business news in context, analysis with attitude

Okay, here goes…

Earlier this week, MNB posted an exclusive two-part e-interview with Al Norman, who has created a second career out of documenting the negative implications for American business and culture of Wal-Mart’s unbridled growth, and helping community activists develop action plans.

In his new book, “The Case Against Wal-Mart,” Norman constructs a multi-layered case against allowing the retailer to grow unfettered, suggesting the numerous ways in which Wal-Mart’s “sprawl” is a phenomenon worth examining.

You can read Part One of the interview by going to:

http://mnb.grocerywebsite.com/archives/2004/04/26.html#MNB1

You can read Part Two of the interview by going to:

http://mnb.grocerywebsite.com/archives/2004/04/27.html#MNB1

Needless to say, an interview like this expressing opinions like Norman’s will generate a lot of opinion on both sides. Let’s start with the members of the MNB community who found flaws in Norman’s arguments.

MNB user Andrew Casey wrote:

I really don't get the focus of Norman's anger - what did Wal-Mart ever do to him? Is he against people saving money on their purchases or is it just big business that ticks him off? Does he feel the need to be a advocate for the downtrodden Wal-Mart employee, many of whom just happen to love their job? Has he given any thought to what the one million or so people Wal-Mart employs should do to feed their families if Wal-Mart's business goes away? How about the impact on a somewhat fragile U.S. economy if they are regulated into slower growth?

Let me say right now that I am no fan of the Wal-Mart shopping experience and shop there only infrequently. Most of the time when I go in I am doing so primarily to see what has changed since my last visit. I feel the same way about some of the other large national retailers, department stores and in particular, suburban malls. But unlike Norman, it really doesn't bother me that other people like to shop there and do so regularly.

The boys from Bentonville are certainly not corporate angels from on high. But they aren't evil incarnate either, and frankly, not all that unique. They try to get the best price possible from suppliers, pay employees the minimum they will work for and use the legal process to get their way in the face of community opposition. They didn't invent any of those tactics and the big chains were using those same methods when Sam Walton was still working at Ben Franklin. Criticizing them for being more proficient at achieving their goals than many of their competitors smacks more of jealousy than a logical argument.

As far as the "damage" Wal-Mart is doing to America, we could bat that back and forth forever with each side alternately quoting a positive and negative fact. It is a pointless exercise producing no results (except perhaps, frustration) and changing no one's viewpoint in the end.

The bottom line is simply this: Wal-Mart, like every other retailer that has been or will be, ultimately will get exactly what it deserves from the marketplace. Either continued customer loyalty and success because it consistently met or exceeded its customers wants and needs or failure because it didn't. For me (and apparently, Mr. Norman) it falls short on several counts needed to earn my business. But for the literally hundreds of millions of people worldwide who shop Wal-Mart regularly for whatever reason, it seems to be working.

Isn't it more than just a little arrogant to insist they are wrong for doing so?


Another MNB user wrote:

I found it ironic that today's Wal-Mart article was followed by an article on promotional spending (being investigated by feds). What I found missing from the Wal-Mart articles was any mention of the suppliers to Wal-Mart.

There were references to consumer's empowerment being able to stop Wal-Mart. Well, why not supplier's empowerment being able to stop Wal-Mart. The reason is that many, many suppliers rate supplying Wal-Mart as a much more favorable
and profitable experience than supplying other retailers. The manufacturer doesn't have to give Wal-Mart the phony moneys of slotting, promotional allowances, mdf, rebates, accruals, you name it, along w/receiving the hundreds of unauthorized deductions that other retailers take on a weekly basis. The supplier only has to give Wal-Mart a good price. Don't believe that suppliers are always selling to Wal-Mart at prices lower than to other retailers. By the time a manufacturer adds in all the phony moneys they have given the retailer in order to "pay to stay", it's very often that selling to Wal-Mart produces a greater profit to the supplier than when the supplier sells to other retailers.

Al Norman would like to stop Wal-Mart? Then get the other retailers to set up an honest buying shop like Wal-Mart's.


Another MNB user observed:

Norman didn't answer the question, why Wal-Mart employees refuse to unionize.

I try to shop the local merchants in my small community as often as possible but I pay more, don't have a large selection to choose from, and usually can't find particular items because they're not stocked. Or, I could drive 20 miles to the nearest Wal-Mart and get almost everything on my shopping list for less money and in one store.

I've asked several Wal-Mart employees why they put up with part-time work, low pay, and no health insurance. "That's all they offer", or "There aren't any other jobs" are the responses I get.


Yet another member of the MNB community wrote:

After reading you interview with Al Norman, I'm left with a funny taste in my mouth. I agree wholeheartedly that men like him should be given their soap boxes and be allowed to preach to anyone who wants to hear them. But, what's unclear to me is why he is not looking at the bigger picture of how Wal-Mart fits into American society. Things to consider:

- Wal-Mart will never be on Fortune's top 100 employers list because they are not paying to be a part of it. If you look at the fine print on any kind of rankings, a certain fee is paid to researchers to look into what makes a company great. Furthermore, I have worked for companies on the top 100 list and came to the conclusion that most people don't view their workplace on a global scale — their work experience is only as good as their manager. Crappy manager means your work life sucks, no matter how good the proverbial "company" looks.

- Nearly half of the workers in this country are employed by companies that have less that 75 workers, and most have less than ten. This means that nearly half of this country is functioning without employer provided benefits. Maybe we should work on getting healthcare for every worker, not just Wal-Mart’s.

-As long as people lead the fast paced lives that they do, working moms are always going to shop at Wal-Mart, no matter what the global impact. Wal-Mart, if nothing else, is convenient. You can buy every household need there, which eliminates the multiple stops that someone would have to make if they don't have a Wal-Mart. With the rising cost of gasoline, the less distance you have to travel to get what you need the better.

-There is nothing new about Wal-Mart. It is following a long American tradition of exploiting the worker for financial gain. It is not that much of a stretch to call it a modern day plantation (aside, why is there relevance given to that statement because it was said by a black man?) To this day, corporations in American are benefiting from profits made by the use of slave, migrant, and immigrant labor. Unless we're willing to discontinue the use of sugar, tobacco, meat, steel, rice, or cotton, why should we limit the discussion of exploitation to just Wal-Mart?

And finally, if it's not Wal-Mart taking money, it's going to be some other huge entity. Over priced designer clothes and shoes, ridiculous mark ups on prescription drugs... unless I go live in a tree in India, eating no more than the dates that I can reach, I'm going to be financially raped by someone. At least with Wal-Mart I know the prices are cheap.


Another MNB user wrote:

It still amazes me why customers continue to flock to WMT to buy what they want at very low prices. You would think that they would listen to the astute critics that you seem to enjoy featuring daily and start shopping at the inefficient retailers who are victim to WMT and our terrible system of free enterprise. Fortunately, the people who count, the customers, are too busy shopping to read such nonsense.

Still another member of the MNB community wrote:

Mr. Norman certainly can take a basic statistic and turn it into something that appears evil. Although he has a right to his words, his twisted view is dangerous.

First, Wal-Mart provides a valuable service to middle America. Value. A very large population base in this country needs low prices on staples and other household goods. They are not complaining. The only segment of the population complaining about Wal-Mart ever, are the companies who haven't figured out how to differentiate themselves enough to compete with Wal-Mart; The manufacturers who are not efficient enough to service them; and the people who create fear by exploiting them. I don't hear many customers complaining.

Second, there are a number of great retailers who are smart enough to differentiate themselves and coexist. Again, this provides a valuable service to the customer. Wegmans, Target, HEB, Publix, Galyans, etc. all exist in Wal-Mart markets and the need to stay on top of the game to continue to thrive is ever present.

Third, Mr. Norman's statement about "every year at least 40% of their workers quit." Is he serious? The industry has a 110% turnover. Wal-Mart has 40% is this supposed top be a negative?

If everyone spent as much time on understanding their customer as Wal-Mart does, and providing what the customer wanted, instead of being VICTIMS, this would be a non issue. Wal-Mart has been allowed to grow and prosper because others are asleep at the wheel.


And another MNB user wrote:

I read with interest your interview with Mr. Norman. From first hand experience having annexed, zoned and built a Wal-Mart Superstore in the face of Norman's personal opposition, the man is a fraud. His source of income is derived from spreading fear and hate. His "facts" are always presented with spin that boarders on a outright lie. His con is to entice those opposed to Wal-Mart in a given community to pay him to come to their town to tell them the monster will get them if they don't follow his advice[for a fee]. What a load of trash he sells to the fear driven few and what a load of cash!

MNB user Andrew Cookson wrote:

Having just read your interview with Al Norman on Wal-Mart, I would like to raise the following points.

The questions being asked in the US about the Wal-Mart phenomenon are to a large extent reinventing the wheel. Most of it has already happened in Europe, and particularly in France, where large hypermarkets (>100K sq ft, 50% non-food) have radically changed the retail and supply structure since the early 70s. In other countries, where there was already serious competition from other formats - hard discount in Germany, "Tesco" style retailing in the UK - introduction of the hyper has had less success.

By the time the French authorities had understood what was happening, the damage had effectively been done, and small scale grocery retailing had been effectively wiped out. Only then did the authorities introduce very strict planning permission for new store building and extension, as well as legislation forbidding selling at a loss. This did stop more large store building, but the market was by then pretty well saturated anyway. So the real effect was to make a lot of rich and powerful hypermarket owners a great deal richer and more powerful.

What is interesting is that the large hypermarket in France is now in crisis. Not because of any government or union or supplier pressure (suppliers have had little to say in the matter for many years), but because consumers are loosing interest. They are discovering that the large format is really very INconvenient, and that price certainly isn't everything when food only represents 15% of your household budget.

In fact, there is very good reason to believe that the large hypermarket in its current form in France has now reached the top of its product lifecycle. We are seeing shoppers visiting more stores each week than ever before, and the concurrent upswing in the use of C-stores and above all in Aldi-style hard discount is no accident.

Placing US Wal-Mart in this context today depends on where you situate its "large format - discount - working for consumers" development on the store format's life-cycle. But even accepting that there will be important regional differences in the US, it looks from an impartial European's point of view that the Wal-Mart phenomenon has a long way to go yet before it hits the top of the curve.

The errors committed in France over the last 30 years make it crystal-clear to me that rather than trying in vain to stop a phenomenon that consumers want and that makes economic sense to them, it would be better for all concerned to learn from European experience - and there is a lot of it - and to concentrate on ways of "humanizing" the inevitable, rather than blindly opposing it (on moral or any other grounds) or pretending it won't happen.

The impact of one or a few nationwide, highly structured and efficient mega-retailers will go far beyond just squeezing the existing retail trade, some of whom may indeed deserve squeezing. It will completely change the balance of power along the whole food chain, affecting brands and market shares, agriculture and processing in ways yet unseen in the US.

Here at least, the US should watch "old" Europe and learn how to avoid the worst in what is probably going to happen anyway.


MNB user Trent Gruenwald wrote:

Long-time reader; first time writer. Great topic. Love the site.

As I am sure many others are doing I would like to comment on the e-interview with Al Norman. Al's comment that he recommend retailers focus on rezoning to "restrict the size and frequency of big box stores" is a horrible long-term strategy to beating Wal-Mart. While rezoning would be effective in hedging Wal-Mart's potential impact (positive or negative) on a community it does nothing to address the fundamental business question each retailer in America (and the world) needs to answer -- What do I represent to my customers?

Retailers need to identify their customers' needs and find ways to meet those needs. Focusing on rezoning to keep a competitor out does nothing to address customer needs. If more retailers would figure out what their customers needs are, develop a plan to address those needs, and execute the plan, they would not have to be so worried about losing customers to Wal-Mart. While it is probably impossible for a retailer to Wal-Mart-proof itself, it is possible to build customer loyalty that is so strong it will be difficult for Wal-Mart (or any competitor) to take those customers away. It just takes a lot of work.

Al is right in that "competing with Wal-Mart does not begin with the ribbon cutting on the superstore" but instead of focusing on zoning codes, focus on the consumer!


We would agree with this. Enthusiastically.

MNB user Dean Parker wrote:

I have not read Mr. Norman's book. I shall do so. I heartily concur with Mr. Norman's philosophy that the mighty "wal" will eventually crumble and fall. The sad part is that the "fall" when it occurs will put the Enron debacle to shame! The number of institutions that hold Wal-Mart stock as part of their portfolios will cause many of its small individual investors to suffer great financial hardships.

Many will lose much more than they can afford. Time tested reluctance to rid ones self of a "loser stock" will once again happen. The "big" investors will read the writing on the wall and cut their losses. The little guy and the institutions they invest in will unfortunately ride the stock down.

It will take a long while for this demise to occur, but it will. Too many negatives, too much power, too much arrogance. "Pride goeth before the fall".


Another MNB user wrote:

Challenge the critics of the Wal-Mart critic (and a point not covered in your Q&A) with war stories of Wal-Mart's abuse of small manufacturing businesses -- their vendors and suppliers -- here in the U.S. It is no secret that many vendors refuse to step foot into a Wal-Mart store except on company business because they've been so manhandled by the chain: duplicating product ideas; stealing merchandising designs; lying about sales data; withholding fees; etc.

There is no recourse against Wal-Mart. No one can afford to sue and even if you did, everyone who works with you would be cast into retail darkness.

A focus on community opposition to Wal-Mart is a cliche. Truth is, some of these people come off as cranks, especially against the backdrop of the 60-80 million other Americans who are happy to flock into a Wal-Mart every week.

But ask small manufacturers and designers in this country -- off the record -- and I think you'd be surprised by the ferocity, legitimacy and unanimity of disgust with Wal-Mart business practices.


On the other hand, it seems to us that there are numerous manufacturers who say that Wal-Mart is one of the few retailers who does what it says it will do, and has little red tape to cut through. Not easy to work with, but very precise and great and follow-through.

And yet another MNB user chimed in:

I have lived in small towns and watched what Wal-Mart does to a small towns economy. The downtown area with all the local chamber members who sponsor all the local events and organizations that make a small town a great place to live all disappear. The little league park becomes run down and the schools have no one to ask for much needed donations. The small retailers who use to be the town leaders disappear and you now have to buy junk rather then quality products or drive 50 miles to a bigger city. Instead of having $10.00 a hour jobs they all become minimum wage jobs and half the town needs government assistance. If you drive through Arkansas you will see how they wiped out small towns and then close a existing Wal-Mart every other town and make people drive 50 miles to shop one of there filthy super centers. The American people will eventually figure them out and then they will be the next Kmart of the future because we will all want quality, cleanliness and a store that appreciates it's customers and employees and is a proud member of there community.

It’s interesting. We had a conversation about this subject with a friend yesterday, and he observed that people like Al Norman and companies like Wal-Mart are each high polarizing – you either love ‘em or hate ‘em. But there’s no in-between.

But we’d disagree. Because we’re in-between.

We think Wal-Mart is neither St. Thomas Aquinas, nor Satan. And the same goes for Al Norman.

Now, part of this is because we are a spectator by profession. But part of it is because we try never to forget that Wal-Mart is like every other great American company…just better at formulating its strategies and hitting its goals.

Is there a potential economic, cultural and even political downside to so much power being centralized in one entity? Of course. Does a citizenry that essentially gives this power to Wal-Mart by shopping there deserve what it gets? Absolutely. Does society benefit from having people like Al Norman shouting in the wilderness, talking about what they perceive as shortcomings and potential problems with the growth of a company like Wal-Mart? No question.

As we’ve said before, read the book. Then form an opinion. And, as Dean Martin used to say, keep those cards and letters coming in, folks.

You can order a copy of “The Case Against Wal-Mart” by going to:

http://raphel.com/
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