Wal-Mart undercutting practises

[wannaberocker]

hmm so walmart forces vendors to use the cheapest labor possible. Well who is the winner then? i say its the american consumer because they get the products cheap. So what exactly is the wrong in this situation? Should walmart tell vendors to find the most expensive labor force?

Its strange really. Most of the times my leftist friends who hate walmart and complain about what walmart pays their employees are also the first ones to bitch, when the price for a product goes up lol. Its as if people wanna live in a fantasyland where everyone is rich and products are very cheap (world wide).

 

[donnay]

hmm so walmart forces vendors to use the cheapest labor possible.

Uh huh and you get what you pay for--disposable products.

 

[wannaberocker]

Uh huh and you get what you pay for--disposable products.

Exactly, the market needs disposable products and wal mart provides them at a low price. I dont see whats the harm, wal mart dosnt market themselves as "Top quality" seller. They market themselves as a "Low cost" provider.

 

[Soca Taliban]

Now I agree that the government should not provide any subsidies for Wal-Mart, however, it's kind of silly to say that Wal-Mart put these other small shop out of business. It's not Wal-Mart that does, its the consumer. The consumer is the one putting these small mom and pop stores out of business because they vote with their wallets.

 

[cdc482]

I agree that there are cheaper options than Wal-Mart that you mentioned including Trader Joe's.

The biggest issue with Wal-Mart is that the worker's keep 1% of the companies profits and the other 99% go to executives. A real rip-off, but as it grows, so does its buying power and then other employment options shrink...
Not very good for society if they continue to shop there, but so many people fail to realize the hidden cost.

 

[donnay]

Now I agree that the government should not provide any subsidies for Wal-Mart, however, it's kind of silly to say that Wal-Mart put these other small shop out of business. It's not Wal-Mart that does, its the consumer. The consumer is the one putting these small mom and pop stores out of business because they vote with their wallets.

I vote with my wallet--I do not shop at Wal-Marx.

Wal-Marx can buy in great quantities whereas the Mom and Pop cannot. If any one has worked in wholesale, you would know it is cheaper by the dozen. For instance, if the Mom and Pop owns a hardware store, they cannot afford to buy 200 lawnmowers at a time, therefore, they can only get a specialty rate versus a quantity rate--it makes a huge difference on the price that a Mom and Pop can sell the lawnmower for than Wal-Marx can.

Of course the most people are going to go to Wal-Marx because the price of the lawnmower is considerable cheaper, and then they still have enough money to buy the lawn chairs they wanted too.

My theory is, when Wal-Marx is the only store in town, and they have knocked out all the competition, then they can charge higher prices and you will have no other choice but to pay.

Pay less now, pay dearly later...

 

[silverhandorder]

Uh huh and you get what you pay for--disposable products.

What if I want disposable products?

 

[donnay]

What if I want disposable products?

Then your wish will be their command. But, be careful what you wish for...

 

[vodalian]

I vote with my wallet--I do not shop at Wal-Marx.

Wal-Marx can buy in great quantities whereas the Mom and Pop cannot. If any one has worked in wholesale, you would know it is cheaper by the dozen. For instance, if the Mom and Pop owns a hardware store, they cannot afford to buy 200 lawnmowers at a time, therefore, they can only get a specialty rate versus a quantity rate--it makes a huge difference on the price that a Mom and Pop can sell the lawnmower for than Wal-Marx can.

Of course the most people are going to go to Wal-Marx because the price of the lawnmower is considerable cheaper, and then they still have enough money to buy the lawn chairs they wanted too.

My theory is, when Wal-Marx is the only store in town, and they have knocked out all the competition, then they can charge higher prices and you will have no other choice but to pay.

Pay less now, pay dearly later...

Can you cite an example of this happening? Also, what makes a mom and pop shops necessary? The typical argument is "it puts mom and pop shops out of business", but how is that a detriment to society? Mom and pop shops sell the same type crap Walmart sells, except it's normally way overpriced and they often heavily discriminate when it comes to hiring by only hiring family.

 

[donnay]

Can you cite an example of this happening? Also, what makes a mom and pop shops necessary? The typical argument is "it puts mom and pop shops out of business", but how is that a detriment to society? Mom and pop shops sell the same type crap Walmart sells, except it's normally way overpriced and they often heavily discriminate when it comes to hiring by only hiring family.

By your last statement it sounds like you have a dog in this hunt. Mom and Pop and small businesses keep the local economy stimulated. Without entrepreneurs you are left with nothing but Big Corporations, who will lobby and get what they want. Which in turn will dampen any future prospects for young kids who want to invent, create and build and aspire to have their own business with their ideas, talents and ingenuity.

http://www.momandpopnyc.com/campaig...ing/WisconsinPriceCuts, Journal, 10.26.00.pdf
http://www.momandpopnyc.com/campaig...atory Pricing/Conway, BusHorizons, 9.1995.pdf
http://www.momandpopnyc.com/campaig...ng/PredatoryPricing, HometownAdv, 11.1.00.pdf
http://www.momandpopnyc.com/campaigns/walmart/articles/Small Business/BathMaine, Inc, 7.1993.pdf
http://www.momandpopnyc.com/campaigns/walmart/articles/Small Business/Newspapers, E&P, 5.29.02.pdf
http://www.newrules.org/retail/news/dont-subsidize-big-boxes-local-shops-expense
http://www.newrules.org/retail/key-studies-walmart-and-bigbox-retail#6
http://www.newrules.org/retail/key-studies-walmart-and-bigbox-retail#4

I can cite you more if you need more.

 

[vodalian]

By your last statement it sounds like you have a dog in this hunt. Mom and Pop and small businesses keep the local economy stimulated. Without entrepreneurs you are left with nothing but Big Corporations, who will lobby and get what they want. Which in turn will dampen any future prospects for young kids who want to invent, create and build and aspire to have their own business with their ideas, talents and ingenuity.

All of those links are complaints that Walmart's prices are too cheap.. I want proof of your implication that Walmart moves into towns, drives out every business with their cheap prices, then raises their prices to screw everyone and hold them hostage with their monopoly.

 

[donnay]

All of those links are complaints that Walmart's prices are too cheap.. I want proof of your implication that Walmart moves into towns, drives out every business with their cheap prices, then raises their prices to screw everyone and hold them hostage with their monopoly.

All the information I posted in my earlier post had this information there, all you had to do is look at it.

Competing with the Discount Mass Merchandisers - By Dr. Kenneth Stone, Iowa State University, 1995


The basic premise of this study and others by Ken Stone is that the retail "pie" is relatively fixed in size (it grows only incrementally as population and incomes grow). Consequently, when a company like Wal-Mart opens a giant store, it invariably captures a substantial slice of the retail pie, leaving smaller portions for existing businesses, which are then forced to downsize or close. This study of Wal-Mart's impact on Iowa towns found that the average superstore cost other merchants in the host town about $12 million a year in sales (as of 1995), while stores in smaller towns nearby also suffered substantial revenue losses. These sales losses resulted in the closure of 7,326 Iowa businesses between 1983 and 1993, including 555 grocery stores, 291 apparel stores, and 298 hardware stores. While towns that gained a Wal-Mart store initially experienced a rise in overall retail sales, after the first two or three years, retail sales began to decline. About one in four towns ending up with a lower level of retail activity than they had prior to Wal-Mart's arrival. Stone attributes this to Wal-Mart's strategy of saturating regions with multiple stores.

http://www2.econ.iastate.edu/faculty/stone/1995_IA_WM_Study.pdf

Okay, so if we do the math, in the above study, 7,326 businesses closed due to the fact that Wal-Marx's moved in, within a 10 year span and no new growth was obtained. You do not see that as an economic downside to that local economy?

________________________________________________________

http://www.newrules.org/retail/key-studies-walmart-and-bigbox-retail#6

The Economic Impact of Locally Owned Businesses vs. Chains: A Case Study in Midcoast Maine - by the Institute for Local Self-Reliance and Friends of Midcoast Maine, September 2003.

Three times as much money stays in the local economy when you buy goods and services from locally owned businesses instead of large chain stores, according to this analysis, which tracked the revenue and expenditures of eight locally owned businesses in Midcoast Maine. The survey found that the businesses, with had combined sales of $5.7 million in 2002, spent 44.6 percent of their revenue within the surrounding two counties. Another 8.7 percent was spent elsewhere in the state of Maine. The four largest components of this local spending were: wages and benefits paid to local employees; goods and services purchased from other local businesses; profits that accrued to local owners; and taxes paid to local and state government. Using a variety of sources, the analysis estimates that a national big box retailer operating in Midcoast Maine returns just 14.1 percent of its revenue to the local economy, mostly in the form of payroll. The rest leaves the state, flowing to out-of-state suppliers or back to corporate headquarters. The survey also found that the local businesses contributed more to charity than national chains.

 

[Soca Taliban]

I vote with my wallet--I do not shop at Wal-Marx.

Wal-Marx can buy in great quantities whereas the Mom and Pop cannot. If any one has worked in wholesale, you would know it is cheaper by the dozen. For instance, if the Mom and Pop owns a hardware store, they cannot afford to buy 200 lawnmowers at a time, therefore, they can only get a specialty rate versus a quantity rate--it makes a huge difference on the price that a Mom and Pop can sell the lawnmower for than Wal-Marx can.

Of course the most people are going to go to Wal-Marx because the price of the lawnmower is considerable cheaper, and then they still have enough money to buy the lawn chairs they wanted too.

My theory is, when Wal-Marx is the only store in town, and they have knocked out all the competition, then they can charge higher prices and you will have no other choice but to pay.

Pay less now, pay dearly later...

Again, its the consumers who decide that they'd rather spend their money on goods at Wal-Mart. You choose not to, so be it, but there is a demand for the products Wal-Mart sells and at the price it sells it at. I failed to see why you gripe about Wal-Mart undercutting local businesses yet somehow eliminate the possibility that another company can come in and undercut Wal-Mart if it raises its prices above the level consumers are willing to pay.

 

[erowe1]

Okay, so if we do the math, in the above study, 7,326 businesses closed due to the fact that Wal-Marx's moved in, within a 10 year span and no new growth was obtained. You do not see that as an economic downside to that local economy?

I don't. Is having more businesses provide what could otherwise be provided by fewer businesses supposed to be good for the economy or something?

 

[donnay]

Again, its the consumers who decide that they'd rather spend their money on goods at Wal-Mart. You choose not to, so be it, but there is a demand for the products Wal-Mart sells and at the price it sells it at. I failed to see why you gripe about Wal-Mart undercutting local businesses yet somehow eliminate the possibility that another company can come in and undercut Wal-Mart if it raises its prices above the level consumers are willing to pay.

SIGH...what we have here is a failure to communicate, you need to look above your post at the impact studies done. I have already gone round and round on these points, so take the time to read through the whole thread, with all the links provided.

One thing is libertarians ideals are great on paper, but when they are actually applied in the world with crony capitalism at the helm, it tends to do nothing for economic growth and more towards implemented slave labor.

 

[Danke]

I usually avoid Walmart and just give my business to Sam's Club.

 

[donnay]

I don't. Is having more businesses provide what could otherwise be provided by fewer businesses supposed to be good for the economy or something?

Fewer business means fewer choices, and by fewer choices there is more of a chance of monopolizing. In the impact studies above, show that there is more poverty in areas of less choice than that of it those where there were more choices available.

 

[erowe1]

Fewer business means fewer choices, and by fewer choices there more of a chance of monopolizing. In the impact studies above, show that there is more poverty in areas of less choice than that of it those where there were more choices available.

But that's fewer choices because of people making the choice to shop at Walmart. Essentially, all those mom and pop stores that get put out of business are just anchors on the economy. Would you also like to ban sewing machines so that more people can be employed sewing by hand?

There may be more poverty, but it's not because of Walmart.

Plus, like you said, stuff is cheaper at Walmart, so at least those poor people can buy affordable stuff, not like at those overpriced mom and pop stores.

 

[Brent Pierce]

Robert Higgs of the Mises Institute discusses this in his excellent podcast series "Crises and Liberty." He discusses how the old Standard Oil story has zero evidence backing it up and that this sort of thing usually ends up hurting the business using predatory pricing. He discusses the German Chemical Co that sold its products at a loss to the US only to have Dow Chemical buy them up and sell them in Germany for a profit. Higgs declares that "Predatory Pricing" is an argument for free markets and not against them. http://mises.org/media/categories/64/Crisis-and-Liberty-The-Expansion-of-Government-Power-in-American-History

 

[donnay]

But that's fewer choices because of people making the choice to shop at Walmart. Essentially, all those mom and pop stores that get put out of business are just anchors on the economy. Would you also like to ban sewing machines so that more people can be employed sewing by hand?

Oh yes I am not saying people are not at fault for the fewer choices, but that is because they are not looking at the ramifications of their choices. Mom and Pops are the cornerstone of our country, the spirit of freedom to be successful. The anchors are the Wal-Marx who saturate the market with non-quality, cheap slave labor merchandise. To use your example; Mr. Singer who's innovation of the (up and down motion) sowing machine was greatly appreciated, but he didn't take jobs away from people with his invention, he in fact created jobs!

There may be more poverty, but it's not because of Walmart.

Wal-Marx is a contributing factor, again, read the case studies that I have already provided.

Plus, like you said, stuff is cheaper at Walmart, so at least those poor people can buy affordable stuff, not like at those overpriced mom and pop stores.

That is quite a condescending statement. How do the poor people, get out of their poverty when there are no jobs to be had, because Wal-Marx has taken out any competition?