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Give them pickles! (08/01/2004)
By Janet Lewis Burns

Wal-Mart is the world's largest company, selling in three months what number two retailer Home Depot sells in a year.

Gib Carey, a partner at Bain & Co., has been quoted as saying, "Our clients cannot grow without finding a way to be successful with Wal-Mart." Somehow, that remark is unsettling...so much dominance by one retailer!

However, the International Forum on Globalization voices a positive overview on a growing number of organic markets, small farms, and locally owned businesses. The Forum has stated, "Very few of our daily needs cannot be met by small and medium-sized enterprises cooperating within a market economy."

Getting very little government support, "...they are the primary sources of livelihood for most of the world's people." May the little guy thrive!

Most information for this column comes from Fast Company's senior writer Charles Fishman, along with researcher Andrew Moesal, in a 12/03 article entitled "The Wal-Mart you don't know - Why low prices have a high cost."

The exposé poses the question, "remember Wal-Mart's big push to ‘buy American' back in the early 1990s? The enterprise has doubled its imports from China in the past five years alone, buying some $12 billion in merchandise in 2002."

Wal-Mart has the power to squeeze profit-killing concessions from a number of its 21,000 suppliers, forcing them to "lay off employees and close U.S. plants, in favor of outsourcing products from overseas."

In the name of fair play, there's a more positive side to the corporate profile. "By now," Fishman writes, "it is accepted wisdom that Wal-Mart makes the companies it does business with more efficient, focused, leaner and faster." An executive from Levi Strauss informs Fishman that, "it has helped everything, customer focus, inventory management, speed to market."

"Wal-Mart does not cheat suppliers, it keeps its word, it pays its bills briskly." So what's the big "BUT"? Praise, as well as pulverization by its suppliers, indicates that it uses its clout to get vendors in the door...then the real demands start. W.M. forcefully dictates how suppliers should operate, as well as what the "deep pocket:" will pay for their goods. No ifs, ands, or buts.

Some would say, "So what! As long as the price is right and it's handy - all under one roof!"

Before their alliance with Wal-Mart in 2002, the 150 year old blue jeans company, Levi Strauss, had suffered a six year loss, from a $7.1 billion peak in 1996. In July of 2003, "Levi Strauss rolled blue jeans into every Wal-Mart in the United States."

"BUT" Levi has had to sacrifice its topnotch quality to work with the big guys. The company, that 22 years ago had 60 clothing plants in the U.S., has closed its last two U.S. factories, laying off more than 2,500 workers, or 21% of its work force. It was predicted that the jeans mogul would be importing all its clothing by 2004.

With mixed emotions, past president of the Huffy Company, John Mariotti, admitted that, in order to continue to supply Wal-Mart, it made its last bike in the U.S. in 1999, forcing a 98% import of bicycles. "BUT" ...Wal-Mart, he counters, "has done more good for America by several thousand orders of magnitude than they've done bad. They have raised the bar, and raised the bar for everybody."

Pickles and sour grapes! Wal-Mart's grand introduction to ravenous consumers began with the infamous 12 pound, gallon-sized jar of Vlasic pickles, priced at $2.97, a year's supply of pickles (whether you would eat them or not). Some 3,000 stores sold the green gimmick at a price so low that Vlasic and Wal-Mart were making only a penny or two a jar.

It seems Wal-Mart is in a pickle of its own! In a recent syndicated newspaper article, Martha Burk reports that six women, representing 1.6 million of them, are suing the nation's largest employer for sex discrimination. On a sour note, if proven, this could be the largest class action suit in history, forcing back pay and promotions.

Women, close to 70% of Wal-Mart employees, are given lowest level jobs, hold only 14.3% of managerial positions, often can't afford the higher-than-average share of their health insurance plan, and are paid less than male counterparts.

"Most people don't know," Burk writes, "that the majority of the working poor (below $9.04 per hour) - and Wal-Mart is responsible for a bunch of them - are adult women." This encumbrance is far too big for a jar of pickles to bale out.

Could it be that the "BUT" stops here? 


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