Document Sample
Walmart Powered By Docstoc
 "Wal-Mart does more for the average American than any company in America," Ray Bracy, Wal-
                                Mart's vp of corporate affairs.

According to economic consulting firm Global Insight, the existence of Wal-Mart in the United States and
its effect on consumer prices results in an annual cost savings of $263 billion, or roughly $895 per person.
The study also concluded that Wal-Mart created 210,000 net new jobs last year and pays employees
competitive wages. If Wal-Mart's store penetration rate as it's found in Dallas/Fort Worth was applied to
markets such as Chicago, Los Angeles and New York, that annual savings per person would be $763,
$1,000 and $1,307, respectively, according to the study.


From Fishman’s Walmart-Effect:


Doubled its imports from China in 5 years to 12 billion in 2002. (10% of all Chineese Imports to US)


WALMART MARKET: 7.5 cents of every dollar spent in any store in the United States (other than auto-

WALMART EFFICIENCY: You have this 30-second delivery window. Either you're there, or you're out. With

WALMART INTEGRITY: To a person, all those interviewed credit Wal-Mart with a fundamental integrity in

WALMART GOOD: John Mariotti could not be clearer on his opinion about Wal-Mart: It's a great company,

doing it."

LEVIS: Levi's launch into Wal-Mart came the same summer the clothes maker celebrated its 150th
engagement, Levi was shrinking rapidly. The pressure on Levi goes back 25 years--well before Wal-Mart
sewing overseas.


The Man Who Said No to Walmart


Mart for the cost of a single Snapper.


saw a death spiral.



experience doing so not with Wal-Mart but with Snapper.
Talk about coming to the table with different agendas. Wier was in Bentonville to pull his mowers from Wal-
Mart's stores. The vice president was offering a greater temptation: Let's join hands and go head-to-head
against the home-improvement superstores.

Which is when Wier said no.

"As I look at the three years Snapper has been with you," he told the vice president, "every year the price
has come down. Every year the content of the product has gone up. We're at a position where, first, it's still
priced where it doesn't meet the needs of your clientele. For Wal-Mart, it's still too high-priced. I think you'd
agree with that.

"Now, at the price I'm selling to you today, I'm not making any money on it. And if we do what you want next
year, I'll lose money. I could do that and not go out of business. But we have this independent-dealer
channel. And 80% of our business is over here with them. And I can't put them at a competitive
disadvantage. If I do that, I lose everything. So this just isn't a compatible fit."

Walmart Salmon:
Salmon for $4.84 a pound is a grocery-store showstopper. If prices contain information, if
prices are not just a way of judging whether something is expensive or affordable but contain
all kinds of other signals about supply, demand, prestige, and even the conditions under
which products are made (bad freeze in Florida, expensive orange juice; hurricane on the
Gulf Coast, expensive gasoline), then salmon for $4.84 a pound is a new, unintended Wal-
Mart effect. It is a price so low that it inspires not happiness but wariness. If you were so
inclined, you couldn't mail a pound of salmon back to Chile for $4.84. It's a price so low, it
doesn't seem to make sense if you think about it for even a moment. Salmon at $4.84 a
pound is a deal that looks a lot like a gallon jar of Vlasic dill pickles for $2.97 -- it's a deal too
good to be true, if not for us as the customers, then for someone, somewhere. What exactly
did Wal-Mart have to do to get salmon so cheaply?

Jennifer Lash is executive director of the Living Oceans Society, a marine conservation group in British
Columbia, which is one of two centers of salmon farming in Canada. "Salmon are generally raised in open-
net pens," she says. "There is a metal cage on the surface, with nets hanging down to a netted bottom.

"The density of fish depends on the nation, but they grow tens of thousands of fish per net, 1 million or 1.5
million per farm. Then they all go poo. There is a huge amount of waste going into the ocean. People say, oh,
that's natural, all fish go poo in the ocean. But not in that kind of concentration. It just smothers the
seabed." One million salmon produce the same sewage, says Leape, as sixty-five thousand people.

The ocean pens suffer from another source of pollution -- excess feed. Any food that isn't consumed settles
to the ocean floor, adding to the layer of feces. The waste itself contains residues of antibiotics and other
chemicals used to keep the fish healthy during the two years it takes them to grow to harvestable size.

All those problems are manageable; it's just that managing them costs money, and if there is no reason to
spend that money, no incentive, then no one does.

In southern Chile, says Pizarro, the impact on the daily lives of the local people comes not so much from the
pens of fish as from the processing plants built to prepare them for export. "What salmon farming has done
is move the people from subsistence agriculture to factory work," says Pizarro. "Salmon farming for the
people is about the processing plants, it's not about the farms."

The plants themselves are modern and hygienic, in part because American companies fear nothing so much
as importing tainted food that sickens their customers. Despite the cleanliness, the processing plants suffer
by most accounts from the kinds of sweatshop issues more commonly associated with garment factories in
developing nations.

"The hours worked are not respected," says Pizarro. "There are a lot of women working in the processing
plants. There are a series of issues in terms of sexual harassment, in terms of hours worked standing up.
They are not allowed to go to the bathroom. And there are antiunion practices."
Pizarro is quite careful in discussing the labor issues. "Much of this is denied by the companies," he says.
"But currently, the labor standards are very weak, and they are very difficult to enforce. These plants are
very far away from Santiago."

Salmon-processing facilities that are run with as much respect for the people as the hygiene
of the fish also cost money -- for reasonable wages, for proper equipment, for enough
workers to permit breaks and days off. Right now those costs aren't in the price of a pound of
Chilean salmon either.

Groups like Pizarro's and Leape's, concerned about salmon's impact in Chile and elsewhere, agree on two
things. The salmon industry isn't going away -- Chile has declared that it intends to increase production
another 50 percent by 2010. And the key to managing the impact of salmon farming, to making the business
sustainable for both Chileans and their environment in the long term, isn't self-regulation or government
regulation. It's the customers, the big corporations who buy salmon by the ton. Even the corporations
realize that.

The environmental groups in conversations with Wal-Mart want to bring along the big company toward a
view that it can, that it must, use its power to solve some of the environmental and labor problems that the
industries it relies on create. They think Wal-Mart could ultimately do for corporate
environmental stewardship what it has done for corporate productivity and efficiency. Wal-
Mart wants to be seen as taking criticism seriously, and it wants to be seen as a responsible citizen. But the
environmental groups don't want to be duped, or co-opted, by a Wal-Mart campaign that turns out to be
more public relations than substance. And Wal-Mart does not really know that much about taking
"externalities" into consideration in managing where its products are coming from and how they are made.
If salmon poo needs to be cleaned up and properly disposed of, well, that's not a way of making salmon
cheaper -- it's potentially a way of making salmon more expensive. And Wal-Mart must surely be worried
that once you open the door to considerations other than what's required by law, to considerations other
than what's required to improve efficiency and decrease cost -- well, where will the demands end? What
won't people ask of Wal-Mart?

Indeed, it is possible to argue that it's not Wal-Mart's job to worry about salmon farms in Chile. Protecting
the waters of Chile, and the workers of Chile, is the responsibility of the government of Chile. Wal-Mart's job
is to obey the law, and to deliver low prices. That, in fact, is pretty much how things have looked from
Bentonville for forty years. But the global economy is turning out to be much more complicated.