If you are a union "moo-baah" (that is sheeple suffering from a herd mentality) the name Wal-Mart drives you wild. After all the largest and most successful retail operation in the history of the planet is not unionized. So even bringing up this subject can exacerbate the serious mental defects exhibited by the union agenda driven Wal-Mart haters.
Now comes the story that follows. In the interest of supporting their customers in a slow economy with rising fuel and medical costs, Wal-Mart has gone to work to LOWER prices through their massive purchasing power. Rather than pass on price increases they have insisted on price decreases. That's good for their vendors and their customers. Everyone wins, what a concept.
It would be interesting to know what percentage of those Wal-Mart customers are regular union member working Americans. I suspect it is a large number.
Wal-Mart puts the squeeze on food costs
The retailer is using its clout with vendors to hold onto its everyday low prices.
By Suzanne Kapner, writer
(Fortune Magazine) -- With gas, grain, and dairy prices exploding, you'd think the biggest seller of corn flakes and Cocoa Puffs would be getting hit by rising food costs. But Wal-Mart has temporarily rolled back prices on hundreds of food items by as much as 30% this year. How? By pressuring vendors to take costs out of the supply chain.
"When our grocery suppliers bring price increases, we don't just accept them," says Pamela Kohn, Wal-Mart's general merchandise manager for perishables. To be sure, Wal-Mart (WMT, Fortune 500) isn't the only retailer working to cut fat from the food chain, but as the largest grocer - Wal-Mart's food and consumables revenue is nearly $100 billion - it has a disproportionate amount of leverage. Here's how the retailer is throwing its weight around.
Shrink the goods. Ever wonder why that cereal box is only two-thirds full? Foodmakers love big boxes because they serve as billboards on store shelves.
Wal-Mart has been working to change that by promising suppliers that their shelf space won't shrink even if their boxes do. As a result, some of its vendors have reengineered their packaging. General Mills' (GIS, Fortune 500) Hamburger Helper is now made with denser pasta shapes, allowing the same amount of food to fit into a 20% smaller box at the same price. The change has saved 890,000 pounds of paper fiber and eliminated 500 trucks from the road, giving General Mills a cushion to absorb some of the rising costs.
Cut out the middleman. Wal-Mart typically buys its brand-name coffee from a supplier, which buys from a cooperative of growers, which works with a roaster - which means "there are a whole bunch of people muddled in the middle," says Wal-Mart spokeswoman Tara Raddohl. In April the chain began buying directly from a cooperative of Brazilian coffee farmers for its Sam's Choice brand, cutting three or four steps out of the supply chain.
Wal-Mart has been going green, but not entirely for the reasons you might think. By sourcing more produce locally - it now sells Wisconsin-grown yellow corn in 56 stores in or near Wisconsin - it is able to cut shipping costs. "We are looking at how to reduce the number of miles our suppliers' trucks travel," says Kohn. Marc Turner, whose Bushwick Potato Co. supplies Wal-Mart stores in the Northeast, says the cost of shipping one truck of spuds from his farm in Maine to local Wal-Mart stores costs less than $1,000, compared with several thousand dollars for a big rig from Idaho. Last year his shipments to Wal-Mart grew 13%.
In fact, it's the small suppliers that are feeling the pain from Wal-Mart's pushback the most. Bushwick has seen its costs rise 10% over the past year, but has passed only half that amount on to Wal-Mart and its other retailers. For consumers who are having a hard time paying $3.80 for a gallon of milk, however, without those measures that sticker shock would be a lot worse.
Wal-Mart: More shoppers are living paycheck to paycheck
Find this article at: http://money.cnn.com/2008/05/28/magazines/fortune/kapner_walmart.fortune/index.html
© 2007 Cable News Network LP, LLP
Comments
JudgeBob-
The market is indeed a powerful teacher.
People tend to forget what was a working life like in a "free-trade" anti-union society just a century or so ago, and is still in existence all over the world where unions do not exist and corporations enjoy the benefits of the "free-trade" economic zones etc.
You call yourself THE Historian and yet post after post your spill out the most historically ignorant ideas, which makes me seriously doubt that you are actually a historian by education, unless of course reading corporate sponsored articles and official government-approved versions of events qualify for education nowadays.
Schweik-
You and I are in complete agreement relative to the reasons why unionism was a vitally necessary movement in American history. There is no question about the quality contributions of unions to the general welfare of this nation for 50-75 years.
Than the wheels came off and unions became the bastions of self-serving, greedy union bosses who bought politicians and pursued an agenda that became injurious to American society. You might not want to admit to that but it is clearly part of the historical record.
So insults aside let's admit that unions hate Wal-Mart because they cannot break that company. Wal-Mart NEVER is hurting for either willing employees or enthusiastic customers. When Wal-Mart becomes a negative force it will be driven out of the market place. Before that, unions might as well go on the attack in other arenas since they are not going to break Wal-Mart. The public is not and will not buy this part of the union agenda.
For a green solution here, you need to encourage 100% responsibility for disposal of packaging upon the packager. This is what they did in Germany where they ran out of landfill space. It was a government mandate and increased efficiency.
A little education for you "free market" religious nuts:
All economies are market driven one way or another. The issue is management. Either you have top down management or distributed decision making. Obviously the later is more effective as it focuses decision making to where the most relevant information is available. 100% state management is too much work for even the most brilliant minds to handle. However all markets have structure and the proven most effective means of this is a third party free of a potential conflict of interest.
Walmart has an incredible conflict of interest in managing the supply systems that feed its stores. While reducing packaging is definitely a plus one must wonder why it wasn't done earlier. Perhaps because "green" as JudgeBob said wasn't in Walmart's interest? Meanwhile Walmart has had enormous pressure on trucking nationwide... in a race to the bottom. Isn't that what is happening everywhere else in the world too? A race to the bottom? Wow. What progress.
Heneusa-
Thanks for your view. Lighten up on the insults, they serve no purpose.
Of course a Euro country would rely on government as the answer, it is after all socialist oriented.
You treat the Wal-Mart move to reduce packaging as bad news because it is market driven rather than government mandated. In the end, socialism becomes, as history shows, a "you pretend to work, we pretend to pay" system that developes dependence on government "masters" who have all the right answers and know better than everyone else. Motivation to produce is lost and society spirals into a level of subsistance and mediocrity. That might be what you seek but I have to say I am not interested.
The market in this instance is a far more powerful force than government mandates. If that were not the case why has not government mandated this change long ago? The creativity and rapid change that is often (not always) driven by the market place have built this economy into the most powerful in history and the most powerful on the planet. No government mandated country comes close.
None of this is to say that a pure market driven society is ideal. It is not. Some regulation is required as is some degree of government mandate. There is a mix in there that is ideal and this country is more often closer to the correct mix than is Europe.
Big changes are only made by business when the profit motive in favor of the change is large enough. That was the illustration made for the Walmart example. Germany's solution on the other hand is good for their national economy, not just one company. Have you seen their rates of material reclamation? Quite a boon for national security. The benefits of the decision are actually wide ranging well beyond the interests of any individual player within the market. And how again is establishing these rules for the market a problem? What better solution would have been established?
Second, my issue with Walmart's "green" effort is that it was inevitable anyway and thus not worthy of praise. This only happened now because the business is under pressure due to its dependence upon wide spread distribution. Its a minor increase in efficiency when the issues facing them will require much more than that. I still ask - why wasn't this done earlier if there is such a benefit to it? The answer is obvious. This is reactive decision making not proactive. And it is a weaknesses of market based decision making. I like how markets work too, but they aren't magical nor a panacea for all of our economy.
Furthermore for someone such as yourself - a "free" market moollah - I am surprised you'd applaud this. What was described in the article is not what qualifies as a process with distributed decision making - the essence of the mythical "free" market, and what socialism purportedly lacks. The way WalMart worked this out is very similar to how state run businesses work. It was a management decision within one entity influenced by another more authoritative entity who happens to have the most to gain since they own the distribution chain as well as the store.
An actual market driven process would have multiple producers, packagers, distributers, and stores each with different strategies competing and cooperating with one another depending upon their needs. This situation with Walmart is quite the opposite sharing many of the the weaknesses of socialism to me. How about you?
Henesua-
"...intention to comprehend...", sorry but like most people I am just too stupid to fully grasp your "nuance". Thanks for being so... condesending? By the way is a free market moollah and a free market religious nut the same or are there nuanced differences?
The business is under pressure at the point of sale: if costs go up, prices go up, customers go elsewhere. Thus the business does what it can, where it can to stay competitive.
I still ask: why is the private sector beating government mandate to this solution if it is so proactive? Answer: government is even more reactive than the private sector which is, by nature, reactive. That is why the market driven entity is leading the way while government trails along directionless.
Finally, don't tell Costco, K-Mart, Kohl's and the whole host of others out there in the marketplace that Wal-Mart has no competition. It might cause them to wonder why they go to work everyday. In my view, the competition is what keeps each of them on track, alert and non-socialist.
HI-
Thanks for the visit.
However, that you categorize my argument in the "socialist" camp is highly irritating and shows no good faith on your part to even try to read my comments. It does not take much nuance or hell not even much effort for those that care to see outside of this politicized dialectic. It isn't just about "communism" versus freemarket. I can see it and I'm - as you can probably tell by the quality of my writing - about as intelligent as the majority of the other wannabe's on Vox - which is as solid an example of damning with faint praise as one can find. So come on.. if you don't want condescension, step it up a little, especially with that academic-ish title of yours.
Businesses like Walmart who have a history of monopoly and anti-competitive practices certainly do not deserve kudo's as champions of the "free" market. At this point I'm just going to leave it at that - as you seem quite averse to seeing the similarity between the way WalMart handled the business above and the way state owned companies in Russia managed goods distribution. They were looking to run more efficiently also by the way.
Furthermore to lump German economic policy with that of Europe as vaguely socialist does not hold much water either.
Henesua-
Obviously, academic-ish I am not. But I do confess to a life long love of history. Reading history and biography is a favorite activity.
I agree that Wal-Mart is huge. Let's face it they are the largest retail company in history and currently the largest retail company on the planet. So competing with them is not easy but they are also not a monopoly. Ultimately, as history repeatedly records, they will be knocked off their pedestal but for the time being they have an outsized impact on the American economy.
Going forward it appears we will disagree as to the fundamental value of a free market economy but that is OK. We shall all see where it leads.
Anyhow.. maybe next time.
Henesua-
Understood. Let's make sure there is a next time and thanks.
Further, if the energy businesses were allowed to build nuclear power plants we could reduce the carbon footprint (which I am not worried about) to very small numbers. Further, if the government weren't addicted to oil revenue we could have been operating our cars on HHO gas by splitting water molecules on the fly since that technology has been around since the late 70's.
JudgeBob-
There are so many good tracks we could and should pursue but we wait until we are on the brink. That is the nature of a democracy.
I'd rather not hijack this thread but if you'd like to discuss this recycling technology further I would not mind. Send me a note. I however strongly disagree that a technology to recycle any and all waste at 100% efficiency exists, but I am curious if you were referring to biodegradable materials for which I can not understand why material recycling would even be a concern, but rather processing into biomass would be the interest. Anyway from my significant experience in construction and development, a private industry which contributes a major proportion of the waste diverted to landfills in this country, I can assure you that it is neither government nor the failure to adopt a particular recycling technology that is contributing to this problem - but a constant push for expediency - which in my opinion is also why so much development is unattractive and one dimensional but that is a serious digression I'd rather not get into now.