The Nation: Wal-Mart business model "needs to create more poverty to grow"

[Bush_Eats_Beef]

A 2000 study by Andrew Franklin, then an economist at the University of Connecticut, showed that Wal-Mart operated primarily in poor and working-class communities, finding, in the bone-dry language of his discipline, "a significant negative relationship between median household income and Wal-Mart's presence in the market." Although fancy retailers noted with chagrin during the 2001 recession that absolutely everybody shops at Wal-Mart--"Even people with $100,000 incomes now shop at Wal-Mart," a PR flack for one upscale mall fumed--the Bloomingdale's set is not the discounter's primary market, and probably never will be. Only 6 percent of Wal-Mart shoppers have annual family incomes of more than $100,000. A 2003 study found that 23 percent of Wal-Mart Supercenter customers live on incomes of less than $25,000 a year. More than 20 percent of Wal-Mart shoppers have no bank account, long considered a sign of dire poverty. And while almost half of Wal-Mart Supercenter customers are blue-collar workers and their families, 20 percent are unemployed or elderly.

Al Zack, who until his retirement in 2004 was the United Food and Commercial Workers' vice president for strategic programs, observes that appealing to the poor was "Sam Walton's real genius. He figured out how to make money off of poverty. He located his first stores in poor rural areas and discovered a real market. The only problem with the business model is that it really needs to create more poverty to grow." That problem is cleverly solved by creating more bad jobs worldwide. In a chilling reversal of Henry Ford's strategy, which was to pay his workers amply so they could buy Ford cars, Wal-Mart's stingy compensation policies--workers make, on average, just over $8 an hour, and if they want health insurance, they must pay more than a third of the premium--contribute to an economy in which, increasingly, workers can only afford to shop at Wal-Mart.

To make this model work, Wal-Mart must keep labor costs down. It does this by making corporate crime an integral part of its business strategy. Wal-Mart routinely violates laws protecting workers' organizing rights (workers have even been fired for union activity). It is a repeat offender on overtime laws; in more than thirty states, workers have brought wage-and-hour class-action suits against the retailer. In some cases, workers say, managers encouraged them to clock out and keep working; in others, managers locked the doors and would not let employees go home at the end of their shifts. And it's often women who suffer most from Wal-Mart's labor practices. Dukes v. Wal-Mart, which is the largest civil rights class-action suit in history, charges the company with systematically discriminating against women in pay and promotions.

http://www.thenation.com/doc.mhtml?i=20050103&s=featherstone

[Turn CO Blue]

1. Wal-mart hasn't received one dime of mine in 2 yrs and never will.

Wal-mart sucks!

[President Jesus]

2. Campaign contribution histories of Wal-Mart chairman and ceo

cold facts:

S Robson Walton, chairman
http://www.newsmeat.com/ceo_political_donations/S_Robson_Walton.php

H Lee Scott, ceo
http://www.newsmeat.com/ceo_political_donations/H_Lee_Scott.php

also, check out this list of campaign contributions of America's top 100 chairmen and ceos.

[The_Casual_Observer]

3. Walmart ads are all about opportunity and a promotion

of their employees rather than the goods (or bads) they sell in their stores. They make it sound as though their main business is promoting Latino box boys to management positions. Walmart is a shitty chain. I would rather do without than buy it from them.

[Undercover Owl]

7. their models are hired cheap, too.

They use employees in their ads. Hmmm, I wonder how much they pay these employees to model in the ads? I'd be suprised if they compensated the "models" at all. They probably hype it as a great privilige to be featured in the ads.
Meanwhile, customers see that, and think "they must care a lot about their workers, to use them in their ads". "These models look average, just like me".

It's evil genius.

[LaPera]

4. No one should ever shop at Walmart.

If I have to pay a bit more elsewhere, I do, rather than shop at Walmart.

[benevolent dictator]

5. See the funny thing is,

I've talked to people who are unemployed and actively follow the pricing and sales of various stores, and they say that if you buy stuff while it's on sale, meijer's can't be beat.

and then there was that interview on frontline where the former manager said that walmart has higher prices, they just make it look like they don't by having a really low "hook" price on one of their items, the other ones in the same catagory are more expensive, but you think they're cheaper because the heavily-advertised one was.

[gorbal]

6. Doesn't make sense.

There is more poverty now than there has been in a long time, Walmart would have had a much better year if that theory was true.

[sonicx]

8. shows how bad things are...

for those on the bottom at least.

Remember, they are still the biggest retailer in the world.

[gumby]

9. Great wealth requires.........

Great poverty.....

in order for the wealth to accumulate at the top.

See George Bush's Plan For The World.

[spinbaby]

10. 6% of their customers make over $100,000?

I find that hard to believe. Why would anyone making that kind of money put up with the unpleasant Wal-Mart experience just to save a few pennies?

[ReverendDeuce]

11. I dislike Wal-Mart but... something is wrong in this article...

I refuse to shop at Wal-Mart for a multitude of reasons I wont go into, but primarily it's because of their terrible business practices.

Nonetheless, I will say that this article is somewhat wrong when it says that Wal-Mart plants its stores in poorville. For the most part, I absolutely agree. However, there are three "super" Wal-Marts in town. One of which is certainly in a poorer part of the town. The other, built in the last year, is in, at least what I believe to be, a fairly nice middle-class part of the city. The oldest one is way our west in the middle of blossoming community of "divine wealth".

There is no difference in these three stores other than the vehicles in the parking lots. One has Lexii and Benzes, the other has old Nissans and rusted-out pickups, and the third has just about everything.

I guess the other similarity is that their parking lots are always packed. Absolutely packed! Wal-Mart must be an addiction.

[Vidar]

12. Unfortunately, this is true of American-stlye capitalim in general.