said

Maybe runaway inflation will finally decrease.

@savdavid: No it isn't.

@kimsama:

So, What retailers DO you approve of ?
And what should WalMart do with it's billions of dollars ? Since they belong to the owners,it's only fair that we give them to...The UFCW ? The Catholic Church ? Who ?
What business ,or company meets your criteria ?

BTW- WalMart workers can unionize now,but it's awfully hard when they don't stay there very long and see no need to pay union dues for benefits that they will never collect. I would have NO PROBLEM with their unionizing . None. But their new found prosperity and long term job security has to come from somewhere. Since you already admit that WallyWorld is not a charity, I guess that the ones paying for it will be...You and I.This will have the happy result of raising their price umbrella so high that another company (with a non union workforce) will be able to come in under them and undercut their prices. Will this unnamed company then need to be punished for their "negative externalities "?
See, folks. This is just WalMart hate.This is taking an economic problem and making it a political issue.These people want more money and benefits for a class of people (Union workers)and they would pay for it by having customers pay higher prices. It really is that simple. I don't shop at WalMart much (hate the long lines ) but would it be any better for anyone if it was union ? Would the workers suddenly be any more cheerful and efficient ,or would the atmosphere of mutual suspicion and mistrust between workers and management poison everything ? (Hint - it ain't working for GM) Would ironclad job security make them more responsive to your needs or less ? Would the union bosses become models of propriety or would they be a law unto themselves ? And thats no straw man...

Translating Wal-Mart's PR speak into English:

"Our low prices and low-cost business model should give us an advantage over other retailers if things get more difficult for consumers."

to:

"Our bait-and-switch low-cost loss leaders will lure foolish customers to our store, where they will find themselves paying more than shopping elsewhere. We'll keep the difference but whine poverty to our suppliers, forcing them to off-shore more middle-class jobs and destroy the our middle class. And whichever locally-owned stores we can crush under our hob-nailed boots."

"Killing their pets, poisoning their children and dressing them in Nazi-emblazoned clothing? That we do simply for the giggles."

@Snarkysnake: Costco and your locally-owned retail outlets (they hire more, pay more and recirculate more money to your local economy. They also eschew hiring legions of gov't lobbyists, instead focusing on providing great service at a sustainable price.

Failing that, Target. Only because they're less evil, of the biggies.

If neither of these work for your location: shop the internet for the above kinds of establishments.

Jeff Foxworthy says: You know your economy is in the shitter when... rednecks is too poor to shop at Wal*mart.
In all seriousness, is it possible that American cost shoppers have awaken to the high cost of low prices at Wal*Mart? My Grandma, a real big business republican, is very worried about job export to China and oddly blames Wal*Mart. I say oddly, because she's very unlikely to blame a big business for anything.

@Trai_Dep:

I shop there too...But it's because they do a damned good job at what they do- not because I approve or disapprove of the way they spend the money that they earn or how they treat their workers (they must treat them pretty well because they are really nice at Costco). But Costco is not union either.Nobody is writing any boring books about how to "control" Costco. Nobody is organizing a "Costco Project" to force their social values on it's shoppers.I'll bet that there are more than a few Costco and Target employees that get some public health assistance or other tax suppported benefits. Nobody is demanding that Costco's and Target's shareholders pick up that tab.No, Walmart is a convenient sump for all of the anger that some people have against...Business in general.

@Snarkysnake: Once upon a time, General Motors was the largest employer in the US and the world. The folks at General Motors made an actual product. Inputs come in, value is added, and they go out. The economy is enhanced as Capital (with a K) meets Labor (with an L).
Currently, (ignoring the Federal Government), Wal*Mart is the largest company in the world. Some of this is WalMart's manifest destiny. Some of it is a comic series of CEOs at GM all of whom lacked vision of anything accurate. Wal*Mart's business model is a little different. Kapital is spent on goods made by other firms, and resold at a higher price. They do not add much value to the value chain, other than being a one stop shop for all of your needs. They actually steal value from other companies. How? Lemme 'splain.

You make pickles. Pickles are a value added product. You (labor) brine you up some cucumbers (kapital), and ideally your pickle is worth more than the cucumber, the junk in your brine, and the labor it took to move all that kaptial into a finished product. You MUST sell through WalMart. You don't make a fancy pickle. And you need to sell a lot of pickles to repay your investors for their investment. WalMart, holding something like 40% share of the grocery market, is really the only way you can make your volume. Or rather, without WalMart in your mix of retailers, you CANNOT make your volume. WalMart alone doesn't do it, but considering the concentration in the industry, you can't make it without them.

So, with hat in hand, you go to WalMart. They tell you some things.
#1- Your price for pickles is too high.
#2- Your pickle jars are too small.
#3- You have too much overhead in your cost structure.
#4- You need to match your logistics chain to ours if you want to be in here.
Remember, you need these guys, otherwise, it's back to your pickle drawing board. Luckily, they have some suggestions on how you can lower your overhead, match their log. chain, and cut your price.

"You have to dump your fat, lazy, overpaid american workers, and get some lean mean Banglideshis, Myanmarese, or Rural Chinese workers. Easy Peasy, you move your operation to China. The money you save on labor is larger than the cost of setting up and shipping. In fact, you can deliver them right to us in China, and our logistics system will take over. Oh, and bigger jars."

What has happened:
1- Jobs are gone, and your former employees have to go find jobs in other industries, like maybe retail greeting. Obviously, there will be a wage decrease. There aren't a lot of industrial pickle brining jobs around.
2- You've moved the value creation out of the country.
3- This might work very well for you and other large stockholders.
4- It works very well for Wal*Mart.

A little value has been destroyed through our pickle journey. But a lot of value has been moved from low class Americans to rural Chinese, SnarkSnake Pickle Co. shareholders, and to Walmart shareholders. A little value has moved to Walmart customers.

This is the invisible hand. The thing is, your factory workers probably caused it by shopping at Walmart in the first place.

FWIW: I don't shop at Walmart, never have, never will. It's not about the economics and it's not even about the ethics of patronizing a company that routinely cheats workers out of overtime, health benefits, and has epidemic sexual harassment. It's that I'm an urban sophisticate and I'm willing to pay a little more for wider aisles, nicer product, and not to have to shop with people who shop at Walmart. I self select out. Might make me a bit of a turd (in my MBA class, I think I turned off a lot of people by saying I don't shop at WalMart because I'm an urbanite and I hate being there, and this is a self selection thing that works for everyone.), but so be it. I can handle being a turd and spending a little more to do so.

@Snarkysnake: [www.costco.com]
vs.
[www.walmartstores.com]

The reasons no one is forcing their values on Costco are:
1- Costco already pays more than Walmart, and has good benefits compared with the package most grocery workers have.
2- Costco is generally more profitable than Sam's Club, the equivalent arm of Wal*Mart. (It's hard to tell, as their statement's don't disambiguate Sam's from general Wal*mart, but by most readers, Costco is a better buy than a theoretical Sam's Club stock offering).
3- Few people are big enough jerks to clamor for lower benefits standards when the business is very profitable for the sector. Few, not none.

When you're better to your people, make more money anyway, and actually have values while having low prices, no one is gonna nag you.

FWIW: I don't shop at walmart as discussed above. I do like Costco. I feel like I belong and they cater to my niche.

@PotKettleBlack:

Next time,go to an accredited school...

WalMart caters to the needs of the price shopper. If you had paid attention in class, you would know that WalMart's advantage is logistics,inventory control and information systems. Nobody makes the poor pickle packers do business with WalMart. Invisibe hand ,my ass. If they signed a disastrous deal with a sharper group of businessmen than themselves,they deserve what they got.Make higher end pickles with different flavors (jalapeno pickles-yummy). Make gourmet pickles so that you don't have to sell them to schlubs that go in Walmart for a deal on pickles.Put pickles in small packages for kids lunch. With MBA's like you out there,it's no fucking wonder that businesses can't compete. WalMart is a business , not a social services agency. They exist to make a profit. If you consciously pay more than need be for stuff, you need to check into your business school's refund policy.

BTW- A 40 % market share figure for groceries in a country the size of the U.S. is absurd.Do some research . Its really more like 15-17%

@Snarkysnake: It's not that people think Wal-Mart should give their money away, it's that they should make less money by not destroying the economy to strip every penny they can.

@Snarkysnake: Excellent points. A lot of times we forget the upsides to corporations. Thousands of folks trying to figure out the most efficient logistics system to move goods is an incredible asset which yields a lot of answers as to why Walmart has low prices even when shipping costs are through the roof.

@hwyengr: Why? there is no profit in charity.

@PotKettleBlack: Your explanations are great.

Wasn't their CEO recently the richest man in the world, just beating out Bill Gates? I think that changed quickly, but still, they'll be fine.

@PotKettleBlack: I recall reading a Slate (?) story on Vlasik's experiences with Wal-Mart.

Basically, Wal-Mart thought it would be "cute", and a loss-leader to draw in the rubes, for Vlasik to offer some huge amount of pickles for $1. Five or ten gallons. Vlasik rightly was concerned it'd dilute their brand, commoditize it, make even their most fanatical customers so woefully sick of pickles by the time they'd eaten their 1,499th pickle that they wouldn't buy Vlasik - or any pickle - for years. They knew this was a horrible idea for their product, customers and industry.

Never mind, Wal-Mart was set, and told them if they didn't do this, they'd clear their shelves of ALL Vlasik products, and replace it with a no-name Chinese mfr's. So Wal-Mark forced them into it.

Sure enough, less than a couple years later, the 5-gal Vlasik pickle jar lost it's novelty factor, didn't sell, and was removed from the shelves.

Of course, by then, there were no other sizes of Vlasik pickles (who'd buy a 1/2 quart jar when $1 5-gal ones were sitting next to them?)

So Vlasik found its market - one that it'd struggled for 100 years to build, destroyed by some swarmy Wal-Mart executive's whimsical promotion. And all those US workers. And all the benefits of the value-added happening within our borders. And the Wal-Mart rubes that were fooled by this bait-and-switch.

That's why Wal-Mart is evil. That, and the fact that this sad tale is repeated on a daily basis.

Costco, et al. don't do this, since they're concerned with the long-term health of their vendors and the long-term value provided to their customers.

@Snarkysnake: riiiight. walmart does well because of "logistics" wink wink (their workers are on public assistance because of the shitty conditions!) wink.

@kimsama: Are you a carpenter? Cause you hit the nail on the head with this. It's a viscous cycle that Wal-Mart started and will eventually take them down, but only after they have raped the American public of all their assets. They could single handedly throw this country into another depression only I could see this one being much worse. I don't want to sound like a Dooms day type person but if something doesn't happen to rein this in it could very well destroy the country. I'm not an expert it's just my opinion.

"I feel we are well positioned for an economic downturn," Scott said. "Our low prices and low-cost business model should give us an advantage over other retailers if things get more difficult for consumers."

Almost sounds like they planned a downturn for the sake of their business. ^_-

@Snarkysnake: Uhm, piss on my school (top 20 MBA program) and I will buy and sell you. Your logic was clearly bought at WalMart, and made in China. With lead and nickel cadmium.

Walmart's value is in their logistics chain. That's why they rule the world. I read the case too. It's the one during discussion of which, I pissed off everyone from the south by making a snarky comment about how a glorious person of intelligence such as I would never shop at Walmart and how that was likely fine with everyone.

The thing is, they really do not add very much to the value chain of any given product. There's no value add to superior logistics. It's cost reduction. And where does cost reduction get you in the long run:
a- undercut by someone who does it better
b- into a price war that drives all the value out of the market.

40% may be an exaggeration. But considering the margins in common groceries, 15% of the market is not a segment any given mass manufacturer (who is making their profit on high volume * small margin) can pass on. And it's not exactly like Heinz or Vlassic is likely to abandon their market and move upscale. Those are the companies that are being pushed to lower margins, foreign workers and general value usurpation by Walmart.

Here's the thing. I work in a service industry. Not a retail service, but a high level, consulting type of service. I will be well paid as long as I am employed and there's not much chance of Walmart's policies moving my job overseas. So, if I were as mercenary as some people, I really wouldn't care if Walmart's business model of value appropriation sends low wage manufacturing jobs away and makes everyone walmart poor. It's not going to be me (I have a job, stable company, high value education, service industry, and adaptable skills). So, I shouldn't care. But if I were employed as a pickle pickler, I might think twice about shopping for the lowest price. Why? The invisible hand.

Since you didn't see it, lemme explain.
You, me and everyone on every gawker media site are self concerned individuals. We seek to maximize our value grab. We shop at walmart, because they have the lowest prices, maximizing our value. Meanwhile, the dark side of low prices is that it requires cheaper workers. If we are those people most concerned with price, we are most likely to be those workers without big sets of generalizable skills. Pickle picklers. Spot welders. Cola plant quality control guys. We shop at walmart because it maximizes our paychecks. But, it also forces our employers to run leaner ships. Some of us might get laid off. Our income goes down. Our reaction, to Walmart. Wash, rinse repeat.

Remember, your Adam Smith style invisible hand moves for the common betterment because everyone acts in their own self interest. It needs revision, because people generally act in their own, short term self interest, which frequently mortgages their future. That's essentially the WalMart effect. Low prices now, and low prices later when you really can't afford anything.

Again, I have a big fancy degree and a big fancy job that is unlikely to move overseas, at least by any effect of WalMart. So, I don't have skin in the game. I just hate shopping at walmart.

Last thing: On the consciously paying more for things:
#1- Is Walmart really cheaper? For the SAME things?
#2- Assume I like premium goods. The kind of thing they don't sell at Walmart. I'm not stupid for paying more for a better value.
#3- Assume I have values (I don't have to to not shop at Walmart). Perhaps I get some value from paying a few pennies more for the same thing at some place other than Walmart. Say it's worth a dime to me not to have to enter a walmart for something. As long as I'm not paying more than that dime, I'm appropriating the same value.

When you actually attend an accredited school, we'll measure up and find you still wanting.

Boiled down I see the problem as:

As a successful nation we (as an American company, Wallyworld is included in my 'we') outsourced many of the less desireable jobs so that we could maintain a certain standard of living at the lowest price possible. This becomes a problem when the requisite lowest price possible comes at the cost of quality. That aside, the real problem occurs when the whole bubble bursts. Whether it comes from the US's addiction to credit and innate laziness, WWIII, or $10/gal. gas prices, eventually there will be a tipping point after which it will no longer be profitable to import goods to the US on a scale that would make them nearly as affordable. Then the large corporations will start building factories in our cities where people are once again desperate enough to work for the wages they offer.

Funny thing is that Walmart reported good news this morning that drove the stock market up.

@Gann: It does almost seem like outsourcing was a chemotherapy-type tactic to kill the 'cancer' of a high-paid working class.

and potkettleblack whips out his dick with a massive thud...

Snarkysnake looks in awe and then snarkysnake says....

"Momma says Walmart is of the Devil!!"
"Let the Sin Begin!"

on a sidenote with the recession and all, we're suppose to help the economy and "buy American" but the tag on my shirt says "Made in China"

is anything made here anymore? (deep i know)

Now back to the story.

Snarkysnake swore he would never don the blue vest ever again but, times are tough and he has just been called to the dancefloor. "time for some justice Wal*mart style"

he reaches into his shirt pocket and pulls out his favorite smile, places it on his proud face. looks at Potkettleblack with a sinister glint in his eye. takes a final sip from his half-full can of diet coke which he paid fifty cents for, suddenly a word escapes his lips, faint at first, barely audible. Potkettleblack could bairly make it out.

"Welcome to Pain*mart."

@PotKettleBlack:

Okay. Fair enough. Go to your company tomorrow morning and suggest that they pay "a few more pennies" for everything they buy because it will protect their values.Should put you in line for an even more elite job. While you are at it tell them that everyone there should be making a LOT more money. That will make you popular with the non management types.
Adam Smith (as per your suggestion) needs revision ONLY if we were going to live forever. Otherwise,some people work hard and save money so that they can have a slightly better life in their short time here.Hell yes we act in our short term ineterest because thats the only one we have. (Not a spiritual argument here- just referencing man's natural lifespan). MBA's may not have to worry about getting the most out of their dollars,but the people that shop at WalMart do. Their life is clearly better than it was and they have more choices than they did before WalMart came along.
You completely ignore the fact that your beloved Vlasic Foods was a spin off from a larger company and was burdened with way too much debt when it was spun off from Campbell's in 1998. It never had a chance and was eventually acquired by other companies. That's why they went "hat in hand" to WalMart to pick up business. They cut a suicidal deal that almost wrecked the company.Is that WalMart's fault ? If I offer to sell you gas for your elite urban car below cost are you going to turn me down because it will hurt me ?
Apparently common sense is not common knowledge. Please identify your company so that I can short it when the market opens in the morning.