business news in context, analysis with attitude

We read with interest an Op-Ed piece that ran in The Washington Post over the weekend, written by investment banker Peter J. Solomon and focusing on why the US Federal Trade Commission (FTC) should not be looking into Wal-Mart's practices as being anti-competitive.

For one thing, Solomon writes, the FTC has been loathe to do anything that would interfere with Wal-Mart's ability to provide consumers with low prices. And to be consistent, he writes, the FTC and other agencies need to "be equally hands-off as those suppliers and other retailers increasingly consolidate in response to the Wal-Mart challenge."

Old regulations that might have provided the government with a method of constricting Wal-Mart's growth are just that, Solomon writes - old, and in need of modernization.

"As the regulators recognize," he writes, "Wal-Mart's pricing practices have had a positive influence on the economy. They have helped dampen inflationary pressures and improved Americans' standard of living by lowering prices, forcing competitors to lower theirs also, and requiring efficiencies from direct suppliers of products as well as, in turn, their suppliers.

"Wal-Mart is changing marketplaces -- not simply the marketplace for buying and selling goods to consumers but the corporate marketplace -- by creating mergers, acquisitions, sales and liquidations among competitive retailers and domestic manufacturers."

The competition, Solomon writes, has but one choice. "To meet the Wal-Mart challenge, consolidation is an imperative for both competitors and suppliers. Size can provide retailers with the product offerings and price flexibility to help keep customers from migrating to Wal-Mart. It can also allow suppliers to drive their manufacturing and logistics costs down and give them more countervailing negotiating power." And to step in and try to subvert Wal-Mart's activities and/or stop the inevitable consolidation that follows, Solomon writes, would be to risk throwing the brakes on an economy that Wal-Mart is largely responsible for stimulating.
KC's View:
We are neither investment banker nor economist. And we realize that in the pursuit of low prices and low costs, the economy in some way is being helped.

But we cannot help but feel that something is being lost in this eternal search for the "dampening of inflationary pressures" and the creation of "mergers, acquisitions, sales and liquidations among competitive retailers and domestic manufacturers."

Such a cold way to refer to the magic of the retail experience. Maybe it's because we're in London, a city we've always found to be romantic. Maybe it's because we are, in the scheme of things, sentimental. But we are saddened by where retail is going.

We can't help it.