business news in context, analysis with attitude

We had a couple of stories yesterday about Wal-Mart, one of which detailed its expansion plans for 2004, and another that described the ripples emanating from its defeat in Inglewood, California.

In our commentary, we noted that “Wal-Mart’s opponents have to avoid thinking that they necessarily have the moral high ground. After all, this really isn’t about morality. It is about public policy. And Wal-Mart is a terrific example of American capitalism…though…sometimes democracy and capitalism live in uncomfortable proximity.

The Wal-Mart guys aren’t evil. They’re just unbelievably committed, and very, very good at their jobs.”

Not surprisingly, these comments prompted a range of responses.

One MNB user wrote:

I agree with your message…but not your verbiage. I don't see a massacre, instead i see a shake out of the inept operators who should've gone a long time ago.

Harsh. Probably true, but harsh.

Another MNB user chimed in about bills being considered in California that would force Wal-Mart to live up to certain pay standards in its stores:

You say Wal-Mart is a terrific example of American capitalism. This may have been accurate in the beginning, but they have gone past capitalism now. I used to work for a health product company who had Wal-Mart as one of its main customers. They could not afford to lose Wal-Mart, and Wal-Mart knew this. It was written in the contract that Wal-Mart would get the lowest price. The company I worked for also did business with Target, Kmart, Costco, Safeway, Albertsons, Kroger and the list goes on.

When Wal-Mart uses their power to insist on the lowest price for essentially the same product that the company is making for all these other retailers, I would say they're not playing in a free market anymore. Granted they probably were doing more volume than any of the other retailers the majority of the time, but they weren't always doing so yet always insisted on the lowest price. Wal-Mart made sure that we knew they could make or break any company. I don't call that capitalism; I call that a monopoly.

I live in California and applaud Inglewood's resolve. I like cheap prices just as much as the next guy, but I'm not so sure Wal-Mart is as cheap as they like to make out. California already has enough people living off the state; after all, it's very expensive to live here and seems to become more so every day.

House prices continue to rise, and it's unlikely that this trend will go down. I read somewhere that they expect about 25 million people to pour into California in the next twenty years. Supply and demand will keep the house prices high, which really means the price of the land high, and we don't need a company that refuses to pay for health care and pays the lowest wage they can get away with and plays around with even that.

I know someone who works at Wal-Mart. She said she was very happy working there because they regularly let her have extra hours. Her manager told her she just couldn't go over forty. She thought this was because then she'd be full-time. She always works between thirty and forty hours. Do you think she gets health care? She's technically a full-time employee, but they don't treat her like one. I had to explain to her that they don't want her to go over forty hours because then she could get overtime. She doesn't care, though. She only has a high school education and has few opportunities available to her. She's grateful to have the hours and won't complain because her family needs the money. How many people do you think are in the same boat? Wal-Mart doesn't just take advantage of the manufacturers; they'll take advantage of anyone they can. This is not the kind of company California needs, and I hope those bills get passed.

Another MNB user wrote:

I just have to comment that H. Lee Scott and the rest of the WM execs need to reread an important passage in Sam Walton's book that says "Wal-Mart will not go where it isn't wanted." I'm not sure how many current WM execs recall that passage or what it means.

There are a ton of communities who do not want Wal-Mart for one reason or another. Votes like Inglewood just drive Mr. Walton's quote home.

MNB user David Brewster offered:

I believe that Wal-Mart, while attempting to put forth a very moral and compassionate public face, is a superbly organized and run company that has a goal to enrich itself without particular regard - or caring - about what happens in its trading communities. By design or by result, the fabric of small-town America has been changed from downtown community focus, and all the associated moral values and heritage, to something else that no longer supports that base root of our historical physical community structure.

Is this good, or bad, or neither? Is this the result of a force of change, or is it the cause?

Berlin had its wall of stone (both real and symbolic) against which much of the "free world" raged, and it did come down. Is there a ground swell of discontent growing against our own American Wal? I think so.

Out of curiosity, how many public companies do you think have as their primary goal the enrichment of their shareholders and management without regard for “moral values and heritage”?

Just curious.

MNB user Bob Reynolds wrote:

One of the things that rings hollow in the Wal-Mart "Let's build a Supercenter" argument is the notion of jobs creation. Supercenters may employ lots of people but there are no net new jobs. There are no net new retail sales. There is not net new need for employees. It is all relocation -- relocation of sales -- relocation of jobs.

We may all be better off with greater efficiency and lower prices but nothing new is created when Wal-Mart comes to town except perhaps a traffic jam.

If Wal-Mart is as efficient as it appears to be, there may be net fewer jobs and almost certainly at a lower wage.

And finally, one MNB user observed:

Wal-Mart is society's cancer. Obviously you own Wal-Mart stock and don't give a **** about who gets kicked to the curb on your way to the bank.

For the record, we don’t own any Wal-Mart stock. And if you honestly think we don’t care about “who gets kicked to the curb” while we’re on our way to the bank, then, quite frankly, you haven’t been paying attention.

We also had a story yesterday about how Oakland residents are fighting a McDonald’s, which prompted MNB user John Tatum to write:

What ever happened to voting with your pocket book? It seems that local legislation is always in some way focused on serving the desires of a limited group of consumers, whose base concern is that the majority will support the new enterprise. If the existing stores / restaurants were really that good they would have no problem competing in the first place.

And MNB user Randal O’Toole wrote:

In response to the report of a neighborhood opposing a McDonald's to protect a local hamburger stand, you say, "it is, after all, what democracy is supposed to be about." Yes, and democracy is about whites lynching blacks, beating up Chinese, and refusing to hire other minorities.

Recall that, 200 years ago, "democrat" was a dirty word (similar to "communist" a few years ago) because no one trusted the majority not to oppress the minority. That is why we live in a republic, not a democracy, supposedly with safeguards to protect the rights of minorities.

That includes minorities who may prefer the taste of McDonald’s
hamburgers to Kwik-Way hamburgers; who may prefer to save money at Wal-Mart over shopping at Krogers, Albertsons, or Safeway; or who may prefer to buy meat that is guaranteed to be untainted by chemicals mad cow disease.

If the residents near Grand Lakeshore shopping district don't like McDonalds, no one will force them to patronize it. Let them buy their Kwik-Way burgers. Let Kwik-Way find ways to distinguish their product from McDonalds by providing better value, better quality, or better service.

The only true democracy is the market. You can vote as often as you want, if you vote "yes" on something you usually win even if you are in the minority, and if you vote "no" on something you don't have to pay for it even if the majority votes "yes."

We actually see both sides of the discussion about whether communities can and should have this kind of influence over the businesses that are built there. But we’d like to make two observations…

One, there is an implication in this letter that opposing certain kinds of retailing is the same as lynching black people and committing other kinds of bias-based atrocities. Which we think is incorrect…though we suppose you could argue that discrimination is discrimination. But resisting Wal-Mart or McDonald’s just feels different from lynching a black person.

Second, we think there are plenty of people around who still think that Democrats are Communists.

On a related point, yesterday we wrote:

Recently, we were out jogging with Mrs. Content Guy and when we went by a long-abandoned Howard Johnson’s restaurant, there were two huge signs in the windows: “Coming Soon: Hooters!”

Well, we quickly started to investigate, to spread the word among our friends and neighbors, to find a way to mobilize opposition to such a thing. (We found the idea of a local Hooters to be amusing, if not entirely appropriate; Mrs. Content Guy found nothing funny about it.)

As it ended up, the signs apparently were part of an elaborate practical joke. (And we have tremendous respect for the jokesters!) But for a few hours, we were part of the community of resistance. It was instructive.”

And it also was instructive to see the letters we got in response.

One MNB user wrote:

Geez, Kevin, does that knee hurt much from jerking so hard? This is spoken exactly like someone who has never been in a Hooters. I am relatively certain that the end of civilization will not come from short shorts, tight tops, cold beer, and pretty good Buffalo wings.

You deserved to be the target of a prankster.

One MNB user had a note for Mrs. Content Guy:

Let me get this straight, it means more to a neighborhood to have a long abandoned Howard Johnson’s than to have a new Hooters restaurant?

And another MNB user wrote:

NIMBY (Not In My Back Yard) kind of a guy, huh?

What's the big difference between HJ and Hooter's?

They're both restaurants. One just serves you in a more appetite appealing fashion.

And yet another MNB user wrote:

Sorry, Kevin, I'm not sure I understand this one. I realize that the whole thing was a hoax, but let's take a look at this:

You have a deserted building in your neighbourhood. This tends to attract kids and vagrants who are up to no good, and it's just a flat-out eyesore, with the weeds growing tall through the cracks in the parking lot, the general decay of an unused building, peeling paint, abandoned vehicles, etc., etc., etc.

Had this not been a hoax: Someone wants to come in and make it a restaurant serving beer and pretty good (NOT great, sorry) chicken wings and beer, lots of TVs to watch the game on, and waitstaff comprised of attractive young women wearing shorts and tank tops (legs covered by dance tights, by the way). Their attire is not nudity by ANY stretch of the imagination (walked down a street in the heat of summer lately?), and they are waitresses only -- not floozies, bimbos, tramps, or prostitutes. With very few exceptions, they know the menu well (sign of good training) and are friendly, fast, and efficient (more signs of good training). They are covered by the same sexual harassment laws as I am when I'm sitting here in my office. Moreover, the tips they earn (key word EARN) are considerably higher than working in nearly any comparable restaurant. I can't speak about the benefits, because I don't know what the benefit package entails.

The place will be remodeled, cleaned up, well-maintained, and busy. Aside from traffic issues (a valid concern) and the smell of fry grease (also valid if you live downwind), I'm not sure what the problem is with Hooters.

By the way, I do not and have never worked at Hooters, nor has anyone I know. I have seen waitstaff at Hooters who are drop dead gorgeous, and I have seen some to whom the fates were not particularly kind in the physical attribute department. I have seen girls of nearly every body shape and build, and have yet to have a run-in with a single one who has a bad attitude.

I don't eat at Hooters often for two reasons -- most importantly, there's not a franchise close to where we work or live, and second, to be blunt, their wings are not my favorite (that title belongs to Beef O'Brady's, another Tampa-founded sports bar franchise). But the fact that they hire attractive, friendly young women to be their well-trained waitstaff has never, ever been a reason not to eat at Hooters.

Well, we probably deserved some of this abuse…

A couple of quick responses…

We’ve been to a Hooters. Once. We were taken there by a supermarket guy. (He knows who he is, and he’ll probably smile when he reads this.) The food was okay.

Our objection to the Hooters was two-fold. (Actually three-fold. If we’d been in favor of it, we’d probably be sleeping on the couch.)

First, we were concerned about the traffic. The potential for snarled traffic would have been high because of proximity to I-95 and the Boston Post Road…and frankly, the HoJo was less popular when it was open. Is an abandoned building preferable? Of course not…but isn’t there a middle ground? (We were hoping for a California Pizza Kitchen…) We also would object to a Krispy Kreme because of traffic concerns, by the way…

Second, we have a daughter. She’s nine. And we’re just not sure that Hooters is the kind of joint we want around the corner.

Maybe we’re wrong. It isn’t a simple issue.

In a story yesterday, we wrote that McDonald’s plans to expand the number of restaurants in which it offers Wi-Fi service to “thousands” of restaurants within the next year. McDonald's has been testing Wi-Fi in roughly 300 of its 13,000 restaurants.

Our comment: We think that any business that wants to attract customers for any period of time ought to have Wi-Fi access. We’re starting to get to the point that we’re choosing where to go for coffee based on Wi-Fi availability…it’s all part of staying connected.

MNB user David J. Livingston responded:

For a guy who spends most of his life on the road with a lap top, this is one way to get me in your store. But I don't want to pay for internet when many coffee shops and libraries have it for free. If McDonalds wants to impress me then they better offer it for free like it was a cup of water.

We actually think that free wireless will be the next step for chains wanting to differentiate themselves.

I can just picture using the Internet with the kids running around yelling and playing in the indoor playground. I think staying connected means more than the Internet. How about staying connected to your kids or the world around you?

A legitimate point.

MNB user Bob McMath chimed in:

I think you're right about tying in with the Internet in more places, but I have to admit that it isn't a very pleasant thought. We as a people have already become so attached to the telephone that we must carry one around with us so we can talk everywhere including restaurants, in the bathroom, in our cars, and often in concerts and churches, etc., etc. Now we can't go to lunch or dinner without hooking up with our E-mail, too?????

How on earth did we ever get the world around us to run in the old days without being available to direct it through local contact 24/7? We were on the West Coast for several months, and had our New York phone direct calls to my wireless. It was a rude shock morning after morning to get calls at 6:00 AM in California from credit card or telephone companies or cable TV operations all trying to get us to sign up for new services!!!!

Now do I have to tie-in my E-mail to my lunch hours, too?

Another MNB user wrote:

Is it necessary to ALWAYS be connected? People managed before cell phones...I would think they could get along for a couple of hours without the Internet also. I tend to think this is going a little far when you need to check e-mail at McDonald's.

Regarding our coverage of the illness of Kraft CEO Roger Deromedi, MNB user Chris Kuplack wrote:

I don't have any details at hand about Kraft's corporate personnel structure, but it seems that the hospitalization of the head man should really not be such a big deal. After all, how many VP's and directors does a company the size of Kraft have on the payroll? I'm guessing there are hundreds of them. Does everyone need to check with Roger before running the quality control check at the plant, before loading the next truck for it's journey to the retailer's warehouse, before making the sales presentation on the new mayonnaise squeeze bottle line extensions, before hiring a new server technician, before going to the bathroom?

Where I work, the top leadership provides exactly that: leadership. They shape the vision and set the direction. The rest of us are competent at executing the vision and getting the company moving in that direction, with the intent of surpassing whatever goals define the realization of the vision. If we can't do that without the constant presence of the top people, then we shouldn't be working here. If Kraft's top person hasn't been effective enough at communicating the company vision and setting the direction that his people can function for an extended period without him, then perhaps he is the one who shouldn't be working there.

On the subject of the USDA deciding that a private slaughterhouse should not conduct private testing of all its cattle for mad cow, one MNB user wrote:

The bottom line in this is that the government agencies are caving to pressure from mega-producers who do not want to step up and test all beef due to the cost involved. Simply put, Creekstone will have a competitive advantage if they are permitted to proceed with testing. They might even be able to export where their counterparts would not be able to. Sounds to me like they are adjusting their business model to meet the demands of the market and the government is restricting free trade. They should sue.

On the subject of continuing calls for the reimportation of inexpensive prescription drugs from Canada to the US, MNB user Jane Graves wrote:

I just don't get this ongoing debate. Everyone's trying to decide whether or not to get drugs from Canada, but no one seems to be asking why it is that the drugs are so much cheaper there than here. What is Canada doing which allows its prices to be so much less expensive? Is it the ban on marketing? Lack of premiums/gifts to doctors? We should be trying to figure out why the Canadian program is so successful and copy them. It's the American way, after all.
KC's View: