The Other Superpower: Wal-Mart

This article about Wal-Mart is incredible. I knew that the retailing giant rode its suppliers hard—witness the RFID mandate and deadline—but I didn’t really grok the squeeze they put on them. I don’t fault them for it: after all, the loss of an American job to a foreign company means that more money is being made by the American company and that money doesn’t just disappear. Plus, the reduced costs mean reduced expenditures by consumers, which means that you can do more with less. And Wal-Mart has certainly been at the forefront of that!

Sure, there’s a certain nostalgia for small Mom-and-Pop businesses. There was a nostalgia for small farmers as well, but that’s pretty much passed as consumers enjoy the bounty of agribusiness. Wal-Mart is essentially saying to the American consumerate: resistance is futile. Those same people are obviously spending quite a bit at Wal-Mart since the $250 billion in sales has to come from somewhere.

[UPDATE: My friend Larry (who apparently doesn’t like using the comments function I provide. *ahem*) said what I should have said except that I rushed this entry during my lunch hour:

Now, if Vlasic wanted to avoid the “distortion” of every aspect of its operations it could just say, “Hmm…well, no thanks, we don’t want to sell pickles at that price because our brand is more imporant.” Yes, they’d lose the whole Walmart account, but that’s the nature of the thing. It was hardly Walmart putting pressure on Vlasic. It was Vlasic putting pressure on itself to expand via Walmart, even if it meant cannabalizing their other sales and eroding their margins in a way that was ultimately self-defeating. It was a strategy. If they really wanted an exclusive brand they could stay away completely from big box stores and sell pickles for five times the price from organic cucumbers and whatnot.

Anyway, I understand that it sucks to work with a customer who is so demanding that it’s almost not worth doing business; or to get oneself into a position to compete for that business that you’ll then fail if you turn off the spigot down the road. It’s a very upsetting circumstance, but Walmart is nonetheless an unmitigated good—and it’s alleged bad behavior is a key component of why it’s good.

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