SOC200: Introduction to Sociology
September 18, 2005
The Wal-Mart Phenomenon
At Wal-Mart, "everyday low prices" is the motto. This slogan has helped create the largest business in world history with over $245 billion in revenues. It is actually three times the size of the No. 2 retailer in the world, France's Carrefour. Nearly 138 million shoppers visit one of the 4,750 Wal-Mart retail stores in the United States each week. This trade giant has eliminated tens of billions of dollars in cost efficiencies out the retail supply chain, passing the larger part of the savings along to shoppers as bargain prices. As noted in Business Week online (2003), New England Consulting estimates that Wal-Mart has saved U.S. customers $20 billion last year alone. Economists refer to the phenomenon as the "Wal-Mart effect" because of the suppressed inflation and productivity gains through the economy year after year. The power Wal-Mart has in the business world is clear and their low prices are great, but this dominance may have created problems for suppliers, workers, communities and even the American culture. According to the latest economic results, Wal-Mart would be China's eighth largest trading partner if it were a country. Importing expensive products and passing that discount on to the customer is one tactic that is driving the profits for Wal-Mart higher. This approach may seem beneficial for the consumer in the short-term, but may have grave results in the long-term. Greg Denier, spokesman for the United Food and Commercial Workers, which represents grocery workers, states that the "Walmartization of America has a broader impact than just retail workers. Wal-Mart probably has had more negative impact on manufacturing jobs than on other jobs in the United States." (Moberg, 2004, p.1) By importing products manufactured by low wage earners in foreign countries, the squeeze is put on U.S. manufacturers which are...