Jan. 31, 2004 - 18:26 MST

THE WONDERING JEW

Too Big ?

Just read of an article in a magazine that was referred to in an article by Mary Winter, Assistant City Editor of the Rocky Mountain News.

The article appeared in Fast Company and titled, "The Wal-Mart You Don't Know."

She refers to an interview December 27, 2003 she heard on National Public Radio with the author Charles Fishman of the above mentioned article.

She says that "Fishman tells the following tale: In the late '90's, Wal-mart became fascinated with the gallon jar of Vlasic pickles. Wal-Mart determined it would sell the 12-pound jars for an astonshingly low $2.97 as a "statement item" -- showstopping proof of its unbeatable prices. It didn't matter to Wal-Mart that Vlasic couldn't make a profit at $2.97, or that other grocery stores got $2.97 for a quart of pickles, not a gallon."

"When you're Wal-Mart, they get to dictate what you'll pay your suppliers. For suppliers, the best news is, Wal-Mart is going to buy your product, and the worst news is, Wal-Mart is going to buy your product," Fishman says. "You instantly need to supply enormous quantities and ignore your other buyers. But over time, Wal-Mart insists the price you charge go down. Wal-Mart literally has a policy that your price goes down 5 percent a year." And for the supplier who balks, "Wal-Mart holds out the threat that it will (dump you) and simply knock off your product in China," he says. "As Vlasic discovered, the real story of Wal-Mart, the story that never gets told, is the story of the pressure the biggest retailer applies to its suppliers in the name of bringing us 'everyday 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."

"With almost 3,000 stores, Wal-Mart does more business than Target, Sears, K-Mart, J. C. Penney, Safeway and Kroger combined. And make no mistake, Wal-Mart makes millions of consumers -- and thousands of suppliers -- happy. It saves U.S. customers an estimated $80 billion to $100 billion a year, it lowers the inflation rate and it forces suppliers to run more efficiently."

"But there's a trade off. To make goods cheap enough to satisfy Wal-Mart, manufacturers increasingly must move their operations overseas, where labor is $2 an hour instead of $15."

"Fishman points to Levi Strauss, the venerable maker of blue jeans that had 60 clothing plants in the United States 22 years ago. It closed its last two U.S. factories recently. Now it makes no clothes at all, it simply imports them."

"Wal-Mart's relentless cost-cutting pressure eventually hollows companies out, 'Fishman says.'"

Mary Winter states, "I asked Wal-Mart spokesman Melissa Berryhill whether Fishman's portrayal is accurate. She said, "No." "The fact is, Wal-Mart, perhaps like no other retailer seeks to establish collaborative and mutually beneficial relationships with our suppliers . . . . We conduct business with more than 20,000 suppliers across the nation, and I would encourage you to consider speaking with (some of them)."

Mary Winter continues, "Rocky Mountain Growers of Peyton, 20 miles northeast of Colorado Springs, sells bedding plants, flowers and containers to Wal-Mart. Chris Avila, a sales representative there, said a fifth of RMG's business is with Wal-Mart. I asked him whether RMG's relationship with Wal-Mart is good or bad. "Both," he said. "We've made money with Wal-Mart, but they are pretty relentless. For two years we haven't been able to raise prices, and they still asked us to go lower this year. We do value their business, but they're beginning to put the pinch on us, and we wonder if there will ever come a point when we can get more profit."

Mary Winter gives the other side a chance to speak, "And Fishman's cliam that Wal-Mart forces supplier to drop their prices 5 percent a year "Not true," said Berryhill. "Its no secret that we focus on delivering everyday low prices to our customers," she said. "Our suppliers do the same. Some of the ways we do this include creating improved efficiencies in transportation, information systems and other aspects of the supply chain."

Mary Winter's last paragraph, "I decided not to tell my friend John about the article. Who am I to make someone feel guilty about saving money ? I'm just glad there's no Wal-Mart near me. Finding bargains is fun. Having to think about them isn't."

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Our avid purchases years back in buying cheap clothing from foreign lands has seemed to escalate to everything. Remembering the convenience stores when I was a kid, they were Mom and Pop stores, independent and stayed open later than the chain stores. Southland started the 7-11 stores, most of them now open 24 hours a day. The higher prices we paid to the Mom and Pop stores was because they were not able to get the price breaks the chains did. But the chains pretty well left the Mom and Pops alone. 7-11 doesn't seem to give as good prices as Mom and Pops did.

I do know that Wal-Mart is trying to have some property condemned ( or whatever the word is) so as to move present tenants out of a shopping center so they can put a new Wal-Mart up in South Denver.

I have also noticed that stores are moving out or losing out and closing near most of the Wal-Marts.

In the development on old Stapleton International Airport as well as much housing and residences there is a Wal-Mart, a Sam's Club, a King Soopers (Kroger) and soon a Walgreen's drug store. Wonder how that will work ?

Someday will we read in books something about "Wal-Mart Blight" ? I think perhaps if they do succeed in driving out other businesses, then will come the big rise in prices at Wal-Mart.

My personal opinion is that Wal-Mart's spokesman ?woman? is putting the spin on to avoid admitting what is thought is actually true. She sounds like a politician de luxe to me.

then comes the question, how big is Too Big ? . . . . . . . . . .

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