Wal-Mart Phenomenon

The Wal-Mart Phenomenon

Michael Hancock

SOC200: Introduction to Sociology

Gary Mayhew

September 18, 2005

The Wal-Mart Phenomenon

At Wal-Mart, “everyday low prices” is the motto. This slogan has helped create the largest business in world history with over $245 billion in revenues. It is actually three times the size of the No. 2 retailer in the world, France’s Carrefour. Nearly 138 million shoppers visit one of the 4,750 Wal-Mart retail stores in the United States each week. This trade giant has eliminated tens of billions of dollars in cost efficiencies out the retail supply chain, passing the larger part of the savings along to shoppers as bargain prices. As noted in Business Week online (2003), New England Consulting estimates that Wal-Mart has saved U.S. customers $20 billion last year alone. Economists refer to the phenomenon as the “Wal-Mart effect” because of the suppressed inflation and productivity gains through the economy year after year. The power Wal-Mart has in the business world is clear and their low prices are great, but this dominance may have created problems for suppliers, workers, communities and even the American culture.

According to the latest economic results, Wal-Mart would be China’s eighth largest trading partner if it were a country. Importing expensive products and passing that discount on to the customer is one tactic that is driving the profits for Wal-Mart higher. This approach may seem beneficial for the consumer in the short-term, but may have grave results in the long-term. Greg Denier, spokesman for the United Food and Commercial Workers, which represents grocery workers, states that the “Walmartization of America has a broader impact than just retail workers. Wal-Mart probably has had more negative impact on manufacturing jobs than on other jobs in the United States.” (Moberg, 2004, p.1) By importing products manufactured by low wage earners in foreign countries, the squeeze is put on U.S. manufacturers which are forced to cut wages and workers, move overseas, or go out of business altogether. The Wal-Mart phenomenon and its effect on American business, economy, and its citizens need to be researched thoroughly.

Along with the problems associated with importing products comes the dependence of suppliers on the retail giant. Wal-Mart controls 30 percent of household items such as toothpaste, shampoo, and paper towels and many analysts predict it will shoot over 50 percent by the end of the decade. Today, Wal-Mart is the nations largest grocer, with a 19% market share, and the third largest pharmacy, with a 16% share. Meanwhile, thousands of small stores and their workers are going out of business, with some finding jobs at the local Wal-Mart at a lower salary. Mr. Hawkins, CEO of Green Hills, a family owned supermarket in Syracuse, N.Y. is quoted by Newsweek (2003), “It will be a sad day in this country if we wake up one morning and all we find is a Wal-Mart on every corner.”

The research of the effect that Wal-Mart is having on