What you get and what you pay for
I just finished reading "The Wal-Mart Effect" by Charles Fishman. Good times.
Tell you what, read this book in NYC and people will come up to you to ask about it or share a Wal-Mart related tidbit with you.
It's a fast and engaging read. Fishman is careful to give Wal-Mart their props and perhaps the occasional benefit of the doubt and then just lays it all out there to the best of his ability. There are a lot of things that we don't know because Wal-Mart won't tell us. There are a lot of stories that people won't tell because Wal-Mart won't let them or they are afraid of the retribution that Wal-Mart might exact.
The discipline of Wal-Mart is truly amazing. And the ways they wield pressure to lower prices and cut costs is both wonderous and frightening to read about. The path from wonderous to frightening - Fishman would argue that it is all a matter of degree or of the scale of a thing. Too much of what you believe to be a good thing can yield unintended consequences that effect everything when writ large on the world.
There's a lot in this books that is just mind-boggling. I will probably have to reread it focusing on the numbers and trying to get a better grasp on their implications.
" ... Wal-Mart's total profit comes to $3 an hour over a typical year. So although there may be some dispute about whether the average Wal-Mart store associate earns $8 an hour or $9 an hour, Wal-Mart could not afford to pay those people $12 an hour. There isn't enough money - at least not without raising process." -Charles Fishman
That's the kind of thing that I have always wondered about. The margins are at times so narrow and the difference of a few pennies spread out over selling astronomical amounts of products is where the profit or the savings come from or the threat of bankrupcy.
"No company has more discipline or focus than Wal-Mart, but all that discipline and focus are designed to wring costs out and bring prices down." -CF
And this is not without a cost to the environment, a cost in labor conditions, in the wealth or poverty of communities world-wide, in the quality of our lives, in the quality of merchandise we buy and in the shift in reliability of the brands that we love. Costs that are passed on to governments, to the environment, to the customer, to manufacturers and suppliers.
"This is who we are! We bring truckloads of great stuff whole convoys of great stuff, to a Wal-Mart near you! What's not to love?
It is a moment worthy of Greek literature, a moment of soaring ambition and potentially crippling lack of self-knowledge. The problem is not that we don't adequately shower Wal-Mart with gratitude, kindness and acknowledgments, it's that Wal-Mart doesn't understand why we don't. Two months worth of disaster relief [After Hurricane Katrina] cannot undo a half-century's worth of other damaging Wal-Mart effects." - CF
Plus apparently while it is true that we save a lot of money by shopping at Wal-Mart it's a bit of a mystery to ponder what we do with that money. Clearly we are not saving or investing it. Where does it go? To buy more cheaply manufactured socks? To buy soon to be obsolete electronic products.
"Misperception isn't always perception - sometimes it's reality. Sometimes the way others see you is, in fact the way you are." -CF
Fishman says this of Wal-Mart could the same not be said for anyone or group?
There has been much talk of the potential for Wal-Mart to do good. At some point they might want to get out of the bargain discount game or they might want to take some of that considerable clout and control that they have a use it as a lever to change the world for the better.
"If cost isn't the ultimate question anymore, what are the important questions?" - CF
"There is no human adjustment harder to make than to abandon the very principles that have been the source of your success and adopt their opposites as the path to continued success." - CF
Change is hard for us all. Probably the bigger you are, the more successful you are - the more inertia you have. And the harder it is to see far enough ahead of you to the point of diminishing returns. The point where Wal-Mart might wring all the efficiency that it can out of retail. The point where they run out of room to grow. The point where their effect is of a mgnitude and seriousness that someone or something demands that they be held accountable. Will Wal-Mart be able to adapt or will they eventually hollow themselves out in the way they have hollowed out so many of the companies they like to call their manufacturing and distributing "partners?"
Charles Fishman rightly points out that in the 45 years is not a lot of time and the kinds of enormous corporations that exist today, Wal-Mart being the ultimate example, did not exist in the way they do today. Totally new animal. They are not a part of the free market. They in many ways own and control it. And we as human animals that share the planet with them need to figure out what can be done to help a company like Wal-Mart identify what "the important questions are," demand that they put significant resources into finding answers, and hold them accountable.