As Walmart Goes, so Goes the Nation

Impact of unemployment, stagnant wages

Yesterday, there was no Provolone cheese in the dairy section at my local Wal-Mart. In fact, many of the sections where sliced cheese is normally present in abundance were completely bare.

So I ate my ham sandwich sans cheese.

I thought of this today when I read news reports indicating this is proving to be a bad year for Walmart, the world’s leading retailer.

Bloomberg this week reported the contents of a Sept. 17 internal e-mail between a Walmart ordering manager and a supplier that stated inventory at Walmart stores has outpaced sales growth, and that the retailer missed out on some sales because it didn’t have enough employees to keep shelves stocked.

Wal-Mart’s workforce has fallen by 120,000 since 2008, despite adding several hundred locations. The company’s same-store sales have dropped for two straight quarters.

All of which raises some questions in my mind.

What happens when a company doesn’t hire a sufficient number of employees, treats them poorly and pays them so little that turnover is astronomical?  Hmm … The shelves aren’t stocked even though the product sits behind a door in the store’s inventory. Shoppers don’t make purchases they would otherwise make.  The store loses money.

(This week Wal-Mart said it was adding 35,000 permanent workers and increasing the hours of an additional 35,000, as well as hiring 55,000 seasonal workers.)

And what happens when our society is upside down – when most of our nation’s profits bypass the middle class and go directly to the richest people in the country.  Hmmm … If the middle class doesn’t have the money to buy Walmart’s products, who will? How much Provolone cheese can Bill Gates, Warren Buffet, the Koch brothers and the Walton family eat? (Yes, the Walton family is on Forbes list of the richest people in America.)

Wal-Mart told CNBC that Bloomberg’s story was “misleading” and Wal-Mart spokesman David Tovar told CNBC that the company has hundreds of inventory categories that are being constantly managed based on consumer demand.

Still, Walmart shares fell 1.5 percent last week.

Some of Walmart’s plight is believed to reflect a more general malaise in the retail sector.  Back-to-school sales were disappointing and some analysts forecast that the Christmas spending season will be the weakest since 2009.

The Christian Science Monitor interviewed Howard Davidowitz, a retail consultant based in New York, who notes that Walmart represents about 11 percent of total U.S. retail sales.

“If you look at this economy, it’s a train wreck for [the bottom] 80 percent of the American people, and Walmart sells to that 80 percent,” said Davidowitz. And “77 percent of the new jobs created this year were part-time jobs. We have the lowest full-time labor participation rate in 35 years. Consumers’ incomes are not growing. One of six Americans are in poverty, and another one in six are an inch away from poverty.”

Walmart’s problems may seem trivial today, when our government is literally closed for business. However, one suspects the two matters are related

 

Comments

  1. I’m surprised you would even shop in a Walmart. Given how they treat their employees, I won’t give them any of my money despite being unemployed and living in one of the highest cost of living areas of the country (SF Bay Area). Plus, I’ve found that with Club Card and web app deals, Safeway’s prices are not much different than Walmart. However, at Safeway, I get to support union workers getting a living wage – not to mention better service and cleaner stores. Trader Joe’s and Costco are also able to give their employees fair wages and benefits while still being highly profitable. Stores like Walmart paying slave wages are a big reason for the economy not recovering faster. Henry Ford paid his workers a fair wage not because he was benevolent, but because he realized that it was to his benefit if his employees could afford to buy his cars. If only the corporate CEOs of today were as smart.

    • I have friends and relatives who for years have boycotted Wal-Mart but that hasn’t changed anything. Clearly, the masses shop at Wal-Mart because the prices are low and it’s convenient. You have identified a way of getting low prices at a Safeway with just a bit more time and effort. I think a model of service that requires a consumer to spend more time and effort to get Wal-Mart prices is limiting its appeal primarily to shoppers who have more time and effort to expend. Personally, I do most of my grocery shopping at a sort of big box grocery store called, WinCo, which is employee-owned. It isn’t as pleasant as Trader Joe’s and Whole Foods but it is consistently cheap, carries products that meet my needs and it treats its workers with dignity and respect. Rather than boycott Wal-Mart, I think it is more effective to call out Wal-Mart for its cheap, misguided and inhumane personnel policies, which relegate many Wal-Mart employees to food stamps and poor health as a result of a lack of medical care. That said … more power to you!

Speak Your Mind

*