Published on: May 24, 2004
As always, Wal-Mart continues to be a major topic of discussion among MNB
users…especially responding to comments made last week by Joseph Hansen, international president of the United Food and Commercial Workers (UFCW), in which he observed that “the UFCW sees Wal-Mart as not just a problem for the UFCW. We see it as a problem for all the workers in America. Wal-Mart claims to be about low prices, but when you look hard at what the company is, it's low wages, no benefits, high turnover. It's turning our economy into a Wal-Mart economy. We're going to have a low-wage, no-benefit economy, and we're slowly but surely, and in some cases not so slow, we're being driven down toward the bottom. It's not good for our country.”
user responded:There is a reason why Wal-Mart has such low prices. Eventually, what was brought up by the article will be a problem. I challenge the consumer to not be so near sighted as to forget about the ramifications of your buying decisions...
The Typical Wal-Mart Shopper:
“WOW! I saved $25 this week by shopping at Wal-Mart, what a great place to shop.”
End of the year:
“I hate our town, my property taxes went up again. NYS just increased the sales tax and gas costs me a fortune. I just don't understand why NYS needs so much money??? Now I pay an extra $1000 a year.”
The next year:
“What the hell?!!?? My husband just lost his job as manager of the local grocery store and now things are really bad. How could this happen??? He
so hard for them.”
Two years later:
“Grandma's social security ran out and now she has to get a job at Wal-Mart and she is moving in with us. We need to put her under our insurance because Wal-Mart doesn't give benefits, but my husband had to take a significant pay cut and adding on grandma to his health insurance plan is really going to hurt us financially.”
Three years later:
“My husband's company that sells nice little knickknacks may be going out of business. Wal-Mart beat them down in price almost to the breaking point of the company. They had to lay off 50 employees and my husband took a pay cut.”
The next day:
“I can only afford Wal-Mart now because we have so little disposable income. I don't know what is going on in our community but taxes keep going up and everyone is out of a job. The crime rate has also gone up in our nice little neighborhood. How can that be???
“It all started when I voted yes to have a Wal-Mart here so that I could save money...”
We understand the strong feelings that go into emails like this one…though we’re not sure it is fair to suggest that Wal-Mart is the root of all evil…which often seems to be the subtext of the message.
Of course, making comments like this one lead another MNB
user to write: It's easy to sit in front of your computer and knock the unions and the chains while riding the Wal-Mart bandwagon. Everybody likes lower prices, right?
Wrong. Not when lower prices come at the expense of American manufacturing jobs and workers making livable wages in which to support their families. How about quitting your day job and going to work at your local Wal-Mart and trying to support your family? Better get used to Top Ramen and learning how to use and put a drain on community social services for health care and related needs. Conversely, it is possible to work in a union job at a grocery chain and earn a livable wage and benefits in which to support a family. When I need a gallon of milk I am more than willing to pay
the extra money to support livable wages for other families in my community that are supported by jobs with a chain grocer. I'm not saying these chains have a perfect model by any means. Grocer - Labor Union strikes and Corporate Office centralizations indicate that they are looking for opportunities that will allow them to closer resemble the Wal-Mart model of
business. Instead of looking at what Wal-Mart and the grocery chains are doing wrong, let's look at someone who's doing things right. By "right," I am referring to my belief that they are making ethical business decisions that are right by themselves, right by their employees, and in the process right by their community. I prefer to do the majority of my shopping at Costco, a company that I admire for their stance on providing employees with livable wages and benefits in which to support a family. Costco provides these
livable wages and benefits despite the heat that Wall Street puts on them to reduce wages and benefits in order to further increase profits for investors.
Costco does not provide these livable wages and benefits because unions are pressuring them to do so, but rather because it is the "right" thing to do.
Costco's CEO Jim Sinegal is monetarily underpaid by industry standards. Mr. Sinegal has refused further compensation so as to not further distance himself
from the blue-collar employees that support day-to-day operations.
At the end of the day I will stand with my opinion that the Wal-Mart model of business has a negative impact on communities and furthers class separation. Costco has a business model that not only Wal-Mart and
the chains, but all of us can learn from. We all live, work and play in a community. We rely on each other for support to a degree: physically, mentally and financially. Looking to better ourselves at the expense of others is a form of greed that should have no place in our communities. How wonderful would it be if we all learned that when we take our communities into consideration, we are also taking ourselves into consideration to a degree?
And by the way, I wouldn't recommend quitting your day job...
This email fascinated us because it suggested that we were completely pro-Wal-Mart and anti everybody else…an opinion that our readership down in Bentonville probably would find amusing.
So we shot this person back an email asking if it was his impression that we had consumed the Wal-Mart Kool Aid…and got the following response:It is my impression that you are pro "Wal-Mart model" of business, and that the rest of the industry and its workers could learn from the model. We all have our opinions, and I enjoy reading yours each morning.
I'll reiterate - don't quit your day job 😉
Well, we have no intention of quitting our day job. We could, of course, be fired…but only when the 10,000 or so people who get the MNB
email each morning stop signing on.
But that’s a different issue.
We believe that Wal-Mart’s policy of making its money on the sell, and not the buy, is indeed the best way for a mass market retailer to do business, and it avoids the inherent corruption of slotting allowances and promotional fees, which are the “heroin” to which many food retailers are addicted.
However, we are extremely concerned that Wal-Mart’s policies toward employees – meaning both salaries and benefits – could be having long-term negative effects on the economy. We worry that mass retailing on this scale is too homogenous in nature, and could reduce the level of diversity and choice available to consumers.
But we don’t think Wal-Mart is the root of all evil. And we think that the retailers competing with Wal-Mart have to stop thinking like victims.
user wrote:Why is it that Wal-Mart can hire enough people to support their current stores and significant growth with "low wages" and no union, while the supermarket industry complains of difficulty in hiring qualified help even though they pay "high wages" and have union shops?
Do you think it is the way the people are treated?
There was a legitimate question raised by an MNB
user about the unions’ attitude toward Wal-Mart:Why not look up what the union chiefs make in salary versus what their members make? Maybe they don't want to give up the good life. It is not the same disparity between the top of the corporate pyramid and the those on the bottom. But the union bigwigs make many times what their members do. Is this rant about self-preservation too?
On the subject of reimportation of Canadian medicines into the US, one MNB
user wrote:Had a long conversation last night with some Canadian friends of ours who have some friends that started up a very successful chain of pharmacies that have quickly grown into the millions due to sales to the US. On one hand they are very happy and have a cash cow. However the concern about reimportation from the Canadian perspective that we were informed was that Canada is only entitled to ___ quantities of the drugs Pfizer is producing. If the Americans buy up all the drugs from them, their concern is there won't be any for the Canadian population themselves when they need them...a perspective on the topic I hadn't heard.MNB
user Andrew Casey added:It is really just about economics. Drug prices are lower in Canada for exactly one reason - government price controls. One of the corollaries of price controls is always limited supply. Pharmaceutical companies are willing to deal with those controls in the relatively small Canadian market but are unwilling do so in the much larger U.S. market. The impact on the bottom line for these publicly traded firms would simply be too great.
So it isn't even surprising that the Canadian government is considering cracking down. If they don't, they risk losing their ability to control their drug costs or at the very least, finding their own supply of popular drugs unacceptably limited. While they may be sympathetic to our problems with drug costs, they are unlikely to be willing to help us fix it.
What is really happening here is that U.S. consumers are subsidizing Canadian drug costs. Rather than making all this noise and wasting effort on the importation issue, what we should be doing is working with the Canadian government to move them closer to a free market scenario.
There was news last week that Safeway’s president/chairman/CEO, Steve Burd, was reelected to the company’s board of directors with 83 percent of the shareholders’ vote, surviving an attempt by dissident shareholders to force him to relinquish at least some of his power.MNB
user Mark Heckman responded: Kevin, the news of Mr. Burd's vote of confidence appears to be a function of two things: Safeway already taken some action to ameliorate the stated concerns by the dissident shareholders, and secondly, that there was likely no plan to move forward without Burd at the helm and this made some shareholders nervous about changing leadership at this time.
But Safeway is by no means "out of the woods" when it comes to dealing with its chronic problems. Even if the labor issue is settled, there are more new SuperCenters coming to Safeway markets, while its acquisitions over that last 5 years are now showing signs of the indifference to market specific issues.
This "homogenized" approach of morphing the acquired chain into a Safeway clone, quickly negated the key points of distinction those acquired chains had worked so hard to develop. We know the rest of the story.
Unless the negative sales trends and lost market share in these acquired markets is reversed, the next confidence vote may yield a very different result.
Finally, we had a piece last week about the Yankees no longer selling Cracker Jack at Yankee Stadium, which led one MNB
user to write something that we wish we’d written:The move away from Cracker Jacks has caused the Yankees to revise the words to “Take Me Out To The Ballgame.”
"Buy me some peanuts and Crunch & Munch.....just who's on Steroids is anyone’s hunch…”