Everybody hates Wal-Mart except those who shop and those who work there. Wal-Mart has grown from a small discount store (originally named Wal-Mart Discount City) opened July 2, 1962 in Rogers, Arkansas by 44-year-old Sam Walton and his younger brother James; first-year sales were $975,000 (source: The Wal-Mart Decade, by Robert Slater, Penguin Group, New York, 2003). As it grew, emphasis in the earlier years was on concentrating its stores in rural areas. Today it is the largest retailer in the world: its sales during the fiscal year ended January 31, 2006 were $312 billion; it employs 1.6 million people in 3,800 stores in the U.S. and in 2,400 stores in fifteen other countries (source: Wall-Mart’s website www.walmart.com).

I have three books on the company: Wal-Mart Decade (cited above), The Wal-Mart Effect, by Charles Fishman, The Penguin Press, New York, 2006, and How Wal-Mart is Destroying America (and the world) And What You Can Do About It, by Bill Quinn, Ten Speed Press, Berkely, CA, 2000.

Wal-Mart Decade is an objective study of the company, emphasizing its founders’ philosophy of keeping prices low and making shopping at its stores a "happy experience." It tells how Sam Walton personally visited his stores, even after they had proliferated into a large number, to make certain that his guidelines were being implemented.

The Wal-Mart Effect faults Wal-Mart in many respects, but does so in an objective way (if one assumes that its fact are accurate) and, thus, can be considered reasonably balanced. It cites several ways in which the company has been detrimental:

--A 1993 study of its presence in Iowa reported that, over a recent five-year period following the opening of a first Wal-Mart store in towns that didn’t previously have any: ...the arrival of Wal-Mart coincided with a swath of destruction. Grocery stores lost 5 percent of their business after five years, specialty stores lost 14 percent of their business, and clothing stores lost 18 percent of their business–all while total sales were rising 6 percent after Wal-Mart’s arrival. (p. 156)

–It gives several accounts of how Wal-Mart pressures suppliers to hew to its demands or else lose its business. One such case is with Vlasic, a pickle supplier. Wal-Mart demanded that it provide gallon jars of pickles at a price that would let them be priced at $2.97 at Wal-Mart stores. This was ...a price so low that Vlasic and Wal-Mart were only making a penny or two on a jar, if that...The gallon jar of pickles became what you might call a "devastating success" for Vlasic.

"Quickly, it started to cannibalize our non-Wal-Mart business" says (a Vlasic executive)...Vlasic was struggling...and couldn’t afford to risk the Wal-Mart business...(Eventually) profits in pickles had been cut by 50 percent–millions of dollars in lost profits, even as the business itself grew...(The Vlasic story) shows the impact of Wal-Mart’s scale and power in what we all think is a market economy. Wal-Mart’s focus on pricing, and its ability to hold a supplier’s business hostage to its own agenda, distorts markets in ways that consumers don’t see, and ways the suppliers can’t effectively counter. Wal-Mart is so large that it can often defy the laws of supply, demand and competition. (p. 80)

--The book points out how Wal-Mart is notorious for forcing its suppliers to make moves–including setting up manufacturing operations in foreign countries–to keep down the prices of merchandise sold in its stores. Such moves, although they allow the suppliers to keep Wal-Mart as a customer (at least, temporarily)--business they can’t afford to lose–overall the moves are actually detrimental to them.

Arm-twisting by Wal-Mart was a major factor in Levi Strauss, the internationally-known maker of blue jeans, having to shut down 58 U.S. manufacturing plants, at the same time sending 25% of its sewing operations overseas.

Likewise, L. R. Nelson, a manufacturer of lawn sprinklers since 1911, based in Peoria, Illinois, has reduced its work force in Peoria in recent years from 450 full-time employees (total employees used to reach 1,000 during the seasonal busy part of the year) to 120; it no longer makes lawn sprinklers in Peoria, only commercial irrigation systems. At the same time, Nelson had to set up manufacturing of its lawn sprinklers and other related items in China. Notwithstanding this move, Wal-Mart undercuts Nelson by selling its own brand of garden hose nozzles at $1.74 alongside Nelson’s at $6.72.

–Much attention has been given in the media to Wal-Mart’s treatment of its employees (known as "associates"). This book gets into that also–about employees having to do work after they have checked out (for which they are not compensated), being locked in the stores when they are closed to the public, so that they won’t pilfer merchandise, and many being classified as part-time so that they only qualify for skimpy benefits. The book gets into this also.

I heard the author, Charles Fishman, on a radio talk show recently. He commented that Wal-Mart, when it is opening a new store, will put out publicity that it is creating, say, 350 new jobs in the community. This isn’t true, he says, because something like only 50 are truly new jobs with the other 300 being filled by people leaving other local jobs to move to Wal-Mart. This stands logic on its head: First, to the 350 people they are all new jobs, presumably better ones than those they left. Second, most, if not all, of the 300 vacated jobs would probably have to be filled–although a few may not be filled for various reasons, the great majority of the new "associates" probably worked in fast-food restaurants or as bank tellers, seasonal construction workers, cab drivers, etc.–jobs that would have to be filled.

–Finally, the book includes a very interesting observation: that people who rant about Wal-Mart’s harmful practices still shop there. It describes the findings of a research firm that interviewed people in Oklahoma City:

They discovered four basic kinds of Wal-Mart shoppers: champions, enthusiasts, conflicted, and rejecters...The conflicted shoppers–15 percent in Oklahoma City–actively dislike Wal-Mart because of its impact on communities, wages, and jobs. But by a wide margin, they are the second most frequent shoppers at the store–they go there more than once a week (5.6 visits in a month), and they spend nearly as much as the champions–$289 a month...(Even the rejecters shop at Wal-Mart an average of nine times a year, and they spend more than $450 a year.) (p. 220)

How Wal-Mart is Destroying America... is just one long diatribe. Its author, one Bill Quinn, said that he was 88 years-old and living in a small town in Texas (and had earlier run a family publishing business) when his book was published in 2000. Its chapter headings tell it all:

Seven Bad Things That Happen When Wal-Mart Comes to Town
One Sure-Fire Way Wal-Mart Barges Into Town (and 3 Ways it Sneaks In)
Two Ways Wal-Mart Is Oh So Greedy
Six Reasons to Beware of Wal-Mart
Nine Ways Wal-Mart is Downright Bad to the Bone
Five Ways Wal-Mart is a Menace to America–and the World
Here’s What You Can Do About It!

Quinn’s style of writing is often corny homespun. If I were on an anti-Wal-Mart crusade, I wouldn’t want him as a compatriot. In a preface he says that his virulent hatred of Wal-Mart is due to the closings of small businesses in and around his small town, for which he blames Wal-Mart (although the closest Wal-Mart is 13 miles from the town). Maybe there are some Targets, Home Depots, Lowes, Best Buys, Circuit Cities, Sears, CVSes, Walgreens, Eckerds, RiteAids, Staples, Office Depots, not to mention supermarkets, nearby that also have had something to do with those closings.

I strongly suspect that his principal motivation was to sell his book.

Wal-Mart does pose a conundrum. Isn’t the builder of a better mousetrap supposed to do well? No one charges Wal-Mart with violating any laws other than occasionally some relatively minor labor law infractions. I recently bought a pair of jogging shoes at Wal-Mart for $9.78; they look good, are very comfortable, and seem to be built to last a long time–I would be a hypocrite to be one of its critics.

Yet, one can see the possibility of Wal-Mart, if not restrained in some way, becoming so powerful in the future that a "tipping point" (I apologize for the use of this over-used term) could be reached whereby the benefits to society of its wide variety of merchandise at attractive prices might be outweighed by detrimental effects of its unbridled power.