Friday, July 6, 2007

The Walmart Effect

Originally Posted on 6/16/06

I just started listening to a new audio which is pretty impressive thus far. It's called the Walmart Effect, which obviously speaks to their business prowess but also discusses the ripple effect Walmart has across our entire economy, culture and perception. The book boasts a very well regarded author in Charles Fishman. I have no doubt that the book will not disappoint even though I'm only through the first 3 chapters.

I'll close with these thoughts:
Walmart exemplifies the best and worse of our world class business economy. They've demonstrated consistent brilliance in their relentless pursuit of cost efficiencies, which has essentially transcended the entire retail business landscape on multiple levels. I for one am dazzled by their ability to reduce overhead expenditures and negotiate such low rates from suppliers at such break neck speeds. organization of such size, magnitude and political clout should be seen as a world leader in civil responsibility. But it's emphatically not. It's not just perception but it is matter of fact. The topic of employee wages, benefits, etc will continue to rage on for years to come as Walmart fundamental business model is to always provide the lowest prices. In order for them to offer increase wages or benefits, they will need to raise prices on products in order to offset the expense. Walmart's gargantuan size, do to their endless pursuit of reaching optimal economies of scale, makes such a change extremely cost prohibitive due to their slim margins. Walmart's mantra was/is and always will be frugality. From my perspective, the bigger question, which will undoubtedly be around to some degree for decades to come will be: When will corporate profits take a back seat to morality? As an optimist, I feel this day will eventually come, but only when their financial standing or legal mandates allow or force them to change.

Time will tell.

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