Friday, March 10, 2006

The Other Side of Wal-Mart

I haven't posted anything on Wal-Mart for awhile now, so I thought I'd pass along two interesting articles I came across discussing the relationship between Wal-Mart and their vendors. The first article, The Wal-Mart You Don't Know, is from December 2003 and it discusses what happened to Vlasic, Huffy, Levi Strauss and other companies when they decided to do business with the Beast of Bentonville.
The giant retailer's low prices often come with a high cost. Wal-Mart's relentless pressure can crush the companies it does business with and force them to send jobs overseas. Are we shopping our way straight to the unemployment line? [...]

Indeed, as Vlasic discovered, the real story of Wal-Mart, the story that never gets told, is the story of the pressure the biggest retailer relentlessly applies to its suppliers in the name of bringing us "every day low prices." It's the story of what that pressure does to the companies Wal-Mart does business with, to U.S. manufacturing, and to the economy as a whole. That story can be found floating in a gallon jar of pickles at Wal-Mart.
The second article, The Man Who Said No to Wal-Mart, is about Jim Wier, CEO of Simplicity, the company that bought out Snapper lawnmowers in 2002, and his decision to stop selling Snapper mowers through Wal-Mart stores.
Selling Snapper lawn mowers at Wal-Mart wasn't just incompatible with Snapper's future--Wier thought it was hazardous to Snapper's health. Snapper is known in the outdoor-equipment business not for huge volume but for quality, reliability, durability. A well-maintained Snapper lawn mower will last decades; many customers buy the mowers as adults because their fathers used them when they were kids. But Snapper lawn mowers are not cheap, any more than a Viking range is cheap. The value isn't in the price, it's in the performance and the longevity. [...]

Wier is too judicious to describe it this way, but he looked into a future of supplying lawn mowers and snow blowers to Wal-Mart and saw a whirlpool of lower prices, collapsing profitability, offshore manufacturing, and the gradual but irresistible corrosion of the very qualities for which Snapper was known. Jim Wier looked into the future and saw a death spiral.
Read the article yourself. It's a fascinating look into the behind the scenes world of Wal-Mart. When Wier went to Bentonville to end his relationship with the retailer, he had to sit on a lawn chair in the vice-president's office. Wal-Mart apparently maximizes profits by cutting out frivolous office furniture too!

Also, surprisingly, Wier says, "I believe Wal-Mart has done a great service to the country in many ways. They offer reasonably good products at very good prices, and they've streamlined the entire distribution system. And it may be that along the way, they've driven some people out of business who shouldn't have been driven out of business."

Does he have any regrets? "I could go to my grave, and my tombstone could say, 'Here lies the dumbest CEO ever to live. He chose not to sell to Wal-Mart.'"

14 comments:

Left of Center said...

I saw an interview with Jim Wier, the guy is smart and sees wel into the future of his company. protecting the integety of the snapper brand is part of the fuure. Good for him.

abi said...

Quality? Reliability? Durability? Un-American.

Midwestern Progressive said...

I'm not sure if abi's comment is intended to refute your post, but Wal-Mart's practices affect quality, reliability, and durability for everyone, even those who never set foot in a Wal-Mart.

But don't trust me! I'm not sure if you've seen this op-ed piece by Kathleen Parker, no defender of liberals, she. She refutes the notion that Wal-Mart is a benign corporation:

Take salmon. Wal-Mart, which buys all its salmon from Chile, sells more than anyone else in the country and undersells all other retailers by at least $2 per pound.
[...]
Salmon in Chile are raised in packed underwater pens - as many as 1 million per farm - and fed prophylactic antibiotics to prevent disease. Here's a fact you'd rather not know: A million salmon produce the same amount of waste as 65,000 people. Combine that waste with unconsumed food and antibiotic residue, and you've got a toxic seabed.


Possibly abi does not care about toxic seabeds in Chile, but the environment is a global concern, not a local one.

I meant to write about this column when I first saw it, but it slipped my mind. Stone Soup, thanks for the reminder!

abi said...

mp - sorry, I was being too glib for my own good. I was just trying to say that quality, reliability, and durability aren't goals of our throwaway society. Make it fast, make it cheap, and make them buy it again and again. Consequences be damned.

His Honor the Mayor said...

I was as pleasantly surprised as you when I first read about Mr. Wier standing up for principles over profit.
The way Wal-Mart choses to force suppliers to comply goes way beyond its own store walls. They regularly force companies to make changes in it product of packaging to fit company shelves or needs, especially if those changes make it difficult to sell at other chains. They even made Coca-Cola, the most recognizable brand in the world, introduce Diet Coke with Splenda, a product they hadn't planned on making, and didn't think they needed. because They are also behind the move to create RFID tags to be placed in all products, as a more modern version of the UPC codes. They have basically set a deadline stating that any products delivered to Wal-Mart after a certain date must have them to be sold there. The tags raise serious privacy issues, and there are health concerns for the store employees, but few suppliers can afford to say "no" to the largest retailer in the world.

His Honor the Mayor said...

Wow, I really should proof-read what I write before hitting "send". I hope everybody understood my point in spite of all of my typos.

Ron Nasty said...

When my old man passed away my brothers and I fought over who got the Snapper. Then we decided to be fair and drew straws. One got his pick-up, one got his huntin' rifles, one got the fishin' gear and I got the Snapper. Of course, there ain't much lawn around the trailer, but hey, I'l be damned if I'll use a mower made in China.

Kathy said...

Wow, lots of great comments and feedback - typos and all!

I think we all agree that integrity, quality and reliability are important to us. I think we need more of that in America. I'd rather pay more for a good American built product that lasts than a throw away one, and I know lots of people who think like me. We need to get that sense of pride back again and be proud of what we make IN this country.

Midwestern, I heard about the salmon, but never read the Parker op-ed. I'll have to hunt that down. Or you could point me to it! :-)

Ron Nasty, I agree about not buying in China, but it sure is getting harder and harder to find American made goods, especially when it comes to clothing.

Mayor, I didn't know about the RFID tags and Wally. That just gives me one more thing to add to my "why I don't shop at Wal-Mart" list.

One other observation, Jim Wier also worried about protecting his workers' jobs. You don't hear that from CEO's mouths anymore - people before profits.

thepoetryman said...

I live in "Wal-Mart Country" and people around here believe in wal-Mart only second to God and/or Bush! Of course here recently that trend has turned more toward the local restaraunts adding an entree of Crow to the menu...


http://apoeticjustice.blogspot.com/

Midwestern Progressive said...

gggrrr.....I need to check my comments more carefully too, since I definitely meant to include the link.

Here it is.

His Honor the Mayor said...

Here is a link with info on how Wal-Mart has mandated the use of RFID tags.

Wal-Mart says "jump", and the market asks "how high?"

Kvatch said...

"I could go to my grave, and my tombstone could say, 'Here lies the dumbest CEO ever to live. He chose not to sell to Wal-Mart.'"

But you know...so what. The man seems to know what it is he want's to be selling. So Bravo!

Kathy said...

Poetryman, I'm happy to hear "crow" is on the menu in Arkansas.

I enjoyed your blog and reading the poetry. Thanks for stopping by.

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