Wal*Mart: the story behind the : )

Remember that "Theory of Stuff" video? It talked about the 'true price' of a calculator. Did the $7.99 really take into account the manufacturing of the product halfway across the world. Does eight bucks reflect the fuel need to bring the calculator over the ocean? Eight measly dollars gives you a device that transforms solar energy into the ability to multiply 78 by 62. How on earth is this possible?

The answer is simple. Scale.

And no other retailer uses economies of scale to greater advantage than Wal*Mart Stores, Inc. With over 6,600 stores worlwide, and sales over $344 billion in revenues (guess how much is pure profit?) - Wal*Mart is not only the top retailer in the world... it's in a category all of it's own.

Once upon a time, there was pickle manufacturer. The manufacturer made a distribution partnership with Wal*Mart. And Wal*Mart, as part of its Everyday Low Prices promise to its customers, sold a gallon of pickles for $3.97. Customer's couldn't resist. Pickles for an entire year for half the price of a quart at the nearby grocer. 12 pounds, too big to carry with one hand, an abundance that symbolized everything Wal*Mart stands for. Selection? Experience? Convenience? All three are were exemplified in that gallon jar of pickles. But above all else, the Price of $3.97 is what Wal*Mart - and its mass of customers - fell in love with.

Pickle sales went a little crazy. Vlasic, the pickle manufacturer, became the top-selling brand in America. Over a few short months, it's sales grew exponentially. Even as its profit-margins shrank by millions. A few years later, Vlasic closed shop and went out of business.

For you see, that's the hidden cost of "everyday low prices".

This post won't touch on the numerous unfair-labour-practice, gender discrimination, and environmental damage lawsuits against the retailer. I won't talk about Wal*Mart's "A Manager's Toolbox to Remaining Union Free"... or the fact that - while the company takes 3.5% of its $344 billion sales dollars as pure profit, the majority of its employees are earning a-lower-than-subsistence living wage - won't be explored.

But the crux of the matter is that Wal*Mart isn't inherently evil. That's why I - and so many others - have such trouble finding absolute fault with the retailer. Wal*Mart complies (on most instances) with the law. They are fair when dealing with suppliers. Cold, harsh, blood-sucking some might say - but always fair.

And Wal*Mart has brought us the world.

Once upon a time salmon was a delicacy enjoyed by the rich. Today, Wal*Mart offers a pound of Chilean salmon for $4.84, making it accessible to the common man. As pointed out in a post below, it brings exotic Indian fashions to the average Canadian consumer. It sells us 140,000 different items (talk about variety!), things that have to be shipped over oceans or flown across skies, from halfway across the world. Because of Wal*Mart, you can have a salwar kameez for a measly $20.

But Wal*Mart has amassed an unprecedented amount of power. It's values shape entire economies. Twelve years ago, there were no salmon in Chile. Today, Wal-Mart buys a third of the nation's $1.5 billion salmon export. From subsistence fishermen and agriculturists, Chileans by the droves have gone to work in Salmon farm-factories. Farms that pollute the oceans with a toxic quantity of salmon fecal matter. Factories where workers work from dawn to dusk under supremely clean (Wal*Mart wouldn't want our food contaminated) but ethically revolting labour conditions.

So, what Wal*Mart chooses to do with this power is what ultimately defines the corporation. Will it raise the price of salmon 25% (from $4.84 to $6.05 - are you willing to pay $1.21 more?) and provide livable wages, safe work conditions, and environmental sustainability for the Chilé salmon farms? Or will it choose to continue spending the bare minimum it has to - thus keeping its largest group of employees (sales associate) below the poverty line? Everyday Low Pricing versus... well, fairness, economic and environmental sustenance, morality... whatever you want to call it.


Sources/Links/Related Articles:

The Wal*Mart You Don't Know (excerpt from The Wal*Mart effect): http://www.fastcompany.com/magazine/77/walmart.html?page=0%2C0

Global Fishiness (excerpt from The Wal*Mart effect):
http://www.salon.com/tech/books/2006/01/23/walmart_effect/index.html

Wake-Up Wal*Mart: The Real Wal*Mart effect:
http://wakeupwalmart.com/facts/

Some Uncomfortable Findings For Wal*Mart (BusinessWeek article):
http://www.businessweek.com/bwdaily/dnflash/oct2005/nf20051026_8916_db016.htm