Walmart's workers bear the brunt of these low wages, but it also has an affect on tax payers, Traub said, because these workers don't make enough to support themselves they often have to rely on government programs like Medicaid and food stamps. Other big retailers, like Costco, have proven that it is possible to pay your workers livable wages and still provide competitive prices, she added.
Economies thrive when people have money to spend on the basics. Walmart's business model will not be sustainable in the future, and isn't worthy of one, Traub said. MPR News presents offers speeches, documentaries and debates — airing weekdays from noon to 1 p. You make MPR News possible. Once Wal-Mart has established a relationship with a manufacturer—and the manufacturer has made all of the changes and investments necessary to meet Wal-Mart's requirements—Wal-Mart again demands cuts in production costs, substantial cuts.
Perplexed, the supplier examines each step in his production process. Some opportunities to become more efficient may be found, but such opportunities are limited; they are the result of research and development, which takes time.
The supplier again looks to see what other corners might be cut. How would less costly materials work? Might a design change lower costs, reduce unit labor costs? Too much is at stake not to find a way. But something else may be at stake if the manufacturer does find a way. Another famous American company—Levi Strauss—discovered this the hard way. Levi Strauss jeans, at one time, sold themselves. But then sales started to slide.
The popularity of blue jeans drew in a wide range of competitors. As the market expanded, there was a demand for a new variety of design options. Designers met that demand with high-style jeans with big price tags.
Levi was also hit on the low end. Wal-Mart, with its enormous customer base, appeared to offer Levi-Strauss a way to return to the glory days of the early s. At the end of , Levi Strauss hooked up with Wal-Mart. For Wal-Mart, Levi offered a name long associated in the public mind with a quality blue jean.
The line was to include jeans with all the variations: low rise, boot-cut, relaxed fit, and so on. It was a new line that Wal-Mart could brag about. Charles Fishman, in his excellent book The Wal-Mart Effect , describes the negotiations between the two firms. Levi Strauss had a problem right off. Its clothes were too expensive; they did not fit the everyday low price parameters of Wal-Mart.
But Levi needed the business, and Wal-Mart wanted something new. Today, Levi Strauss puts it name on a product made by other companies—foreign firms—located in Mexico and East Asia. In effect, Levi Strauss is now an importer rather than a manufacturer. Levi must have known the risk it was taking to get a shot at Wal-Mart's high volume sales: Brand names, like machinery, can "rust" if not well maintained.
Over time, deterioration in the quality of a product will reduce the appeal of a brand-name. For a while, Wal-Mart treated the Signature line with much fanfare, and Levi seemed to be holding its own. But then Wal-Mart decided to go after a more affluent customer—and that meant offering a higher quality jean.
Since Levi was now identified with the lower quality Signature line on Wal-Mart's shelves, its name brand had become too rusty to draw in the more affluent customer. Wal-Mart selected Uncharted Territory as the new star.
That could well change by the time this article is printed. On Wal-Mart's shelves, Levi Strauss is now down in a fight among the lowly brands, with some of its models at clearance prices. Wal-Mart itself is little affected by such changes. Wal-Mart's concern is not with this or that brand name, or with the loss of quality, or the collapse of American-made goods, or the demise of the small retailer.
Wal-Mart has only two interrelated concerns: growth and profit. The company was about to lose its flannel shirt business to a cheaper factory in Latin America. Walton placed an order to keep Farris in business. The Governor called Walton a "patriot" for his help. A year later, and aware that many Americans were nervous about losing American manufacturing jobs to overseas factories, Walton kicked off a "Buy American" campaign, prominently featuring Farris Fashions, that was to continue for the next 12 to 14 years.
But the reality of the Wal-Mart-Farris partnership was quite different from the campaign slogan. Farris Fashions cut costs by switching from U. Just what did "Buy American" mean to Wal-Mart? In his letter to domestic suppliers Walton argued: "Something must be done by all of us in the retailing and manufacturing areas to reverse the serious threat to our free enterprise system Our Wal-Mart Company is firmly committed to the philosophy of buying everything possible from suppliers who manufacture their products in the United States" [emphasis added].
Sam's idea of "everything possible" hinged on his definition of "possible. Over the next two decades, Wal-Mart steadily increased its purchases of goods from other countries around the world.
Walton apparently had no problem simultaneously pursuing these two opposing tracks. As his friend and tennis partner George Billingsley said, "Sam was a tough man. Sure, everyone wants higher pay. If its employees could get higher pay elsewhere, Wal-Mart would lose its best workers to the businesses paying those higher wages. The same goes for the alleged uncompensated overtime.
Employees are not chained to their stations. They are free to leave and take other jobs if the pay or working conditions at Wal-Mart are less than satisfactory.
Of course, sellers would like to get as high a price for their wares as they can. Likewise, buyers would like to get as low a price as they can. Both have to settle on a price that is mutually agreeable. Wal-Mart has a reputation for keeping its word and paying promptly. The relevant comparison is not to the working conditions Americans have become accustomed to after two centuries of industrial progress and wealth beyond the wildest dreams of inhabitants of the less-developed countries.
The relevant comparison is to the alternatives available in these less-developed economies. Companies that employ people in factories in less developed economies must offer a compensation package sufficient to lure them from alternative occupations. The concerns that Wal-Mart rightly disregards are those of local businesses that would prefer not to have to deal with new competition. The absence of rigorous competition leads to high prices in many small communities.
Develop and improve products. List of Partners vendors. The Walmart Effect is a term used to refer to the economic impact felt by local businesses when a large company like Walmart WMT opens a location in the area.
The Walmart Effect usually manifests itself by forcing smaller retail firms out of business and reducing wages for competitors' employees. Many local businesses oppose the introduction of Walmart stores into their territories for these reasons.
The Walmart Effect also has its positive benefits; it can curb inflation and help to keep employee productivity at an optimum level. The chain of stores can also save consumers billions of dollars but may also reduce wages and competition in an area.
The Walmart Effect has been shown to not only affect competing companies and suppliers but consumers as well. Walmart's insistence on procuring products at lower prices from suppliers means that suppliers must find ways to make their products for less money, or else they could be forced to take losses if they choose to sell through Walmart.
This can compel them to seek out lower-cost alternatives to manufacture their product, which could lead to the use of overseas operations or less expensive materials in the production of their goods. The company has over 4, stores in the U. As a retailer of this size, it can dictate the price it pays to wholesalers at a magnitude many other companies cannot.
As a result, Walmart has the capacity to sell its merchandise at lower prices, compared with other businesses in the markets in which it operates. This can have an effect that goes beyond the retail market and into manufacturing and production. In addition to its buying power, Walmart has historically controlled its compensation to employees in such a way that rival companies might feel pressured to reduce salaries or cut benefits to their workers in response. Once a Walmart location opens, the lower prices, concentration, and selection of merchandise in its stores tend to draw consumers away from local retailers.
0コメント