Last month, there was this really laudatory Fortune article about Wal*Mart, pointing out how it has lowered prices and brought competition to every area it could, shrinking the margins of every competitor and benefiting even the consumers who hate it.
Of course, when a band or fashion trend gets that kind of coverage from a major magazine, I assume it’s on the way out. I don’t know as much about business, though. News coverage for the company points to flailing competitors and an open field to become a trillion dollar firm. It can get larger and it probably will.
A lot of people say they dislike Wal*Mart because it’s a big-box, sprawl-based, homogenizing merchandiser. But I think it’s because it’s got what Fortune calls a “downhome twang.” I argue with people who dislike Starbucks — are you opposed to it because it’s bad, or because you prefer your version of cafe culture? Starbucks makes pretty good coffee, they offer organic and fair-trade coffee, and it’s a pretty good place to work. Now, Wal*Mart has fewer of those plusses, and it really is a bad place to work: low pay, no unions, no employee power, allegations of unpaid overtime. Still, it’s got one major advantage over any other store: it’s cheaper.
It’s the bottom line that matters most to the most people, and that vast majority is the Wal*Mart customer base. That’s what makes the company so big. Fortune points out a few tidbits of bigness: its annual loss through theft, incorporated as a business, would be a Fortune 1000 company. It is the largest employer in 21 states. It has more employees than the Army. It is the largest customer for a huge number of huge manufacturers: Tandy, Rubbermaid, P&G, Clorox, Revlon…
Wal*Mart has a wider appeal than most other stores, and its growth has been organic rather than through acquisition. They don’t waste money. They have a fantastic distribution system. Even their annual reports are printed on no-frills paper. They have an amazing reputation for cutting costs all along the supply chain. All of these things are good signs.
Still, I wonder about the example of McDonald’s: associated for so long with cheap food, McDonald’s is now regarded as the food of poor, stupid, fat people. Also, I’m concerned about overextension: they sell staples and groceries and media and electronics and gasoline, and are adding cars, computers, software… at some point they’re going to make a mistake and add something that their customers simply won’t associate with them. But for now, they look like one of the few stable retailers out there.
Secretly Ironic 