April 17, 2006

• The vendor squeeze is part of a broader push toward a theoretical "zero inventory" state in which Wal-Mart won't pay for products until they're purchased by consumers. I'd be interested to learn how their going to pull of that little magic trick.
• "taking measures to eke more spending out of upscale consumers already visiting Wal-Mart stores with higher-ticket, higher-margin items." The people I see turning into the local Wal-Mart are not "upscale" by any means. They also certainly aren't very aware of (or don't give a sh*% about) Wal-Mart's pitiful record of human rights abuse. Wouldn't hurt me a bit to see the company disappear altogether, we would all be better off. And, bottom line, the amount of inventory that Walmart carries doesn't impact on the amount purchased... if manufacturing has been in its own little bubble due to over-inventory, then it is time for an adjustment...this is temporary at worse.
• It does make sense that any monopoly (or near enough to one) in retail would move to a 100% consignment model. Why pay producers for products before the customer does, when, since you're the only retail game in town, the producer gets to shoulder all the risk? But then, I'm vehemently anti-monopoly.
• More on "zero inventory" theory here (I didn't know much about it).
• I'd be interested to learn how their going to pull of that little magic trick. Easily ... they have their suppliers by the balls.
• There are examples of this in retail already (for instance, I believe this is how retailers handle magazines and software). It just sounds like Wal-mart would like to expand this to cover all of their inventory.
• Wal-Mart won't pay for products until they're purchased by consumers. Wal-mart is notorious for paying suppliers verrrrrry slowly. They don't pay for products until well after the consumers already.
• Yeah, but you can't sell shit you don't *have*. I'm basing this on my experience as a pot salesman back in the '80s, and my memory is kinda fuzzy, but as I recall, getting suppliers to front is not only difficult, but fraught with personal hazard. Wal-Mart, for all their bigness, is not a monopoly, not by a long shot. Their shtick is that for remote locations, they set themselves up as the only game in town and drive out the little mom-n-pops. But for urban and suburban sites, they have plenty of competition. And their margins are anorexic. They are widely known to be predatory when it comes to HR, are typically despised as low-rent and of poor quality (hence the movement to upscale, remember how well that worked for K-Mart) and do not have a hugely expert executive tier, esp. at the middle levels (store and regional managers). Sure, their suppliers are shitting themselves, but Wal-mart handles too many goods through too many suppliers to get them all to toe this line - these suppliers are willing to cut rates with wal-mart, after all, because wal-mart buys inventory in such huge volumes. Cut that, and there's no upside for their suppliers to cut wholesale prices. And the suppliers have been waiting *years* for an excuse to give wal-mart a thumb in the ass. My take is, if you don't like wal-mart, this announcement is a good one.
• *skims kittenhead's zero inventory article* What this sounds like is that they want to set themselves up as product brokers rather than retailers. The age of the internet, however, is not a good time to be moving into the middleman marketplace :) They'll regret this.
• Yeah, but you can't sell shit you don't *have*. I may be misunderstanding, but it sounds like they're wanting a "get the stuff now, pay for it as it sells, ship the stuff that doesn't back to the supplier" model, which is damn near as good as zero inventory. Which they can easily pull off with sufficiently hungry suppliers, but Fes is right, no way they get this realized across the board.
• Yes, but plenty of companies operate this way, paying their suppliers 30 to 90 days after shipments are received. Only companies that are a bad credit risk are made to pay up front. What they're asking their suppliers to do, it seems to me, is to warehouse their stock for them, thus increasing Wal-Mart's profits further by not having to warehouse its own stock. That, and having to make more frequent deliveries at their own expense is what suppliers will be squawking about. I think they will tow the line, however, because Wal-Mart comprises a huge percentage of their business. Who says no to their biggest customer?
• I've heard that Wal-mart's "Net 30" or "Net 90" is understood to be "Net whenever we feel like it and if you don't like it, well too bad". A large percentage of what's sold at Wal-mart is sold at a loss (to the supplier, not to Wal-mart). Wal-mart's policy has become one item/one supplier (this is the general trend in "big box" retailing). They essentially auction the "right" to be the supplier for each item. Many manufacturers are afraid of the hit their brand awareness would suffer if their product isn't on display at Wal-mart, even if they make little or no money actually selling via Wal-mart.
• Wal-Mart won't pay for products until they're purchased by consumers. Interesting -- the world's largest consignment shop.
• the world's largest consignment shop No, it's more like a pawn shop And we've pawned our future.
• Kittenhead: Are you old enough to remember that glorious time when the public rose up as one and challenged the evil monopoly of Ma Bell and shattered her on the rock of their ire? It took a bit to get things operating smoothly again, but that was a fine and magical thing we had done. Now it's all monopolies, and there's no public outcry. *climbs in handbasket headed to hell MonkeyFilter: I'd be interested to learn how they're going to pull off that little magic trick.
• I am indeed old enough. And you're right, where the hell is the outcry?!! I demand my outcry! Kids these days. . .
• I'd say the biggest risk is what yer Prez is doing with the big buckeroo budget defecate. Next yer real estate bubblies, ridin' on yer right ARM morties. Next yer hot and heavies over in yer Middle Eastern. What y'all excited about the Wal-Mart fer? Buncha shoppers with yer carts and yer parking lots. I'd worry the defecate first and furmost. Buy some Gold boolions. Cut back on spenses and yer fancy restorant meals like them Quarter pound 'em fries.
• The vendor squeeze is part of a broader push toward a theoretical "zero inventory" state in which Wal-Mart won't pay for products until they're purchased by consumers. I'd be interested to learn how they're going to pull of that little magic trick. I used to work for a company that did a lot of business with Dell. Dell doesn't warehouse their stock (components, accessories, etc.). The vendors put all their stuff on trucks, back those trucks up to Dell's facility, and leave them. Dell pulls stock from the trucks to fill orders as needed. Until that moment, the vendor is responsible for the inventory -- Dell doesn't pay for anything until they actually sell something and pull it off the truck. Once it crosses some line on the loading dock it becomes Dell's. Most Wal-Mart stores have very little warehouse space in them. They stock from the trucks that are parked in the back (which are filled at district/regional warehouses). Changing to the Dell model wouldn't change their stocking on a per-store basis all that much. Rather than Wal-Mart trucks in the lot, vendor trucks would hang out, waiting for Wal-Mart to pull off whatever the store needed when it needed it. This would cut out most of the need for their regional warehouses and reduce both storage and fuel costs. However, as was mentioned above, Wal-Mart deals with many vendors, and this model, if they got it off the ground, would bite them on the ass, if only because the vendor costs would result in higher wholesale prices to Wal-Mart and soak up much of the savings realized by reducing their own warehouse and fuel costs. I doubt Wal-Mart will follow the Dell model, at least at individual stores, but it's one way Wal-Mart could realize a zero-inventory state.
• Monkeyfilter: I'd worry the defecate first and furmost.
• Buy some Gold boolions. Grab yer pans and pack th' mule, kids! Looks like we're going on a Gold Boolean Search!
• Layne, I adore you for that.
• What they're asking their suppliers to do, it seems to me, is to warehouse their stock for them Koko is exactly understanding what's going on here. Walmart is growing their profits at the expense of their 'partners', by shifting business costs to their suppliers and using their market share to make it stick. Walmart's suppliers will have to manage much more complex warehousing and shipping schedules, which pushes costs up. Walmart, however, will refuse any responsibility for those increased costs and play suppliers against each other. Walmart doesn't generate profit or drive sales volume anymore. They simply steal it from other companies. I'm waiting for the study that proves Walmart's benefit to the overall economy is actually negative. Can't be too many more years until they reach that point. "Net 90" is understood to be "Net whenever we feel like it This is quite common with monopolistic and arrogant distributors and retailers. There are very few major computer industry distributors, which gives those distributors tremendous power. It's quite common for them to with-hold payment from their manufacturers until they actually need more product. This is one reason it became impossible to be a small software publisher, particularly in games. Even if you managed to front the development budget, even if your product was super 'hot', you couldn't get the damn distributor to pay you what they owed, and you had absolutely no leverage. A business partner once dealt with Roots Canada, a very powerful and popular brand in the Great White North. After bugging them for payment past 90 days, they finally said, literally, 'If you want to do business with us, shut up and wait 'til we feel like sending a check.' this model, if they got it off the ground, would bite them on the ass, if only because the vendor costs would result in higher wholesale prices to Wal-Mart No, it wouldn't. As TimeFactor mentions above, Walmart essentially auction the "right" to be the supplier for each item. There's always someone else desperate enough for that Walmart business to make the deal.
• Can you please stop all this doom? I just went into big debt by buying my first house. Thank you for your consideration.
• Meh. It's no doom. Don't like Wal-Mart? Don't shop there. If everybody who had a problem with Wal-Mart didn't shop there, they'd make a LOT less money, have a lot less power and would have to rethink their business model. Mare, your house is as safe as mine, Wal-Mart or no (and I shop there maybe four times a year), unless you happen to actually work for Wal-Mart. In which case, if you don't work at the corporate center in Bentonville, you have my condolences.
• I think you mean further down the toilet, but that's academic. I expect China could destroy your economy fairly easily now, and if the imperial chimp and his handlers are stupid enough to start wargames with Iran, expect the Chinese to make your lives very difficult. Yay China! Aside from that, anyone who shops at Walmart is an ignoramus or insane.
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• Ewww, what happened to Dr Doom? He gone all puffy.
• A similar model is used in manufacturing, called kanban. Basically, a manufacturer holds no materials of its own (or only one build's worth), but rather orders them from a supplier as needed. This works very well for keeping costs down, but the supplier ends up taking it up the ass (the company I work for is currently taking it up the ass from a customer who uses the kanban model), unless the supplier uses kanban, and then the supplier's supplier gets screwed, and so on, and so on.
• I expect China could destroy your economy fairly easily now And their own along with it. But this week's Businessweek has an article about how perhaps as many as a fifth of Chinese are currently taking English language courses. So I'm thinking that they might hold off on the frog-and-scorpion parable enactment for a bit yet. what happened to Dr Doom? too many carbs.
• Aside from that, anyone who shops at Walmart is an ignoramus or insane. Kelenkye: I beg to take issue with that remark. The little town where I live is 50 miles from an area with any type of department store. WallyWorld has run any decently priced clothing/shoe/small hardware store out of business here. We have no toy store, no fabric store, no pet store. Mr. Horse and I go to Boise on a much greater frequency than most folks here, since, the in-laws and out-laws live there, so we do more of our shopping at other stores than most here, but I think it's a bit ingenious to assume that everyone has the opportunity or the money to shop elsewhere. Signed, Stupid and crazy
• True enough (except I don't think you mean "ingenious"). In most rural areas, Wal-Mart is the only game in town. But in places where people have a choice, they're still choosing Wal-Mart, out of ignorance and/or sheer laziness. Their prices aren't even cheaper on most items. They use loss-leader tactics to get people into stores, then charge the same prices as other stores for the non-loss items.
• They use loss-leader tactics to get people into stores, then charge the same prices as other stores for the non-loss items. Most stores do that...because it works. Many people shop at Wal-Mart because they believe, rightly or wrongly, that they're saving money. If you tell them about some of Wal-Mart's dubious business practices, they'll just shrug and say "That's not my problem".
• Exactly ... they don't understand how much it hurts the local economy, and how that directly affects them.
• Many people shop at Wal-Mart because they believe, rightly or wrongly, that they're saving money. Other companies have no choice but to try to meet the lower Walmart prices so that's why you don't see price difference between the giant stores. What Wal-Mart *did* do, in our city at any rate, was to start the discount ball rolling. If you compare current prices with what was in our town *before* Wal-Mart came you'd find prices are now lower. So even if you don't shop at the big W, you are in a way "benefiting" from their presence.
• KoKo: Yea, that other word wid the right spelling: in·gen·u·ous (n-jny-s) adj. 1. Lacking in cunning, guile, or worldliness; artless. See Synonyms of naive. Beez got nothin' on me! Damn those vowels!!
• "...this week's Businessweek has an article about how perhaps as many as a fifth of Chinese are currently taking English language courses." Whether or not Businessweek is correct in their data, Chinese people could be learning languages of all sorts for a variety of reasons. Extrapolating so narrowly from one debatable data point is indicative of little. As for destroying their own economy, I have my doubts. I think we'd witness a fairly fluid transistion into other Asian markets, as well as those in South America and Europe, in virtually no time. For those defending Walmart and their little symbionts, I understand the depressing lack of choices in some towns. I do trust, however, that there is precious little that one needs in a Walmart to begin with, and that if one really planned at least half sensibly, one would not need to shop there. As Koko noted, there are (amazingly) people who still shop there when confronted with a dizzying array of choices. Even if we are to assume that the people unfortunate enough to live where only Walmarts exist (which I doubt is really true, but I admit that other stores may be inconveniently located), the people Koko described are clearly stupid and/or insane. Those not stupid or insane, BlueHorse, who happen to find themselves inconvenienced by the monolith, still ought to do their part and refuse to give Walmart their money.
• Tranferring warehousing and transportation responsibilities to suppliers fits in well with Walmart's latest greenwashing initiatives. They can say that they're reducing their use of fuel and so on while they're really just having someone else burn the fuel for them.
• Even if we are to assume that the people unfortunate enough to live where only Walmarts exist (which I doubt is really true, but I admit that other stores may be inconveniently located), You obviously don't live out in the country. Yes, there are indeed areas of the US where for many items, if you want it, Wal-Mart is literally your only choice, because they have run off all the competition. And I'm not talking about leopard print beanbag chairs or N-Sync CDs, I'm talking about things like prescription drugs and office supplies and groceries. If you consider a 45-minute-long drive to go get essentials somewhere else a mere "inconvenience," then good on you.
• Thank you, MCT.
• Is Wal-Mart Good for America? "And Wal-Mart, in its promise to lower consumer costs, is ignoring the fact that at the same time it's participating in the lowering of worker standards; that the very people who buy their goods are, in fact, being pushed into a lower earnings [category]. There's a kind of cyclical process of poorer workers needing cheaper goods, needing poorer workers to produce those goods, in a kind of ratcheting down of standards. What happens is that inequality is increasing in the United States. The middle class is kind of being hollowed out, and there're more and more workers who find that it's hard to earn a living wage. They don't make enough in order to live. The distinction between the earnings of workers and the earnings of management, that division has grown huge. It used to be something like 60-1, [what] the highest executives made versus their workers. Now it's something like 600-1."
• More to the point: What Wal-Mart *did* do, in our city at any rate, was to start the discount ball rolling. If you compare current prices with what was in our town *before* Wal-Mart came you'd find prices are now lower. So even if you don't shop at the big W, you are in a way "benefiting" from their presence. and: If you tell (people) about some of Wal-Mart's dubious business practices, they'll just shrug and say "That's not my problem". Pricing is not set arbitrarily. Retailers do not, as a rule, set unreasonably high prices. If they are reducing prices, it is because they are reducing their expenses elsewhere, and there tend to be two ways they go about doing this. First, they pay their workers less, and try to keep them all limited to part-time. They try to not to pay any benefits or overtime. Basically, they try not to pay the bulk of their workforce a living wage. More importantly ... Wal-Mart is a powerful enough force that they can dictate to manufacturers what price they are willing to pay for goods. For the most part, these are not prices that anyone can charge if they are going to manufacture their goods in North America. The wages are too high, and they expect to be paid benefits. Manufacturing has to move to places where the costs are phenomenally lower. The combination of these two factors is where we see the serious detriment to North American society. Unskilled workers used to be able to count on jobs that paid decent wages and took care of their basic needs like medical benefits and a pension plan. This is rapidly becoming a thing of the past. Manufacturing jobs are moving over seas and being replaced with more and more service economy jobs. These service economy jobs are not the kind of jobs people with families to support are supposed to live on. The wages are lower and they provide little to no security. The effect is as it says below, a widening of the gap between the skilled and the unskilled. We can't pretend that this sort of widening doesn't affect all of us in some way. It effects everything from lowering the tax base, increasing the cost of social support, to increasing crime rates. Generally, the expectation that prices should be as low as the ones Wal-Mart charges and that these savings come out of "thin air" is damaging in and of itself.
• The above is courtesy Mr. Koko, who actually watched the Frontline special I linked to earlier.
• PWND THIS THREAD!!! BA-BAMMM!!!
• Koko : middleclasstool :: baby poo : platinum
• *hands lunch money over to Koko*
• Mr. Koko rocks. I worked in HR for a retail company. HQ was constantly saying, "Salary is our biggest expense. We can't afford to hire more workers or pay more." However, they were also constantly saying, "We have to provide better customer service to stay competetive." You can't do both and still treat your workers like human beings.
• "You obviously don't live out in the country. Yes, there are indeed areas of the US where for many items, if you want it, Wal-Mart is literally your only choice, because they have run off all the competition. And I'm not talking about leopard print beanbag chairs or N-Sync CDs, I'm talking about things like prescription drugs and office supplies and groceries. If you consider a 45-minute-long drive to go get essentials somewhere else a mere "inconvenience," then good on you." Correct, I live in a city -- one in Canada, in fact. We have a Walmart or three here, too, much to my dismay, but they're flammable. I always marvel at the argument presented, the odd claim that "...Wal-Mart is literally your only choice...": do communities spring up around these behemoths, utterly dependent of them, or have the Walmarts put all the other stores out of business? Of course, we know that Walmart tends to move in and obliterate the competition, but that, to me, indicates that the locals are people I'd rather not be neighbours with. Get the hell out of Nowheresville if it's inevitable that you have to shop at Walmart, which is still an argument I don't buy. As for that 45 minute drive, I ride my bicycle every day for at least two hours. There are few amenities I can't carry on it, and for those that do require a car, renting or borrowing one has never been a terrible obstacle. Shockers, I might have to live without that leopard print beanbag, but picking up prescriptions and groceries are all well within the grasp of people who refuse to donate money to right wing, religious fundie nutcases.
• ...picking up prescriptions and groceries are all well within the grasp of people who refuse to donate money to right wing, religious fundie nutcases. I was understanding you okay, but then you lost me.
• It doesn't even matter if it's their only choice, or even the most convenient one. If people want to shop at Wal-Mart and save themselves a few bucks on tube socks, they're free to do so, and it doesn't lower my estimation of the one bit. It certainly doesn't make them stupid or insane. I'll tell you what *is* stupid and insane...and that's imposing your own idea of what's 'right' and 'moral' on other people, and insisting that they make some personal sacrifice to appease what you (and only you) consider to be the greater good. You're no different than the religious fundies in that regard.
• Koko said: "They try to not to pay any benefits or overtime." Wait a second: Then how do you explain this: Wal-Mart boosts health coverage Boudja! *takes lunch money back* hey, there's a nickel missing...
• StoreyBored: buy a map, but not at Walmart. rocket88: I'm not asking for your estimation of others to be raised or lowered. Shopping at Walmart has consequences. If you think the consequences are beneficial to society and the planet, or if you just don't care, you're either stupid or insane. Don't agree? That's fine by me. The 'personal sacrifice' you address amuse me. Those poor dribblers, asking them to be responsible is such a chore.... And, only stupid, insane buffoons wear tube socks.
• Wal-Mart takes aim at Democratic critics Reasons to shop at Wal-Mart: Low prices Organic produce Reasons not to shop at Wal-Mart:

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• Wow, kelenkye, you're certainly...passionate. You make me feel like a right-wing fundy for getting that one roll of film developed there once.
• Meh.
• If you think the consequences are beneficial to society and the planet, or if you just don't care, you're either stupid or insane. Yeah, I'm not stupid, but I can't dispute being insane. But Walmart's low low prices are even more insane! And, if you don't take advantage of those insane low prices, or if you just don't care, you're either stupid or trolling.
• If someone doesn't bring me a cheese sandwich pretty soon...
• I have smoked ham and swiss!
• Wasn't it hard to inhale? *rimshot*
• Food fight: Grocers (in Canada) prepare to compete with Wal-Mart Regardless of which grocer wins the war in the long run, for now, the victors are consumers. Actually, no. Because of their strong unions, grocery stores are one of the one remaining reliable employers of non-skilled workers at living wages in Canada. We surely don't win if Wal-Mart wins.
• Wal-Mart sales worst on record Oh they're goin' down, matey! Just you watch!
• I found this blog linked from Lara's "Passive Agressive Notes" site. It's the story of a woman who got chemical burns on her feet from a pair of Wal-mart flip-flops, and her battle to have the injury recognized by the company. Warning: lots of pictures of feet with chemical burns on them, and poor writing.