The Case for Breaking Up Wal-Mart

Alternet has a very interesting, very... l o n g essay posted that examines the idea that perhaps Walmart has grown so large and powerful that it is now a funtioning monopoly that needs to be dismantled. I think that the whole idea that a retail business can grow using fair and legal tactics and be so successful that it is acutally harmful an interesting possibility that probably needs to spend more time in the spotlight. At what point, when a business emerges as a clear winner, is a free market no longer technically free?

From Alternet.org

One of the basic premises of the free-market system is that actors are free to buy from or sell to a variety of other actors. In the case of Wal-Mart, no one can deny that every single firm that supplies the retailer is, technically, free not to do so. But is this true in the real world? After all, once a firm comes to depend on selling through Wal-Mart's system, just how conceivable is the idea of walking away? Producers own and maintain machines, employ skilled workers, lease land and buildings. Even with careful planning, most would find the sudden surrender of 20 percent or more of their revenue to be extremely disruptive, if not suicidal.

Another basic premise of the free-market system is that the price of a commodity or good carries vital information from actor to actor within an economy -- say, that cherries are scarce, or vinyl floor tiles abundant, or the latest iPod includes a new technology. Again, no one can deny that, technically, every firm that supplies Wal-Mart is free to ask whatever price it wants. But again, we must ask whether this holds true in the real world. Every producer knows that Wal-Mart is, as one of its executives told the New York Times, a "no-nonsense negotiator," which means the firm sets take-it-or-leave-it prices, which as we know from the previous paragraph are far harder to leave than to take. Every so often Wal-Mart will accept a higher price, but then the retailer's managers may opt to punish the offending supplier, perhaps by ratcheting up competition with its own in-house brands. Price, within the consumer economy, increasingly carries but one bit of information -- that Wal-Mart is powerful enough to bend everyone else to its will.

Comments

[es]

Every time I read an article like this, I swear I will never shop at WM again - and then I do. Because it's the only place where I can get thread, camping equipment, underwear and cherries all in the same place.
Sometimes I am not sure this is a juggernaut that can, or even should, be stopped. It isn't just Wallmart, either. When I look for a book on a specific (granted, somewhat abstruse) subject, I go to my local little bookstore first, then to B&N, and finally I just throw up my hands and search it out on Amazon. And usually find exactly what I need. Am I undercutting the small local retailer by using the power of the larger outfit? yes...but maybe small retailers just need to head in more specialized specific directions. If there was a bookstore in town that specialized in history, I would go there first to find my book on medieval architecture. If there was a local greengrocer, it would not occur to me to head to Walmart for their cardboardy veggies. Maybe the solution is in that direction, not calling WM a monopoly.

[A Curious Stranger]

There are local greengrocers. They cost more.

[Nate]

I don't shop at Walmart because of the creepy smiley faces everywhere, the idiot 'greeter' guy, and the fact that the parking lot is so damn full of SUVs that I just know I'm gonna get backed into. Most of the stuff in there is cheap crap, (all the box stores have cheap crap today though so that may be a bit unfair to single out WalMart), it seems like all of it is made in China, and nobody in the place is qualified to wipe my nose let alone answer a technical question about you-name-the-friggin-product. I'd rather pay a little bit more and go to a small hardware store, swing by the outlets, take a walk down main street in town, go to a real music store or buy the crap online than step foot in that place. I may be in a unique situation where I live but WalMart isn't the only big box store near me, I can think of at least 10 within a 15 mile radius, and they're all the same. Perhaps the people shopping in all these places are just following the Bush doctrine? We're at war, so we must all do our part to support the economy and SHOP! Funny they don't tell you that the profits are probably going to some bastard running the show out of the Bahamas and not even paying taxes.

[Zen]

I haven't shopped at Wal-Mart in 10 years. And they don't always have the lowest prices.

[Non-Prophet]

Yeah, but buying a 40" plasma TV for $6 is so tempting. ;)

[Zen]

I enjoy spending time in the "third world child slave" aisle. Sometimes they're 2 for 1!

I will say this for Wal-Mart. It would genuinely appear that their current CEO, Lee Scott, has experienced an epiphany with the birth of his first grandchild. Wal-Mart is poised to lead the business nation in the implementation of sustainable / green business practices. No shit. Environmental Defense has even opened an office in Bentonville, AR at Wal-Mart's request. Current plans call for spending an initial $500 million dollars on sustainability projects.

The only issue is Scott is getting a lot of heat from other Wal-Mart executives who have yet to see "the light".

Check out...

http://money.cnn.com/2006/07/25/news/companies/wal-mart-short.fortune/index.htm

http://blogs.wsj.com/washwire/2006/07/06/wal-mart-warms-to-gore/

http://www.environmentaldefense.org/pressrelease.cfm?ContentID=5322

[Ryan]

Same here but i think it doesn't matter if walmart so so big right now! its just business! Plain business! Have you seen their walmart homepage? Thats the cool online shopping site. I think their one of the newest site! Walmart is still expanding.