It’s just a big old sack of dog food, for crying out loud, but Charles Fishman can hardly restrain himself: “Fifty pounds for $13.82! That’s amazing!” the author of “The Wal-Mart Effect” bursts out. “That’s less than 30 cents a pound!”
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We think we know all about Wal-Mart. But we don’t.
It’s a fantastic American success story, built on entrepreneurial genius and hard work, whose rock-bottom prices are a boon to the nation’s working families. Or it’s a soulless corporate empire that decimates small-town shopping districts, pays its workers poverty wages and restricts their access to decent health care.
Or maybe both: The two versions aren’t contradictory, after all.
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His wife, an editor at the Philadelphia Inquirer, suggested a different approach. Couldn’t he write more broadly about the benefits and costs of being a Wal-Mart supplier? How much does being in a “partnership” with a store so big that 100 million Americans shop there every week put you under Bentonville’s thumb?
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Fishman’s article wasn’t easy to report. No one at Wal-Mart would talk to him, and suppliers were terrified by the very idea. Wal-Mart is “our biggest customer by far,” a Dial executive told him. “We have a great relationship. That’s all I can say. Are we done now?”
The article — based mainly on conversations with people who used to do business with Wal-Mart — got more response than anything Fast Company had ever done, Fishman says. A significant percentage came from businesspeople hungry for advice on working with the world’s biggest retailer. “I could have opened my own little ‘How to Deal With Wal-Mart’ consulting firm,” he jokes.
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Fishman, meanwhile, has been tempering his running commentary on Wal-Mart prices with observations about how those prices are achieved.
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Yet much of what Fishman highlights on the Wal-Mart Tour has more troubling implications.
Take the L.R. Nelson lawn sprinklers, which used to be made in Peoria, Ill., before Wal-Mart pressured Nelson to make them in China instead. Before the move, one laid-off Peoria worker told the reporter, Chinese managers were “walking around the plant and videotaping us working. That was horrible, horrendous. Right in our faces. They are taking our jobs.”
Take the fresh salmon we find in the seafood section for $5.84 a pound (it cost a buck less when Fishman was writing his book). “What exactly did Wal-Mart have to do to get salmon so cheaply?” Fishman wrote, then answered his own question by noting that the Chilean fish farms from which it buys are environmental disaster areas that deposit “a layer of toxic sludge” — made up of salmon feces and excess fish food — on the ocean floor.
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Last year, Akther joined 14 other workers from Bangladesh, China, Swaziland, Indonesia and Nigeria to sue Wal-Mart, arguing that its suppliers’ actions are the company’s responsibility. Wal-Mart has argued, in response, that it has a code of conduct for its suppliers and a worldwide inspection program to enforce it. Fishman’s analysis of this program led him to conclude that Wal-Mart’s inspections, however well-meaning, are not tough, frequent or independent enough to prevent abuse.
But lost manufacturing jobs, environmental damage and sweatshops are only part of the cost of “always low prices.” The Wal-Mart effect can be more subtle as well. To make this point, Fishman walks me over to the lawn mower display to consider a product that’s not there.
That would be the Snapper mower, a high-end brand whose management decided a few years back that it couldn’t afford to continue dealing with Wal-Mart. The reason? Meeting Wal-Mart’s incessant demands for lower prices would put the company in what Fishman describes as a “death spiral” of “collapsing profitability, offshore manufacturing and the gradual but irresistible corrosion of the very qualities for which Snapper was known.”
Almost no one turns down Wal-Mart. The sales volume it offers is simply too enticing. But “once you get hooked on the volume,” as the CEO of Snapper’s parent company once explained, “it’s like getting hooked on cocaine.”