"The Wal-Mart Effect"

This article by Kathleen Parker reviews the book by Charles Fishman called "The Wal-mart Effect." I often find myself defending Wal-mart on this site and even in general, but some excerpts from the review were striking to me. I'll share them below:

Wal-Mart isn't just a company. It's a global market force - a nation unto itself. Americans spend $35 million every hour at Wal-Mart, 24 hours a day, every day of the year. Wal-Mart is so huge and so powerful, you'll wonder how you failed to notice that the company affects not just how we shop, but how we think and live - even if we never set foot in a Wal-Mart store.

When you stand back and examine Wal-mart as Mr. Fishman has, it is quite shocking how the above statement could escape your attention. They control markets. They set the prices. They have power.

They aren't necessarily an evil corporation like some have argued (including myself), but some aspects of their business model should be brought to public attention.

On the home front, Fishman argues that critics are wrong when they say that Wal-Mart puts little people out of business. We (consumers) put little people out of business, he says. We vote with our wallets, and we're the ones who choose Wal-Mart over local stores. Wal-Mart, in that sense, is the ultimate model of democracy.

Consumers also have made possible the company's phenomenal growth. In 1990, Wal-Mart had just nine supercenters in the U.S. By 2000, there were 888. Wal-Mart is the No. 1 grocery retailer in the world. Between 1990 and 2000, 31 supermarket chains sought bankruptcy protection, including 27 that cited Wal-Mart as a factor.

It's true. We are the ones that give Wal-mart the power they have. We choose where to shop and as I have written previously, it is up to us to choose where to shop. If we want to buy our food or goods at a local boutique, there is nothing stopping us. I like the analogy of democracy, because it rings true.

Fishman argues that Wal-Mart's power and scale hurt capitalism by strangling competition.

"It's not free-market capitalism," he says. "Wal-Mart is running the market. Choice is an illusion."

Wal-Mart not only changes the way we buy, but the way we think, Fishman says. If Wal-Mart charges $5 per pound for salmon, then shoppers wonder why a restaurant charges $15. We expect salmon to cost only $5. Or a microwave to cost only $39. The Wal-Mart effect first changes our expectations, then changes the quality of merchandise, which is cheap, because it isn't always well- or ethically made.

This struck me as quite interesting. The article continues with the example of salmon and how it raised in Chile causing immense environmental damage. Wal-mart buys this salmon, because it wants to give us, the consumers, the cheapest price possible. We accept that price and from then on, we compare all other offerings to the lowest price. It is up to us to decide whether the price is "worth it" when looking at the example of salmon (or any other good that is not "well- or ethically made").

Next time I'm in Wal-mart or another discount store, I'm going to think twice about buying the cheap salmon.