Just can’t leave Wal-Mart alone
September 29, 2003Business Week Online has a story “Is Wal-Mart Too Powerful? It’s subtitled: “Low prices are great. But Wal-Mart’s dominance creates problems — for suppliers, workers, communities, and even American culture.”
Here are the workplace-related parts:
“Wal-Mart’s seemingly simple and virtuous business model is fraught with complications and perverse consequences. To cite a particularly noteworthy one, this staunchly anti-union company, America’s largest private employer, is widely blamed for the sorry state of retail wages in America. On average, Wal-Mart sales clerks — “associates” in company parlance — pulled in $8.23 an hour, or $13,861 a year, in 2001, according to documents filed in a lawsuit pending against the company. At the time, the federal poverty line for a family of three was $14,630. Wal-Mart insists that it pays competitively, citing a privately commissioned survey that found that it “meets or exceeds” the total remuneration paid by rival retailers in 50 U.S. markets. ‘This is a good place to work,’ says Coleman H. Peterson, executive vice-president for personnel, citing an employee turnover rate that has fallen below 45% from 70% in 1999.”
“Critics counter that this is evidence not of improving morale but of a lack of employment alternatives in a slow-growth economy. ‘It’s a ticking time bomb,’ says an executive at one big Wal-Mart supplier. ‘At some point, do the people stand up and revolt?’ Indeed, the company now faces a revolt of sorts in the form of nearly 40 lawsuits charging it with forcing employees to work overtime without pay and a sex-discrimination case that could rank as the largest civil rights class action ever.”
“This year alone, Wal-Mart hopes to open as many as 335 new stores in the U.S.: 55 discount stores, 210 supercenters, 45 Sam’s Clubs (UBS ), and 25 Neighborhood markets. An additional 130 new stores are on the boards for foreign markets.”
“Vice-Chairman Coughlin’s biggest worry is finding enough warm bodies to staff all those new stores. By Wal-Mart’s own estimate, about 44% of its 1.4 million employees will leave in 2003, meaning the company will need to hire 616,000 workers just to stay even. In addition, from 2004 to 2008, the company wants to add 800,000 new positions, including 47,000 management slots. ‘That’s what causes me the most sleepless nights,’ Coughlin says.”
“The company’s hugely ambitious expansion plans hinge on continuing its move out of its stronghold in the rural South and Midwest into urban America. . .. Everyday low prices no doubt appeal to city dwellers no less than to their country cousins. But Wal-Mart’s sense of itself as definitively American (”Wal-Mart is America,” boasts one top executive) is likely to be severely tested by the metropolis’ high land costs, restrictive zoning codes, and combative labor.”
“[T]he United Food & Commercial Workers union is stepping up its long-standing attempts to organize Wal-Mart stores, with current campaigns in 45 locations. For UFCW locals that represent grocery workers, the issue is nothing less than survival. The Wal-Mart supercenter — the principal vehicle of the company’s expansion — is a nonunion dagger aimed at the heart of the traditional American supermarket, nearly 13,000 of which have closed since 1992.”
“Wal-Mart plans to open 1,000 more supercenters in the U.S. alone over the next five years. Retail Forward estimates that this supercenter blitzkrieg will boost Wal-Mart’s grocery and related revenues to $162 billion from the current $82 billion, giving it control over 35% of U.S. food sales and 25% of drugstore sales. Market-share gains of such magnitude in a slow-growth business necessarily will come at the expense of established competitors — especially the unionized ones, which pay their workers 30% more on average than Wal-Mart does, according to the UFCW. Retail Forward predicts that for every new supercenter that Wal-Mart opens, two supermarkets will close, or 2,000 all told.”
True confessions: this weekend I stopped at Wal-Mart and picked up a watch with a quartz movement for $10. My body chemistry eats up watch casings, even medium-priced ones. My alternatives were to spend over $2000 for a real gold one or resign myself to a series of cheapo ones. At $10 a pop, I could buy four a year at Walmart for the rest of my life! And I love Sam’s Club!
Plus I think many of those small town downtowns that were decimated by Wal-Mart are coming back now with different types of businesses. But I sure don’t know that I’d want to work there.
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