business news in context, analysis with attitude

Got the following email from MNB user John Welsh:

I have enjoyed your MNB for several years, and I read it conscientiously every weekday morning., even comment occasionally. But, Kevin, entirely too much of the news, views and comments concern Wal-Mart and its trials and tribulations, successes and failures, comings and goings, etc.

I realize Wal-Mart is Godzilla of retailing right now, but is it news when every Tom, Dick, and Harry are issuing criticisms, plaudits and opinions about the topic of the minute concerning Wal-Mart?

Write less about Wal-Mart and more about other retailers or wholesalers who (do the math!) still do a hell of a lot more business than Wal-Mart. Betcha other readers feel the same way I do.

Wal-Mart aside, I still appreciate your daily reports.

Thanks for the note.

Believe it or not, there are days when Wal-Mart doesn’t get mentioned on MNB. (We treasure those days.) But here’s what we can’t figure out – which Wal-Mart story would we not write about? Because when we look at the various stories, we’re not sure which one would best be ignored.

But we’ll work on it. We promise.

At the risk of annoying you, we did this email about our observation that perhaps Wal-Mart needs to look into alternative formats as a growth engine:

KC, you are right, Wal-Mart needs to explore alternative formats. With the near extinction of the conventional supermarket, there are endless opportunities for Wal-Mart to take over the existing shells of these stores. Florida would be more exciting if Wal-Mart were to take over the Winn Dixie and Albertson stores. If they can figure out how to bust the unions, Ahold, A&P, Supervalu, Marsh, and others, could find an easy way to discard underperforming stores.

Wal-Mart is still building a few hundred new stores anyway. Just one year's worth of new store growth is the size of many current chains that took a 100 years to get where they are at. Perhaps someday they will stumble. Their stock price doesn't seem to be going anywhere and it appears that it is the least of Wal-Mart's concerns. The growth in their stock price took place long ago and was probably a bit premature. Their stock price just got too far ahead of what it was really worth and it will take several years now for the market to catch up with Wal-Mart's stock.

And, on another Wal-Mart issue, MNB user Marv Carlson wrote:

Concerning your comments on the Wal-Mart unionization situation in Canada in today's blog - I have been more or less following the situation since they closed the Jonquiere store in Quebec in 2005.

1) In Saskatchewan, it is not just one store that it is applying for certification - it is 3. The store in the lead is Weyburn. However, Moose Jaw and North Battleford have now also voted in favour of unionization and are applying for certification as well. The Moose Jaw case is kind of ironic, because when Wal-Mart entered Canada in the 1990s they refused to buy the Moose Jaw store from Woolco because it was unionized (along with about 20 other Woolco stores). Wal-Mart built a new store there a few years later. Closing 3 stores in a small province such as Saskatchewan (with fairly high pro-union sympathies) is probably not a viable business option.

2) In Quebec, two stores have received certification - Saint Hyacinthe and Gatineau. Apparently, organizing campaigns are also underway at other stores. Binding arbitration is now well underway at Saint Hyacinthe.

The situation in Quebec is very complicated for Wal-Mart. The province is highly unionized and pro-union sympathies are very widespread.

My understanding from speaking to many people and from what I have gleaned from the press (English and French) is that Wal-Mart has paid a huge price for closing down the Jonquiere store in 2005. Wal-Mart gained a very poor image from that move – there was huge negative coverage in the press. They have continued to build a few stores in Quebec, but their growth in that province has apparently not been even close to what they might have hoped. They have had to continually spend huge dollars attempting to boost their image in the province.

From what I can understand, closing a second store in Quebec is not a viable business option for Wal-Mart. The incredibly bad PR received from closing Jonquiere is an experience that they really cannot afford to repeat. Closing another store might also create a whole host of legal problems for Wal-Mart.

3) On the other hand, the union (UFCW) has lost several certification votes in Canada as well. I know of a couple in British Columbia. What may happen is that you will find a few unionized stores in Wal-Mart locations in Canada, but the vast majority will remain union free. I rather doubt, however, that Wal-Mart will keep their chain totally union-free. They can use the courts to challenge the unions, but there is a massive risk for them if they make their anti-union campaign very public and visible - for example by closing stores. The environment concerning unionization in Canada (especially certain areas) is considerably different from the United States.

I continue to greatly appreciate your site, and read it virtually every day - even though I am now retired.

Thanks for the update and context. We all appreciate it.

Regarding our story about the FDA knowing – but not acting – on certain food safety risks, one MNB user wrote:

Maybe the FDA is hoping to thin the herd of consumers before they really take the lead in food safety. Less consumers mean fewer problems maybe.

Amazing how they can regulate us to death but when it comes to something that may actually cause death, they drag their feet or hide their heads in the sand.

We’ll worry when FDA approves Soylent Green for human consumption.

And, regarding the recycling of plastic bags at retail, and one MNB user's observation that Wal-Mart is the only retailer doing it, one Wegmans MNB user responded:

We've been doing it since 1990, with over 600 tons of them recycled in 2006.

Point taken. Thanks.
KC's View: