Wal-Mart -- again

[Hawkmoon]

As if we needed further reason not to shop at Wal-Mart: https://ca.news.yahoo.com/wal-mart-puts-squeeze-suppliers-share-pain-earnings-051129723--finance.html

Does anyone besides me remember when Rubbermaid was nearly put out of business because Wal-Mart demanded prices so low that Rubbermaid was essentially selling to Wally World at (or below) cost? Here we go again.

With its stores in better shape, Wal-Mart now is redoubling its focus on beating competitors on price. Over the next three years, the company said it would spend several billion dollars on keeping prices low.

Foran said vendors will benefit. "We lower the cost of goods, which in turn generates savings and we invest that in price. Lower prices see an increase in traffic and basket, which in turn grows sales and gains share," Foran said.

That's a great, steaming pile of monkey doo right there. It reminds me of an old joke in the building construction industry. A new painting contractor opens up, and by aggressive pricing he gets almost every big job that comes along. Other painting contractors can't figure out how he does it.

The painting contractors are all at a trade show and some of them take the new guy aside and ask him how he does it. "Simple," he says, "I lose money on every job but I make it up in volume."

Sounds to me like that's what Wal-Mart wants its vendors to do.

[brimic]

In 10 years, they will be the next Kmart or Sears.
They pretty much have market saturation at a time when competitors are spreading their presence.

[KD5NRH]

They pretty much have market saturation at a time when competitors are spreading their presence.

It's the idiotic version of saturation they've gone for that bugs the crap out of me.  When I'm in a strange town, and need something that I know WalMart carries, but I'm not sure who else would carry it, I punch WalMart into the GPS...and about a third of the time, waste 20 minutes driving there to find out it's one of their "WalMart Marketplace" grocery-only stores, with the closest regular WM a half hour or more in another direction.

[Fly320s]

I don't understand, Hawkmoon.  Are you upset because Walmart wants to lower the cost of things people buy there?  Or are you upset because Walmart has asked its vendors to lower their costs to Walmart?  Or something else?

[charby]

Wal-Mart is forcing the suppliers to lower their costs (because they are such a buying behemoth) This in turn forces the suppliers/manufacturers to lower their labor costs, which moves more jobs overseas or lowers the wages here. Both are very damning to our economy.

Basically Wal-Mart is killing America.

[brimic]

Wal-Mart is forcing the suppliers to lower their costs (because they are such a buying behemoth) This in turn forces the suppliers/manufacturers to lower their labor costs, which moves more jobs overseas or lowers the wages here. Both are very damning to our economy.

Basically Wal-Mart is killing America.

Walmart isn't killing America.
I would argue that it is forcing their suppliers to come into the 21st century making them more competitive and more likely to survive.
Wages are falling or stagnating everywhere, not just in the businesses related to walmart.
The same with profit margins. A lot of operations that have survived since 2008, have made drastic cost cutting measures and are still working on tight profit margins- they would be out of business if they didn't cut costs.

Both are very damning to our economy.

Its an indicator not a cause.
Regardless of what .gov tells us on unemployment figures (which have been largely lies for the last 6 years- latest reports are a laughable 5.5ish%) and how the stock market is doing (which is being propped up by nearly free money from the FED in the form of stock buybacks) our economy is and has been in shambles. At some point, the Fed has to start weaning everyone off its teat, and all hell will break loose.

[Firethorn]

Wal-Mart is forcing the suppliers to lower their costs (because they are such a buying behemoth) This in turn forces the suppliers/manufacturers to lower their labor costs, which moves more jobs overseas or lowers the wages here. Both are very damning to our economy.

Basically Wal-Mart is killing America.

If it wasn't Walmart, it'd be somebody else.  Things were being outsourced before Wallyworld, and from what I'm seeing, all the 'low hanging' fruit has been picked.  Production is actually moving back to the USA for a number of products, because Chinese labor has increased in expense enough that it's not worth it.

The machinery is staying over there though, to produce for the domestic market.  They build new factories here, sometimes in Mexico, but mostly in union-free areas where labor costs are lower than average.

[roo_ster]

Regardless of what .gov tells us on unemployment figures (which have been largely lies for the last 6 years- latest reports are a laughable 5.5ish%) and how the stock market is doing (which is being propped up by nearly free money from the FED in the form of stock buybacks) our economy is and has been in shambles. At some point, the Fed has to start weaning everyone off its teat, and all hell will break loose.

This.  BS happy-talk by the administration over 8 years, aided by democrat party operatives with bylines in hte media have done their best to hide reality, but reality has a way of re-asserting itself after a time.

[charby]

Walmart isn't killing America.
I would argue that it is forcing their suppliers to come into the 21st century making them more competitive and more likely to survive.
Wages are falling or stagnating everywhere, not just in the businesses related to walmart.
The same with profit margins. A lot of operations that have survived since 2008, have made drastic cost cutting measures and are still working on tight profit margins- they would be out of business if they didn't cut costs.
Its an indicator not a cause.
Regardless of what .gov tells us on unemployment figures (which have been largely lies for the last 6 years- latest reports are a laughable 5.5ish%) and how the stock market is doing (which is being propped up by nearly free money from the FED in the form of stock buybacks) our economy is and has been in shambles. At some point, the Fed has to start weaning everyone off its teat, and all hell will break loose.

The reason I am saying it is damning is because eventually the American consumer base is going to dry up because wages will not be there to pay for the goods and services. I wouldn't be surprised if the majority of spending habits will cut out any extra items and just go to what is needed. Food and shelter will become a larger share of the household income, people will stop buying "luxury" items, even quick some of the modern essential services such as internet or insurance because a decision will need to be made between food or those items.

I'm actually surprised that with the 99% uprising a few years ago that something criminal didn't happen against the wealthy/Industry CEOs with housing being burnt, shot in the street, etc.

[brimic]

The reason I am saying it is damning is because eventually the American consumer base is going to dry up because wages will not be there to pay for the goods and services. I wouldn't be surprised if the majority of spending habits will cut out any extra items and just go to what is needed. Food and shelter will become a larger share of the household income, people will stop buying "luxury" items, even quick some of the modern essential services such as internet or insurance because a decision will need to be made between food or those items.

I'm actually surprised that with the 99% uprising a few years ago that something criminal didn't happen against the wealthy/Industry CEOs with housing being burnt, shot in the street, etc.

Yes, I can see that happening.
We could well be in a deflationary spiral and not even know about it as each of us only sees the small, local data points.
Personally, I've taken to buying only things I need and only spending discretionary money on things that are deeply discounted, if at all.

[HeroHog]

We lived and worked in Bentonville, AR and I worked for a company who had over 50% of their business with Wal-Mart. They can and WILL break a company.

[RoadKingLarry]

Nothing new though. A little over 20 years ago I had a part time gig working as a security guard at the big Zebco factory in Tulsa. They had separate lines for their products that went to Wal-Mart. The outside of the fishing reel didn't look any different but the inside was  significantly lower in quality. Doesn't matter any more since all of it is made in China now anyway.

[MechAg94]

I'm actually surprised that with the 99% uprising a few years ago that something criminal didn't happen against the wealthy/Industry CEOs with housing being burnt, shot in the street, etc.

That is largely because it was a targeted and funded political manuever and nothing more.  There was very little "grass roots" about it.

[MechAg94]

My main issue with WalMart is poor management and slow checkers.  If I go to HEB grocery store at a busy time, they have enough checkers to handle the load and they are moving.  If I go to WalMart, there is a long line at the Self-Check lanes because the small number of regular check lanes are moving so slow, few want to wait. 

The quote earlier about reducing prices made me get the idea they were trying to lower prices to make up for poor management.

[AJ Dual]

The market will curb or destroy Walmart as it sees fit. More brands will tell them to FOAD, and seek other avenues and models where they can maintain the margins they need. Or the merchandise will get so cheap it's indistinguishable from Dollar Store quality.

There's no need for people that ought to know better to engage in borderline OWS whining/class envy over it.  Nobody's engaging in any transactions not of their own free will.

There's only ONE entity in the United States everyone is FORCED to do business with, and that's our government.

[KD5NRH]

The market will curb or destroy Walmart as it sees fit. More brands will tell them to FOAD, and seek other avenues and models where they can maintain the margins they need.

This.  After all, it's not like there aren't tons of brands that survive entirely without WalMart.  Frankly, I'd like to see some of the ones that used to be identified with quality (Gerber, HP, etc.) pull out, ditch their cut rate lines and go back to the days of "if it's got our name on it, you can count on it" rather than "if it's got our name, and the model number doesn't end with WM, you can count on it."

[T.O.M.]

I recall reading somewhere that some manufacturers produce products for Wal Mart that appear to be the same as their products in other stores, but have some corners cut to keep prices down.  Shorter cords on appliances.  Cheaper materials.  Heard that Coleman has Wal Mart tents that are inferior to others that look the same as ones they sell through camping stores for higher prices.  Ignorant consumers get bit, but Wal Mart looks good.

[charby]

Coleman tents are inferior to others.

Fixed it for you.

[Scout26]

Same thing happened to us when I worked at OCP.  Walmart put a lot of pressure on us to reduce prices/our margin.  We started to use cheap materials/cut corners to reduce our costs and still try to maintain our margins.  We had three levels of coolers and lunchboxes.  A) Cheapest stuff we could make- Walmart specific items, B) Almost as cheap - Kmart (Hack, *spit*), and C) Our "Regular" high quality stuff, that went mainly to Target and all the other retailers we sold to.

Eventually Wal-mart went around us to our factories in China and had them make stuff directly for them (modifying them enough to avoid the entire patent infringement thing.)

Then Wal-mart put 75% of those factories out of business.   Kartma, she be a female dog....

[Regolith]

The market will curb or destroy Walmart as it sees fit. More brands will tell them to FOAD, and seek other avenues and models where they can maintain the margins they need. Or the merchandise will get so cheap it's indistinguishable from Dollar Store quality.

There's no need for people that ought to know better to engage in borderline OWS whining/class envy over it.  Nobody's engaging in any transactions not of their own free will.

There's only ONE entity in the United States everyone is FORCED to do business with, and that's our government.

100% this. No one HAS to sell through Walmart, and plenty of successful brands don't.

[AJ Dual]

Same thing happened to us when I worked at OCP.  Walmart put a lot of pressure on us to reduce prices/our margin.  We started to use cheap materials/cut corners to reduce our costs and still try to maintain our margins.  We had three levels of coolers and lunchboxes.  A) Cheapest stuff we could make- Walmart specific items, B) Almost as cheap - Kmart (Hack, *spit*), and C) Our "Regular" high quality stuff, that went mainly to Target and all the other retailers we sold to.

Eventually Wal-mart went around us to our factories in China and had them make stuff directly for them (modifying them enough to avoid the entire patent infringement thing.)

Then Wal-mart put 75% of those factories out of business.   Kartma, she be a female dog....

I have to know,  we're the ED-209's really as glitchy as they say?

[Scout26]

We were Outer Circle Products makers of family and kid friendly coolers, lLunch boxes, CD and cassette cases.    Omni Consumer Products was full of evil scientists engineers.


 

[Hawkmoon]

I don't understand, Hawkmoon.  Are you upset because Walmart wants to lower the cost of things people buy there?  Or are you upset because Walmart has asked its vendors to lower their costs to Walmart?  Or something else?

See Charby's post directly beneath your question. Wal-Mart is not nicknamed "China Mart" for nothing.

I have no problem with any merchant buying a manufacturer's product and cutting its (the merchant's) margins in order to beat the competition and increase volume. That's a simple business decision. When you get to a size that you become a manufacturer's largest customer, and then demand that the manufacturer cut its margins to below profitability (so that YOU can continue to make a profit while still lowering your prices), that's not good business, that's blackmail. And that's exactly what nearly put Rubbermaid out of business ten or fifteen years ago.

Eff Wal-Mart. They are killing America. And they don't care.

[wmenorr67]

One would think that Sam Walton is spinning in his grave.

[Fly320s]

When you get to a size that you become a manufacturer's largest customer,

That sounds like the problem is with the manufacturer, not Walmart.  Something about not putting all of one's eggs in one basket.