Great Articlle About Wal-Mart's Influence on Economy and Suppliers

[Dynasty]

Here's the link:

http://www.fastcompany.com/magazine/77/walmart.html

Here's the strange thing. The article sometimes puts a negative slant on Wal-Mart's impact. Yet, I loved every part of what I was reading about Wal-Mart's activities. The overall impact of Wal-Mart has been a huge postive.

[bigpooch]

Good article about WMT and its relationship to suppliers.
If consumers demand better prices, it just means WMT will be
a major pipeline for imported goods.

[adios]

Yep I agree with you that Walmart has been a huge positive. Economies of scale drive Walmart average costs way down. How can it be bad if people can buy food and clothes cheaper as well as many other items cheaper? It's not like people don't have a choice or that other retailers aren't doing well either. For instance in the grocers group something like Whole Foods is doing quite well. Even Costco is doing fine. Plenty of upscale retailers in clothing are doing well. Target a direct competitor is doing well. Consumers have a choice.

From the article:

Says Steve Dobbins, president of thread maker Carolina Mills: "We want clean air, clear water, good living conditions, the best health care in the world--yet we aren't willing to pay for anything manufactured under those restrictions."

That's total bull.

Factories Sizzling But Jobs Still Elusive (http://biz.yahoo.com/rb/040202/economy_2.html)

an excerpt from the artilce from 2/2/04:

Manufacturing in the United States surged to a 20-year high at the start of the year as factories scrambled to meet demand, while consumer spending increased modestly during the holidays, reports showed on Monday.

A twenty year high for crying out loud and I think this directly refutes what the Carolina Mills exec assers in the article.

Another excerpt from the article about manufacturing:

Even though the economy has picked up in the past six months, robust hiring has been the missing link in the recovery. The risk is that if the job market does not improve, consumer spending could falter.

My comment would be thank goodness for Walmart that allows consummers to buy non durable items at ever lower prices. Cheaper prices for non durable items has allowed consummer spending to remain relatively robust.

Anyway for those that don't want to use the link here's the article about US manufacturing:

Reuters
Factories Sizzling But Jobs Still Elusive
Monday February 2, 4:16 pm ET
By Victoria Thieberger


NEW YORK (Reuters) - Manufacturing in the United States surged to a 20-year high at the start of the year as factories scrambled to meet demand, while consumer spending increased modestly during the holidays, reports showed on Monday.
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Even with improved factory production, however, manufacturers remained cautious about hiring, dampening hopes for a turnaround in production jobs.

The closely watched Institute for Supply Management's manufacturing index rose to 63.6 in January -- the highest since late 1983 -- from a revised reading of 63.4 the prior month. That was shy of economists' expectations of a rise to 64.0.

"Manufacturing is in a cyclical upswing at the beginning of 2004, and is poised for further growth over the coming months," said Bear Stearns Chief Economist John Ryding.

Stocks initially fell and Treasuries rose on the slightly softer-than-expected report. But they reversed those moves in afternoon trade. The broad S&P 500 index ended up 0.37 percent at 1,135.26.

The ISM survey's new orders measure, a key barometer of future growth, was at the best level since the early 1970s. But the surge in factory output has yet to translate into jobs, and the employment index slipped to 52.9 from 53.5 in December.

Even though the economy has picked up in the past six months, robust hiring has been the missing link in the recovery. The risk is that if the job market does not improve, consumer spending could falter.

Economists have been surprised that the national payrolls report has not shown an improvement in factory hiring after three years of declines. In December, 26,000 manufacturing jobs were lost. Analysts will look for signs of improvement in the January payrolls report, due Feb. 6.

Most of the 2.4 million jobs lost over the past three years have been in manufacturing.

"The economy is going to accelerate in some areas and decelerate in others and the labor market is going to be the one that keeps getting squeezed," said Lehman Brothers economist Drew Matus.

Historically low levels of inventories have contributed to the surge in output in recent months.

"The factory sector is in direct drive -- when the new order comes, there's not enough stuff on the shelves to fill it, so they have to ramp up production," said Northern Trust Chief Economist Paul Kasriel.

INFLATION UNDER WRAPS

A separate report on Monday showed one of the pillars of the economy, construction spending, notched a fresh record high in December for the sixth month in a row.

Overall construction spending rose 0.4 percent to a seasonally adjusted $933.2 billion, the Commerce Department said, as low mortgage rates fueled a strong housing market.

Meanwhile, personal spending rose 0.4 percent in December, the department said, slightly below forecasts of a 0.5 percent gain and down from 0.5 percent the previous month.

Adjusted for inflation, spending rose just 0.2 percent, with much of the increased spending on autos.

The report said personal income rose 0.2 percent, in line with expectations. But that included a disappointing decline of 0.3 percent in wages and salaries because of the soft labor market, which could weigh on future spending.

"If job growth doesn't pick up soon, we could be rethinking the strength of the economy," said Kasriel.

A key reading of inflation in the spending report, which is closely watched by the Federal Reserve, dipped to just 0.7 percent in the year to December.

That measure, the core personal consumption expenditures index, or PCE, has declined sharply. It fell from a 1.7 percent annual rate at the start of 2003, illustrating the Fed's worries last year about the risk of falling prices, which has since faded.

Economists believe December could mark the low point for underlying inflation before a gradual increase this year to around 1 percent. That should not present any worries for the central bank, which is more concerned about soft labor markets and excess production capacity in factories.

"I suspect that December could prove to be the low point for the year-over-year advance (in core PCE) because the early 2003 readings were extremely weak," said Stephen Stanley, chief economist at RBS Greenwich Capital.

[Boris]

I find Wal-mart to be disgusting but maybe I'm just a snob.

the negative part of WMT is what it does to community planning. It promotes massive strip malls that require long drives, traffic, nuisance. Also no one wants to live near one of those places. I live in Palo Alto. there are no WMT's in palo alto. Just good schools and a high percentage of owner occupied homes. Everyone wants to live here. I mean think about, who the hell wants to live near a strip mall? So yea, WMT has low prices, but there is a cost.

[MMMMMM]

Yes, it's much better to live within driving distance of a strip mall than right next to one.

[andyfox]

There's no doubt that there have been many positive impacts of Wal-Mart's ascendance to the top of the retail ladder. They set the standard that others try to follow. Competition is good and healthy in that it makes everyone else have to be that much better if they wish to survive.

Wal-Mart is different than most other major retailers in that they don't differentiate among their customers. They don't care how good a customer you are, or how often you come in. It's a different strategy than the other larger retailers use, and the results certainly can't be argued with. Wal-Mart's increase in business every year is as big a figure as Sears' overall business.

But there are troubling aspects as well. As a supplier who has sold to Wal-Mart, I can attest to how unfair they are to suppliers. Until it was thrown out in court, Wal-Mart had a clause in their purchasing agreement that stated that they could cancel any order, up to the date of shipment, for any reason whatsoever. They would then go back to suppliers, who in many cases could be forced out of business by a Wal-mart cancellation, and demand a lower price at the threat of a cancellation. I know suppliers who, as a condition of getting an order, were told to keep back-up stock for replacing goods as they were sold in the stores. But the replacement orders came in at a lower price. I personally have worked out programs with Wal-Mart that were "put to bed" only to have them come back to me at the last minute demanding a lower price.

Now there's nothing wrong with pushing a supplier hard. But Wal-mart is notorious for being unscrulous in doing so. It's as if you were playing 20-40 and, at the last minutes, you were told now it's going to cost you $50 to call on the river. The rules have to remain the same throughout. I have chosen not to sell Wal-Mart because of their unreasonable demands that jeopardize my small business.

Wal-Mart's tremendous size makes it more akin to a large government. They are bigger than most countries and have a power that often contradicts the classical tenets of the free market. One of my other customers, who has eighteen stores, not a small operation, says that Wal-Mart sells Proctor & Gamble products for a lower price than he pays Proctor & Gamble for them. Entire communities are effected in many ways when Wal-Mart decides to open up. Not all of those effects are positive.

[ChipWrecked]

I worked as a stock clerk at Wal Mart store #11, Christmas season 1979. Worst job ever. Minimum wage then was $2.10, and I've never worked so hard for so little since, with so little positive feedback from management.

When the "working off-the-clock" scandal hit last year, it didn't surprise me a bit. My only thought was that things hadn't changed much in 25 years.

I have friends from back then who refuse to shop at Wal Mart to this very day, their enmity toward their former employer runs so deep.

I don't let it get me that badly, I like saving a few bucks on pickles if I can. In a way, the experience was good for me, because it motivated me to build job skills and education so I'd never be caught in a situation like that again.

But when I walk in, I always remember what a hellhole it was to work in.

- a side note: Those were the days when WallyWorld was a regional power at best. I remember Sam Walton's column in the associate newsletter trumpeting the fact that the company had just cracked the retailing Top 20. He made a quote to the effect of, "We may never be as big as Sears or Penny's, but we're fixin' to kick Revco's ass!"