FLORIDA, October 24, 2012 — We are all living in a Walmart world, sure enough.
The one-stop-shopping center is a deeply ingrained part of American culture, and more so its retail economy. This hasn’t happened without controversy.
Walmart draws harsh criticism for various reasons — ranging from employee wage rates to where individual stores are built — but few people think about the chain’s legacy in a truly detailed fashion.
In 2006, business journalist Anthony Bianco published his book, The Bully of Bentonville: How the Everyday Cost of Low Prices is Hurting America. With the turn of each page, his analysis defined itself as an exception to the rule.
Now, Bianco explains whether frustration with Walmart is really cloaked anger at free enterprise, why stores are often built in low income areas, how the chain drives locally owned businesses out of existence, and much more.
Joseph F. Cotto: Many believe that disfavor toward Walmart is disguised anger at the free enterprise system. Have you found this to be the case?
Anthony Bianco: I’ve heard such views expressed but don’t considered them valid. For Walmart or its defenders to equate the company with the free enterprise system is self-serving and a bit pompous. Sam Walton invented a business model that cut costs to the bone in retailing and his successors applied it on a massive scale. The distribution of the economic benefits of Walmart’s success has been wildly disparate, favoring consumers and shareholders over the people who labor in its stores and struggle to survive on their wages.
I think the anger that Walmart provokes is rooted in this disparity, which I think is more extreme than it needs to be for the company to prosper. It is downright freakish, in fact, that the Walton family still owns more than half of the stock in a company as old and as large as Wal-Mart.
Cotto: Why does Walmart often build stores in smaller, impoverished communities? What is the economic appeal of these places?
Bianco: Walmart is a product of poverty in the sense that its proving ground was the Ozarks, one of the poorest regions in America. Its essential appeal has not changed in the decades since it expanded beyond its home region to conquer the world, or at least large parts of it. The company excels at bringing real value to consumers who must watch every penny. Walmart has pretty much saturated rural and small town America with its strategically located stores.
It aspires to doing the same in big cities, but is grappling with formidable barriers to entry, notably political ones.
Cotto: Does Walmart actually drive locally owned businesses out of existence? Or, is this an urban legend of sorts?
Bianco: It’s no legend. The impossibility of competing with Walmart’s economies of scale has put many local businesses under. One can debate whether this is good or bad for local communities, but there is no question that it has happened, and is happening still.
Cotto: It has been noted that taxpayers essentially foot the bill for Walmart. This is because its employees receive lean medical benefits, and consequently apply for public assistance. How serious of a problem would you say that this is?
Bianco: I don’t think it’s huge social problem overall. But it can have a significant impact on particularly hard-pressed municipalities across the country.
Cotto: Why, generally speaking, does Walmart have such a high employee turnover rate?
Bianco: Working in a Wal-Mart store is a really tough way to try make a living. The money is meager and the company takes an authoritarian and inflexible approach to employee relations that is not softened in any meaningful way by its calling its workers “associates” or by turning company gatherings into pep rallies.
Cotto: Economics aside, what is the social impact of Walmart on the areas which it expands to?
Bianco: Walmart’s social impact is almost entirely a function of its economic impact on employment levels, wages, consumer spending, retail industry competition and the like. The one exception I would point to is that in its zeal to win approval to build stores or secure subsidies, the company at times sought to influence the outcome of local elections.
Cotto: Has Walmart really decreased retail wages across the country? If so, how?
Bianco: I think it is really hard to isolate Wal Mart’s effect on the retail wage structure. There have been some studies on both sides of the issue, all of which should be taken with a grain of salt.
Cotto: Many would say that Walmart serves a positive function as it employs people who tend to be in serious need of work. They might also say that Walmart offers consumers a wide variety of products at low prices. What are your opinions about these arguments?
Bianco: Wal-Mart is America’s largest private employer and there’s no question that many of the people it employs, however briefly, desperately need a paycheck and have no other ready means of obtaining one. Whether Walmart is doing these folks a favor or exploiting them is open to debate. When it comes to Walmart’s customers, though, the company’s impact has been unequivocally positive. I would go so far as to argue that Walmart is the best friend the low-income American shopper has ever had, with the possible exception of the old Sears Roebuck. This is chiefly a function of the enormous cost savings it has passed on to customers by making good on its promise of everyday low prices on a truly massive scale.
Also, in its early years especially, Walmart made available a wide array of merchandise to communities that had been underserved or ignored entirely by national retail chains.
Cotto: What inspired you to write about Walmart’s impact on our society?
Bianco: I first wrote about Walmart in 2003 while working for Business Week magazine. It seemed to me at the time that coverage of the company was stuck in the past in the sense that Wal-Mart continued to be lauded on Wall Street in the business press as “America’s most admired company” even as evidence of backlash against the company was reaching critical mass on Main Street. I wrote a cover story entitled “Is Wal-Mart Too Powerful?”—a question I answered in the affirmative in my 2007 book The Bully of Bentonville.
Cotto: How did you become such a prominent author and journalist? Tell us a bit about your life and career.
Bianco: My career is a product of hard work and good luck, I’d say. I got my start as a reporter at the University of Minnesota, working for the Minnesota Daily, which is still going strong. I had no interest in business until I moved to Portland, Oregon, and went to work for Willamette Week newspaper as its first business writer. Business Week then hired me for its San Francisco bureau and moved me to New York in 1982 to cover Wall Street just as history’s greatest bull market was beginning. Business Week was a great place to work and accommodated me by giving me leaves of absence four times to write books, which is what I continue to do on my own now.
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