rblog

The Wal-Mart Effect: How the World's Most Powerful Company Really Works--and How It's Transforming the American Economy
Author: Charles Fishman
Amazon info

This balanced book is summed up with the answer to the question "Is Wal-Mart good or bad for America?". That answer is "Is the car good or bad for America?". Which is another way of saying "It Depends". I can admire Wal-Mart for sticking to its simple message - "Always, Low Prices, Always" for the entire history of the company. And it is true, Wal-Mart does lower prices - even after they have eliminated all competition, you might expect monopolistic pricing - but not at Wal-Mart. Even when Wal-Mart owns a town, it still pushes to drive prices lower and lower. Of course, after 20 years of cutting costs, there are few (if any) efficiencies available, so the costs have to come out of the suppliers. And therein lies the rub. Initially suppliers can cut costs by removing waste from their processes, but over time they have to start sacrificing quality and then perhaps resorting to unsafe or illegal practices. Suppliers to Wal-Mart face a double-edged sword - they will sell lots of product, but can they do so profitably?

The author also dwells on how a great and respectable idea (frugality, hard work, providing low prices) fails when scaled to the size of Wal-Mart, which has revenue of $250 BILLION per year - a staggering number. Is there a point when Wal-Mart has to stop forcing suppliers to cut prices? Or do consumers have to band together and choose to buy higher quality/differentiated products, not just the cheapest they can find at Wal-Mart.

In the highly polarized world of "Wal-Mart" I found Fishman's book to be a lucid and well balanced view of the subject and would recommend it to all.