Wal-Mart the Great

Wal-Mart is a fascinating study of the modern Corporation, for good and ill. I wish I had more time to write about it, especially these days when there is so much good material. Here are four recent stories that are well worth the read to anyone interested in modern retailing, marketing, social engineering, capitalism, and similar stuff.

First there is an excellent piece on Wal-Mart's social impact in the "New York Times".

"[W]ith $256 billion in annual sales and 20 million shoppers visiting its stores each day, Wal-Mart has greater reach and influence than any retailer in history. "In each historical epoch a prototypical enterprise seems to embody a new and innovative set of economic structures and social relationships," said Nelson Lichtenstein, a history professor at the University of California here and the organizer of the conference. "These template businesses are emulated because they have put in place, indeed perfected for their era, the most efficient and profitable relationship between the technology of production, the organization of work and the new shape of the market."

Then there is a useful overview article at "The Economist, which concludes:

"With so many eyes watching it, Wal-Mart may have decided that it has to sacrifice a bit of its entrepreneurialism to reduce its legal risks. It recently set up a “reputation taskforce”, introduced new personnel procedures, hired extra lobbyists in Washington, DC, created an “office of diversity”, and launched new public-relations and advertising initiatives, dubbed “good jobs” and “good works”, featuring lots of beaming associates. These are not the actions of a company intending to get smaller. Wal-Mart, already huge, is preparing to get a whole lot bigger."

Opponents of Wal-Mart -- and there are many -- are obliged by the sheer bulk of the "enemy" to concentrate their energies on local battles. Guerilla News Network has an opinionated piece about the anti-Wal-Mart actions in Inglewood, California. The same article almost canonizes Costco for having 20% union membership compared to zero at the "Evil Empire".

"Costco, surprise, has a lower turnover rate and a far higher rate of productivity: it almost equaled Sam's Club's annual sales last year with one-third fewer employees. Only six percent of Costco's employees leave each year, compared to 21 percent at Sam's. And, by every financial measurement, the company does better. Its operating income was higher than Sam's Club, as was operating profit per hourly employees, sales per square foot and even its labor and overhead costs. Here's a quote to emblazon for corporate America: "Paying your employees well is not only the right thing to do but it makes for good business," says Costco CEO James D. Sinegal."

Still, other businesses look on Wal-Mart with awe and appreciation. It is always the benchmark for comparison. For example, Business Week Online has a fascinating article about German retailer Aldi:

"Aldi is Europe's stealth Wal-Mart. Like the Arkansas-based giant, Aldi boasts awesome margins, huge market clout, and seemingly unstoppable growth -- including an estimated sales increase of 8% a year since 1998. It relentlessly focuses on efficiency, matching or even beating Wal-Mart Stores Inc. (WMT ) in its ability to strip out costs. Yet privately owned Aldi is also very old-school German, financing expansion with cash to avoid debt, shunning publicity, and moving quietly into new markets before the competition catches on. That has allowed the onetime local grocer in Essen to become one of the world's biggest retailers, with $37 billion in sales, a fraction of Wal-Mart's $245 billion but enough to give Aldi a 3.5% market share in Europe, vs. 6.8% for market leader Carrefour, according to Brussels-based market watcher M+M Planet Retail. Even mighty Wal-Mart has struggled against Aldi in Germany."

To close, the Times article quotes Nelson Lichtenstein, a history professor at the University of California here and the organizer of a recent academic conference on Wal-Mart:

Today's prototypical company, he declared in opening the conference, is Wal-Mart, which, he said, rezones American cities, sets wage standards and even conducts diplomacy with other nations. "In short, the company's management legislates for the rest of us key components of American social and industrial policy," Mr. Lichtenstein said.