Monday, November 27, 2006

Wal-Mart? Do you buy walls there?

Listening to my pal Elvis last week talking about his job is what gave me the idea for this blog entry. He works for a company that supplies products for Wal-Mart.

He was telling me all the problems he has dealing with that conglamerate. That essentially they call the shots, no matter what because 50% of people in North America shop at Wal-Mart. He supplies them with a certain amount of product, if they run out, it's HIS fault...HE gets penalized. If HE doesn't like it, they'll simply take their business elsewhere. So essentially, this company holds the entire continent hostage because people are too stupid not to shop there.

This isn't the only criticism that Wal-Mart receives. Essentially, they destroy all the local business around them in order to survive. I know they spin this topic to show how they actually help local economies.

A study commissioned by Wal-Mart by Global Insight, claimed that their stores' presence saves working families more than $2,329 per year, while creating more than 210,000 part time, minimum wage jobs in the U.S. From 1985–2004, Wal-Mart was found to be, "associated with a cumulative decline of 9.1% in food-at-home prices, a 4.2% decline in commodities (goods) prices, and a 3.1% decline in overall consumer prices."

The study also indicated that, "nominal wages are 2.2% lower, but given that consumer prices are 3.1% lower, real disposable income is 0.9% higher than it would have been in a world without Wal-Mart."

However, a study at Iowa State University in 1997 found that small towns can lose almost half of their retail trade within ten years of Wal-Mart opening. To illustrate this, Wal-Mart has faced several accusations of, predatory pricing, or intentionally selling a product below cost in order to drive some or all competitors out of the market. In 1995, in the case of Wal-Mart Stores, Inc. v. American Drugs, Inc., American Drugs accused Wal-Mart of intentionally selling individual items below cost for the purpose of injuring competitors and destroying competition. While the lower court ruled in favor of American Drug, the Supreme Court of Arkansas ruled in favor of Wal-Mart, citing that their pricing strategies, including the use of loss leaders, did not constitute predatory pricing.

Wal-mart has also faced a great deal of criticism regarding its treatment of employees. First regarding employees trying to creat unions at the stores. For example, when meat cutters at the Jacksonville, Texas supercenter voted to unionize in 2000, Wal-Mart closed its meat department and began shipping in pre-packaged meats at all stores. When workers at a Jonquière, Quebec Wal-Mart voted to unionize, Wal-Mart closed the store five months later, citing weak profits.

In the United States, there are concerns on several labor issues, including low pay and inadequate health care coverage. Additionally, Wal-Mart is facing several lawsuits by current and former hourly associates who allege that the company forced them to work, "off the clock", or failed to provide work breaks, or otherwise claim they were not paid for work performed."

Another controversy regarding Wal-Mart related to DVDs they packaged together on their retail website. For African-American related DVDs like Introducing Dorothy Dandridge and a Martin Luther King documentary, they included a link to other similar DVDs that you may also enojoy like Planet of the Apes or Willy Wonka and the Chocolate Factory. Wal-mart referred to this as a software glitch, later changing the story to "human error".

Most of this information I received from wikipedia's section on the criticism of Wal-Mart. It is some pretty interesting reading.

There was also the infamous memo from 1995 by Wal-Mart's executive VP for Benefits regarding how to reduce spending on health care. Its recommendations included the following:

  • hiring more part-time workers
  • discouraging unhealthy people from working at Wal-Mart
  • wooing younger, and presumably healthier, workers by offering education benefits
  • workers with seven years' seniority earn more than workers with one year's seniority, but are no more productive
  • jobs to include some physical activity (e.g., all cashiers do some cart-gathering)
  • employees pay more for their spouses' health insurance
  • cutting 401(k) contributions to 3 percent of wages from 4 percent
  • cutting company-paid life insurance policies to $12,000 from the current level, equal to an employee's annual earnings
  • Life insurance was a "high-satisfaction, low-importance benefit, which suggests an opportunity to trim the offering without substantial impact on associate satisfaction."
  • Wal-Mart workers "are getting sicker than the national population, particularly in obesity-related diseases," including diabetes and coronary artery disease

The New York times got a copy of this memo and it became a huge scandal at the time. However, that scandal has clearly dissipated almost 10 years late.

For more about the issues with Wal-Mart, I highly recommend the documentary Wal-Mart: The High Cost of Low Price. Here is that documentary's trailer.



As the idea for this blog was from my pal Elvis. The top 5 list is as follows:

Top 5 Elvis Costello songs.
1. (What's So Funny 'Bout) Peace, Love and Understanding
2. Pump It Up
3. Radio Radio
4. Shipbuilding
5. She
1. King Creole

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3 Comments:

Anonymous Anonymous said...

Basically you have it correct…..scary….very scary stuff. Literally…. I’m shaking.

Elvis

10:30 AM  
Anonymous Anonymous said...

He's "All Shook Up! Mm mm oh, oh, yeah, yeah!"

Couldn't resist!

11:04 AM  
Blogger JMacK said...

Anyone who shops at Walmart deserves a smack in the head. It is a classic example of not knowing how powerful we can be as consumers. The fact that 50% of North Americans shop there is frightening. I will never cross a threshold of one of their stores. It is globally irresponsible for anyone to shop there.

10:14 AM  

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