business news in context, analysis with attitude

On the subject of genetically modified organisms (GMOs) in foods, MNB user John Henry Wells of Oregon State University writes:

“With respect to political activism and GMO foods, consider the debate ongoing on over Oregon's ballot measure 27. The measure is a citizen petition initiative calling for all GMO foods sold in Oregon to be labeled. Some of the discussion can be seen at:

YES website:
NO website:

My view is that this ballot measure should be an early wake-up call for regulators and the industry.”

Tuesday’s the day for this ballot measure to be voted on in Oregon…and we’re dying to see what happens.

One note. When we were at Portland State University earlier this week, during an audience discussion period, there was much conversation about the GMO labeling initiative. Most of the folks we spoke to said they had seen polling numbers suggesting that it will fail, at least in part because of the millions of dollars spent opposing it by major manufacturers.

Reality? Or wishful thinking?

We’ll know next Wednesday.

We’ve had an ongoing debate about Wal-Mart and its effect on the culture and economics of American retailing taking place over the last few days, with one MNB user (and Bentonville defender) asking that Ken Robb (who started the whole thing) give the name of a single town with a population under 10,000 where the company has built a supercenter.

MNB user Mike Krause wrote:

“I'll give him one. Charlotte, Michigan, with a population well under 10,000 and 20 miles from any city with a larger population. Since he (the MNB user who challenged Ken) obviously works for Wal-Mart (he refers to "our customers"), he's just being disingenuous. Our maybe Wal-Mart is ashamed to tell their own employees how many towns under 10,000 they are preying on by putting in supercenters.”

We will say this -- yes, this defender does work for Wal-Mart. And we’re glad he hangs in here, providing opinions about the Bentonville behemoth and what makes it work.

We’re not interested in just slamming Wal-Mart. We are interested in an honest intellectual debate about the company’s impact on America and the world…because that is such a complex and fascinating subject. On the one hand, it is perhaps the best advertisement ever for American capitalism and entrepreneurism. But an argument can be made that its vastness also has long-term damaging effects on innovation, imagination and differentiation in retailing.

We’re interested in both sides of the argument…and we’re especially interested in making sure that the debate takes place on MNB.

And, speaking of this debate…Ken Robb returns this morning to follow up:

“I would be pleased to provide some answers to the questions asked in today's MNB...

“Give us the town(s) with populations under 10,000 where Wal-Mart has built supercenters? Allow me to take one state and list a few towns that come to Wisconsin, for example...Prairie du Chien WI (pop. 6,018), Hayward WI (pop. 2,129), Richland Center WI (pop. 5,114), Viroqua WI (pop. 4,335), Wisconsin Dells WI (pop. 2,418)...all with new Wal-Mart Supercenters. These are not suburbs of large metropolitan areas, and for the most part are surrounded by open country and even smaller towns nearby.

“If not for Wal-Mart, where would these towns be...dried up and blown away? Unfortunately, that isn't far from the truth whether Wal-Mart builds in your town or not. According to studies conducted by Iowa State University, small towns where Wal-Mart opened experienced a short-term surge in total retail sales, however, after eight to ten years these towns had the same or even less retail sales, as the study found that sixty percent of the revenue of Wal-Mart came from other stores (which eventually closed)...small towns nearby without a Wal-Mart suffered a worse fate, with retail sales declines in the double and triple digits.

“As I said before, the only thing worse than having Wal-Mart build a supercenter in your not having Wal-Mart build a supercenter in your town. The problem is of course one of market size. In these towns (in any town for that matter) there are only so many people, and the market simply cannot support overbuilding on the massive scale that is a critical Wal-Mart strategy. If you doubt this is Wal-Mart's strategy, allow me to quote Sam Walton from his book, ‘Sam Walton Made in America My Story,’ "Our key strategy...was simply to put good-sized discount stores into one-horse towns...even in towns smaller than 5,000 people...but that strategy wouldn't have worked at all if we hadn't come up with a method for implementing it...that method was to saturate a market area by spreading out, then filling in." He was talking about conventional Wal-Mart discount stores, but clearly that strategy continues today with Wal-Mart Supercenters.

“Where are these many workers that now barely survive? Truth is, some are unemployed and others have moved away. Those who stayed and found jobs are working for less. According to a study conducted by Dartmouth University, a typical Wal-Mart store adds 140 jobs to a community as it destroys 230 higher paying jobs. Even those who are hired by Wal-Mart earn less than before. Allow me to again quote Sam Walton from his book, "Folks in small towns...are more likely to want to work for what we can pay." Just to check, this afternoon I telephoned the nearby Wal-Mart Supercenter in Dubuque IA. I asked the store personnel manager what the starting wage and benefits would be for a cashier. The answer was $6.25/hour for a full or part-time position, with no health insurance benefit for 180 days (six months). Then I called the local supermarket and asked the same question. Their answer was $6.60/hour for a full or part-time position, with health insurance benefits immediately for those who work at least 36 hours weekly. Sounds like about 5% some people that's a lot. By the way, the Federal Minimum Wage is $5.15/hour quite a bit less than either Wal-Mart or its local competitor, which no doubt some displaced workers have had to accept.

“Does Wal-Mart management have a killer instinct? Well, perhaps that's a matter of opinion. Let me tell what they're doing in the small town of Prairie du Chien WI (pop. 6,018). Until recently, Wal-Mart and the local supermarket shared a common wall in a strip shopping center on the edge of town. In March of this year, they opened a new Wal-Mart Supercenter down the road. However, when Wal-Mart moved out of their space next to the local supermarket, they refused to let the landlord lease the space to another tenant, even to a non-competitive retailer. As a result, that space has remained vacant. You can easily imagine the impact that has on that local supermarket. And of course, the new Wal-Mart Supercenter rigorously follows Wal-Mart's well known "Never Be Beat 850 Comp Program" which means they maintain everyday pricing at or below competition on each of 850 key items that account for 80% of matter whether that pricing is above or below their cost.

“Does that qualify for a killer instinct? Why would they do it? Well, to quote David Glass, former Wal-Mart CEO in an interview with Money magazine, "We can do whatever we want."

Complicated. And persuasive.

The floor is open…

Have a great weekend.
KC's View: