business news in context, analysis with attitude

Regarding the decision to allow Wal-Mart to open a single store in Chicago, MNB user David Livingston wrote:

Odd how certain anti-Wal-mart groups are screaming about them opening some new stores. In the cab ride back to Union Station from the FMI conference a few weeks ago, I saw a new Target under construction just south of downtown Chicago. It looks pretty cool being multi-level and a parking garage. I don't recall the neighborhood complaining about them. As far as I know they don't pay any better than Wal-Mart or offer better benefits. I wasn't that long ago that Kmart was closing stores in Chicago by the bushel.

Are the job that Wal-Mart is bringing in worse than the Kmart jobs that disappeared? Doubt it.

MNB user Al Kober wrote:

The "poor residents of the area who need both jobs and inexpensive shopping alternatives", want Wal-Mart and the not so poor who already have a job are telling them what is good for them? No jobs for them and having providing an inexpensive shopping alternatives is a better lifestyle than a Wal-Mart. Who is looking out for whom?

MNB user James Curley wrote:

As a Chicago resident (the CITY, not the 'greater metropolitan area'), I can inform you that you missed my favorite part of the story. As reported in today's Chicago Tribune, the southside Wal-Mart proposal was defeated not because of anything Wal-Mart had done in its tactics, but because the junior alderman (city council member) in whose ward the southside store was to be located, didn't 'respect his elders' in the council (the other southside aldermen and alderwomen) by offering to support them in some pet project of theirs, thereby assuring their vote. The senior alderwoman who did get the Wal-Mart in her ward knew the rules and her zoning issue sailed through. Wal-Mart, Schmal-Mart...this was totally about local power brokering.

Just thought you'd appreciate a little local insight into "the Chicago way" of getting things done. Wal-Mart may be playing hardball, but they got nothing on the Chicago City Council, whose legendary tussles once caused our fair city to be nicknamed "Beirut on the Lake."

Reminds us of the great line uttered by Sean Connery (and written by David Mamet)in “The Untouchables”: "If he pulls a knife, you pull a gun. If he sends one of yours to the hospital, you send one of his to the morgue. That's the Chicago way…”

We also got a lot of email about Costco’s approach to wages, which CEO James Sinegal describes as paying workers more than other retailers, getting a lower rate of turnover, spending less on training new employees, and keeping its labor costs lower than even Wal-Mart’s as a percentage of sales.

One MNB user observed:

Sinegal understands how to tap into the "human resource". All things being equal it's the quality, focus and motivation of the people in the organization that make the difference.

MNB user Bob Wheaton wrote:

Costco should be congratulated for recognizing the greatest resource for a company is its "human resource" and the impact managing that component as an asset instead of as an expense.

Companies recognizing the need to pay a living wage, (which is vastly different from a minimum wage) if managed properly can and should create a company's position as a preferred employer.

What is wrong with paying a living wage, reducing turnover, lowering training costs and allowing managers to manage? The "cost" monthly valuation against the Dow Jones follows a generally similar pattern of ups and downs and stabilizing the in the past year.

Maybe Costco is on to something. Business Week was singling out Jim as a
premier leader.

(Being a journalist, we have some familiarity with being seen by management as a cost as opposed to an asset. Management generally tends to be made up of former sales people who forget that without content from writers, the sales people have nothing to sell. This generally leads to uninspiring journalism and sales people who know a lot about their page rates and little about the subjects their magazines cover. But that’s just our personal kvetch…)

Another MNB user offered:

I completely agree with much of what you said about the fact that both models work but work differently. Where I see the biggest separating factor is that of what we could call "good vs. evil". Costco of course would be the good and the behemoth the bad. The reason I state it like that is because in the eyes of the communities they are in, their employees and even their shareholders, Costco is good! Some Wal-Mart shareholders may say that Wal-Mart is helping, if that is true then why are there roughly 100 actions against the company ranging from the immigrant scandal to devastating wages on a monstrous scale. You don't hear about that with Costco. Wal-Mart’s business philosophy is based on pure, unbridled, unsatisfied greed. They don't care who they hurt as long as they are on top...of everything. Costco on the other hand wants to expand and does compete with Wal-Mart but does try to basically suck up all the jobs in the retail community and move on to the next town.

Also, Costco has done a few things to really set itself apart from the Bentonville Basher. The most interesting is the recent addition to their website of fine art. I thought you of all people would have at least commented on that. The art isn't cheap, some pieces are as much as $15,000.

Now that doesn't sound like a discount warehouse to me. Again, a way to separate themselves. Your comments in regards to devaluing the American worker and work ethic were, I believe, right on target. Speaking of, there is a store that Wal-Mart could take some pointers on how to treat its workers.

Target is one of the best. When all is said and done we basically end up back at the same point, Wal-Mart is a big bully and until one or a few companies stand up to them and knock them down a few times things can only get worse. The shift in the economy is happening and the growth of Wal-Mart has been a big contributor to that. Pretty soon the middle class of the last 50 years will be gone, and we will be in big trouble.

In our own defense, we did run that Costco/fine art story. But hey, at something like five thousand words a day, it’s hard to keep track.

An MNB user criticized us last week for a story noting that a number of retailers, including Wal-Mart, RadioShack and Dollar General, are facing lawsuits “accusing them of using low-level managers to do the work of regular employees, in order to avoid paying overtime.” We’d seen the story in that day’s Wall Street Journal, but the user accused us of reporting “old news.”

One MNB user wrote:

It was on page 1 of the Wall Street Journal. It isn't same old any more!

Our industry practices are getting more and more attention and the more complex they are, the less appreciative anyone is going to be.


Had a story last week about how cilantro apparently helps prevent salmonella and prevent food poisoning, which led MNB user Denise Remark to remark:

No doubt people in hot climates who use cilantro in regional foods- Mexican & Indian--"discovered" this, though not scientifically, thus reducing= the incidence of food-born illnesses prior to refrigeration. Best of all—it tastes great! I grow it in my kitchen-garden & once it goes to seed- coriander--enjoy that in many dishes too!

Had several stories last week about both Wal-Mart and Tesco targeting China for growth, which med MNB user Len Lewis to write:

China is a fascinating market. Everyone wants a piece of it for obvious reasons. But the Chinese still make the rules. They sit back and watch everyone battle it out, then take a nice chunk of the action from the winners.

Also keep an eye on Russia. A money losing proposition for most at the moment. But a potentially lucrative market.

We had a story last week about how Kroger, Meijer and Giant Eagle are seeing strong success with various programs that offer shoppers discounts on gasoline purchased at the chains’ own petrol stations – a high effective sales tool in a time of seemingly out-of-control fuel prices.

The programs offer discounts or rebates on gasoline sales linked either to the purchase of specific products from the stores (funded by the manufacturer) or to simply reaching a certain transaction level. According to the companies operating the programs, not only are consumers beginning to choose supermarkets based on the gasoline discounts, but there is burgeoning interest on the part of manufacturers in funding such initiatives.

MNB user Linda Gobler wrote:

There is a bill pending in the Michigan legislature that would prohibit this practice, know as cross merchandising or cross promotion. The Service Station Dealers are trying to compete against Wal-Mart...sound familiar, and they think the only way to do it is to set an allowable price for gasoline and prohibit incentive programs. The problem we have is with the cross promotion prohibition. To keep retailers, large and small, from using this age old method of marketing reeks of government control and is a very slippery slope.

In our commentary about this story, by the way, we wrote that “we’ve noticed a couple of Costco gas stations recently with long lines at their gas pumps…which seemed like a pretty obvious choice if you’re looking for less expensive gas.

“Though it is all relative. We also saw an independent gas station the other day with a line down the street…all because it was selling gas for $2.15 per gallon for regular unleaded. $2.15! Everyone else on the street was $2.22, and that nickel per gallon was perceived as a real savings.”

Which prompted one MNB user to observe, quite rightly, that:

If you think the difference between $2.15 and $2.22 is "a nickel," I think I'm beginning to understand the nature of the problem.

Point taken. The old mental calculator just wasn’t working very well last Friday. (Or most days, for that matter.)

Finally, we made reference last week to a battle between Tesco and Wal-Mart as being akin to James Bond squaring off against Buford Pusser.

This generated some pretty funny emails.

MNB user Richard Gramza wrote:

Tell the Limeys that if they see a red neck with a big stick coming to the dance they might want to head for the back door.

MNB user Rick Parmelee wrote:

As suave as James Bond was and the assorted gadgets he had at his disposal, I have to go with the country boy Buford. Buford always walked tall, carried a big stick, and took no prisoners. Wal-Mart does just this and will continue do to so, whether we like it or not.

Another MNB user opined:

Buford Pusser -- Sprawling stores that are usually grimy, with lots of empty spaces on the shelves because they're too short-staffed to keep up, and "lowest-common-denominator" products. Surly, underpaid staff. Long, slow checkout lines.

James Bond -- Enormous but well-organized stores, spotlessly clean, and always someone around to restock, front shelves, and dust (or God forbid, help you find something). Premium products at non-premium prices throughout the store. Friendly (yes, I know they're British, but they are friendly!) staff who don't look like they're struggling to make ends meet. Quick, efficient service.

Verdict: Rule, Britannia!

And another MNB user, noting that this was our second James Bond reference in a week, wrote:

It's becoming increasingly apparent that you were over-exposed to James Bond movies at an impressionable age.

You seem terrified by the "spectre" of Wal-Mart.

Actually, when it comes to Wal-Mart, we are stirred, not shaken.

Interestingly, not everyone got the Buford Pusser reference. A number of you thought that we were referring to a character who appears in two of Roger Moore’s Bond movies.

Buford Pusser was, in fact, the main character in a series of "Walking Tall" movies that first starred Joe Don Baker and then Bo Svenson. (He was based on a real character.)

The character some of you were thinking about was JW Pepper, a redneck sheriff (allegedly not based on a real character) who appears (regrettably, in our book) in both "Live and Let Die" and then in "The Man With The Golden Gun." He was played by Clifton James.

The sad fact is that we didn’t have to look any of this up.
KC's View: