Why do many hate Wal-Mart?
Who is to blame for all the hatred towards Wal-Mart? The retailer itself? How about the customers who keep it at the top? These are questions that constantly see emotion overtaking logic when the questions arise. Let’s take a look at them a little more closely today.
Why Wal-Mart exists
Wal-Mart, like many retailers, started small and over the course of many decades grew and grew to become the world’s largest retailer -- mostly on the back of its operations in the U.S. By offering "everyday low prices" to consumers, it was able to build a following that eventually pushed it further in sales than any of its competitors.
As most of the world knows by now, Americans love bargains (or the perception of bargains). We like our cell phones to be "free" (along with that hefty two-year contract), we like our food to be cheap (hence, double coupons and tasty but nutritionally worthless processed foods), and we certainly like our gas free. In the case of gas, there’s not much we can do to make it cheaper.
When it comes to retail goods, though, we can make things cheaper -- using competitive advantage to our advantage. Wal-Mart recognized this and I’ll posit that it invented the supercheap mentality by using the "big box, low overhead" type of store and merchandising format while actually lowering prices to almost always beat the competition. In smaller markets with many smaller stores (the ubiquitous "mom and pop" contingent), Wal-Mart has been accused of putting many of these locations out of business. Hence, we have the central question: just whose fault is that?
Getting the customer addicted to low prices
In the 1980s, there were many discount retailers to be found: TG&Y, Venture, Target, K-Mart and Wal-Mart. Which one survived? We now know -- and it was because of Sam Walton’s unwavering pledge to give the American consumer the best (lowest) price on anything carried on its shelves. That may sound like some marketing spin from Wal-Mart, but in researching this thought, many people believe it’s true. Fast forward to the early 1990s -- Walton passes away and his children take control of the retailer. All of a sudden, pricing becomes even more prevalent than ever and the push to enter new markets -- and completely conquer them -- becomes paramount.
Wal-Mart begins making more business deals in China and in low-cost producing nations and is able to kill just about every large national discount retailer -- except Target Corp. All of the previously mentioned competitors fizzle out, and even K-Mart is folded into Sears Roebuck to form a combined company called Sears Holdings, which really isn’t doing a thing, retailwise, since its merger.
Once the year 2000 gets here, Wal-Mart’s ruthless attitude has already planted the seeds in many American minds -- many of whom cannot stand the retailer now. It gains a reputation of killing small business, drying up the smaller downtown shops of small-town America and recruiting as many customers as possible with "everyday low prices" and huge, big-box store locations. Want even more savings? Wal-Mart begins pushing Sam’s Club wholesale stores to small businesses and heavy bargain-seeking customers who would like to buy in bulk to save even more. Think pricing has everything to do with retail merchandising? It does. At least, for the vast majority of those who shop in America.
And, the hatred grows
Here we are in 2008, and the hate that fills the minds of many Wal-Mart watchers continues to grow. Take Charles Smith’s case -- he’s a 50-year-old computer store owner in Georgia. He also hates Wal-Mart with a passion, and runs two websites to prove it: Wal-Quaeda and Walocaust. It’s no secret what Smith is comparing Wal-Mart to in the names of those two websites. But, why would someone compare the world’s largest retailer to a terrorist organization as well as Adolf Hitler’s regime?
It comes down to the thinking that Wal-Mart’s unstoppable fixation on pricing and store growth make it the largest target. Like Microsoft Corp., Wal-Mart is the biggest kid in the sandbox and subsequently draws more arrows in its back than anyone. But, who made it that way? In a country that was built on personal freedoms and personal responsibility, Wal-Mart has become the social retailer. That is, is supplies a certain market demographic who otherwise would find it difficult to survive due to "normal" retailer prices. This is the picture: a family of five who live on a combined annual income of $35,000 per year. Take the situation and duplicate it by the millions. Have a nearby retailer who offers anything and everything, all at bargain basement prices. And we wonder how Wal-Mart became as large as it has.
Following its growth, the animosity towards the retailer has grown right along with it. Charles Smith goes on to day on his Walocaust website that "I worry that by even implying that anything could compare to the horror of the Holocaust, the worst tragedy in history, I cheapen the term." But Smith saw a report "on the TV about how many goods Wal-Mart was importing from China and how many jobs this cost America." This is true and is baked up by fact after fact. Hence, the basis for hatred has grown by those in America who have seen manufacturers in this country become extinct as Wal-Mart constantly moves business overseas. Although we live in a global village, there are many who believe protecting America at all costs is the answer. It’s standard national protectionism instead of progressive global thinking. After all, many of us have those large mortgage payments, right?
But, this is a free country, with everyone free to make their own decisions. Customers choose to shop at Wal-Mart to save a wad of cash. Wal-Mart, in turn, is reacting to demand with supply. It’s standard economics, and by that account Wal-Mart is a champion. Instead of paying a 100% markup at a mom-and-pop store, Wal-Mart supplies the same product for a 22% markup. As a result, customers flock to Wal-Mart and not the smaller store. Result: the smaller stores become extinct due to lack in innovation in competitive practice. Whose fault is that? Can you blame the bargain-seeking consumer? If that logic holds, then every Wal-Mart hater actually hates the "price is everything" American consumer -- not Wal-Mart itself. Right or wrong? Tell me what you think below in comments.
source: Blogging Stocks
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