May 31, 2005

Andy Stern Challenges John Sweeny

It is my opinion Wal-Mart is probably better off if the SEIU doesn't separate from the AFL-CIO:

"We need to make far-reaching changes and have a leader committed to such changes, and that leader is not John Sweeney," said Andrew L. Stern, president of the service employees union, which has more than 1.7 million members.

Mr. Stern seeks to push Mr. Sweeney into retirement, but Mr. Sweeney is digging in - and is voicing anger with Mr. Stern, a one-time prot�g�, saying his divisiveness is weakening the movement.

But Mr. Stern's critique of Mr. Sweeney has strong support from four other unions - the Teamsters, the laborers, the food and commercial workers, and Unite Here, which represents hotel, restaurant and apparel workers. The five dissident unions represent more than a third of the membership of the American Federation of Labor and Congress of Industrial Organizations.

Why should Wal-Mart want to keep Mr. Stern down? He's been effective:
Mr. Stern, whose union has added 600,000 workers in the past decade, has repeatedly said that if the A.F.L.-C.I.O. does not embrace enough change, he will seek to build something better, presumably an organization outside the federation that would seek to attract workers and sympathetic young people.

Posted by Kevin at 10:46 AM

May 29, 2005

Wal-Mart Increases Employment

Via Division of Labor, Emek Basker has a paper showing that Wal-Mart does indeed create jobs when it enters a market. The abstract:

This paper estimates the effect of Wal-Mart expansion on retail employment at the county level. Using an instrumental-variables approach to correct for both measurement error in entry dates and endogeneity of the timing of entry, I find that Wal-Mart entry increases retail employment by 100 jobs in the year of entry. Half of this gain disappears over the next five years as other retail establishments exit and contract, leaving a long-run statistically significant net gain of 50 jobs. Wholesale employment declines by approximately 20 jobs due to Wal-Mart's vertical integration. No spillover effect is detected in retail sectors in which Wal-Mart does not compete directly, suggesting Wal-Mart does not create agglomeration economies in retail trade at the county level.

I think this picture of Wal-Mart's expansion is interesting:

I bring this up because I am skeptical of a claim often made against Wal-Mart. That is the company decimates downtowns. The reason I'm skeptical is that growing up, I remember visiting towns where the downtown had already declined before Wal-Mart was open for business in the area. In one study I found on Wal-Mart done for Bozeman, MT(where I went for my undergrad) it was the mall on the edge of town which had caused the decline. Wal-Mart had entered the market some years later during the time I was there. The economic impact report had specifcally pointed this out.

This story also reminds me of some research we did looking at the devlopment of Montana. Some guys in my class decided to look at a small town in the area and trace out its life and death. Initially, they thought that the railroad pulling out of the town killed it, but in reality they were last ones to leave. Better roads and highways had made travelling to neighboring larger cities economical.

It may just be a coincidence that shopping patterns shifted the same time Wal-Mart entered the market. The growth in shopping malls coupled with better roads and highways caused a shift which Wal-Mart took advantage of. Also, I think the map shows Wal-Mart to be a fairly young company only expanding outside its home region in the mid eighties. I will have to go through Lexis-Nexis to see if I can find stories from that time frame talking about downtown declines. The real story here is probably just the dreaded shopping mall and roads.

Posted by Bob at 6:47 PM

May 28, 2005

Small Shareholders Want Their Say

Owning a few thousand, or even a few hundred shares, of Wal-Mart gives those who want to reform or retard it another soap box to stand on:

The AFL-CIO Reserve Fund of Washington, D.C., which owns 2,700 shares of Wal-Mart Stock, wants senior executives to get shares of stock based on performance, rather than getting stock options....

The Sisters of Charity of St. Elizabeth, Convent Station, N.J., which owns 2,840 shares of Wal-Mart stock, wants the company to say how it promotes women and minorities or encourages their advancement...

The International Brotherhood of Teamsters of Washington, D.C., which owns 160 shares of Wal-Mart stock, and another unnamed filer ask the Wal-Mart board to compile a semi-annual report on policies on political donations made with company funds.

Posted by Kevin at 2:01 PM

May 27, 2005

Wounded WM?

James J. Cramer says that Wal-Mart's competitors are "feasting off the wounded mass merchant", and he names lots of names:

Where else do shoppers want to go?

Wal-Mart may be the largest seller of CDs in the country, but with Apple (AAPL:Nasdaq) climbing back over $40, it might be good to remember that iTunes is the way the next generation buys music. Don't I know it; why is my daughter babysitting every moment she can these days? She says she's getting 25 songs when she does!

An excellent read, even if just to remind you how competitive retail actually is.

Posted by Kevin at 10:42 AM

Some Chinese Want to Buy Wal-Mart?

This bizarre article on China Economic Net considers the plan for the Chinese to buy Wal-Mart. Really:

Recently some Chinese experts have put forward an idea that Chinese enterprises could become Wal-Mart's shareholder by strategically purchasing its stocks and by this way setting up a most facilitative channel for Chinese commodity". This suggestion immediately incurred strong oppositions...

For those who put forward the idea of "acquiring Wal-Mart", they think that Wal-Mart has perfect corporate governance structure and sound management, therefore it is a rational anticipation for Chinese side to share the enormous profit brought by Wal-Mart.

It is true that the smooth performance of the whole Wal-Mart system relies on its perfect procedures and an outstanding management team. However, by now in China there has been no such management team that can run Wal-Mart, which makes the idea of acquiring Wal-Mart a dream that can't come true. If now Wal-Mart were acquired by Chinese, it could be anticipated that Wal-Mart go broke within a period of 3 or 5 years....

The proposal put forward by domestic experts is established only from a seller's point of view, which put emphasis on acquiring Wal-Mart as a distributing channel to directly "dump" Chinese products. However, it will ruin Wal-Mart.

Posted by Kevin at 10:22 AM

SoCal Unionized Grocers Face AntiTrust Charges

Via Progressive Grocer, we find a revenue-sharing agreement between Albertsons, Kroger, and Safeway is alleged to have been harmful to competition.

The agreement was formed to keep any one company from making money at another one's expense, and to fight anticipated United Food and Commercial Workers union efforts to divide and conquer the chains.

According to the terms of the pact, if any of the stores raised their market share above pre-strike levels, they had to share the resulting profits with the other pact participants, with payments based on a 15 percent profit margin. The profit-sharing provisions of the agreement continued until two weeks after the end of the labor dispute.

I don't think having the attorney general go after them is going to solve anything, since tacit collusion will replace the formal collusion.

Posted by Kevin at 9:19 AM

May 26, 2005

Des Moines Hour Limits

Limiting the hours of big boxes but permitting small stores 24 hour operation may not pass legal muster:

Wal-Mart officials Wednesday asked the Dallas County District Court to void the limited business hours contained in the West Des Moines site plan for a proposed superstore.

Ryan Horn, Wal-Mart spokesman, said he hoped the uproar over store hours could be settled before the case goes to trial. The company faces opposition from nearby homeowners who have said traffic and noise from a store open 24 hours a day would disrupt the neighborhood and harm property values.

This week the West Des Moines City Council gave first approval to an ordinance that would limit the hours for big-box retailers, including Wal-Mart. Such stores would be closed from midnight to 6 a.m. daily...

The lawsuit alleges the city exceeded its authority by placing the limited business hours in the site plan. It also says the plan was unconstitutional and the time limit "was an attempt to regulate economic competition contrary to the zoning ordinance purpose of regulating land use."

Posted by Kevin at 9:34 AM

Bomb Scare in Ithaca WM

This is not a peaceful, democratic form of protest:

A bomb scare at the Ithaca Wal-Mart Wednesday resulted in the evacuation of at least three retail stores and left officials concerned for the health of nine law enforcement officers.

Preliminary tests Wednesday on a substance discovered at the scene, after the device was destroyed, found that there was no toxic threat involved....

A bomb squad from the Endicott Police Department arrived shortly after 8 a.m. Bangs Ambulance, Ithaca Fire Department and Cornell University, which brought a trained bomb-sniffing dog, also responded initially.

The Endicott bomb squad "ended up using a 12-gauge shotgun to shoot the device, which did not detonate," Russell said. "It (the bomb) appears to be a hoax.

"When they shot it, it flew apart...."


The Ithaca Wal-Mart opened in January after years of legal wrangling and community debate. The store should boost sales tax revenue for the city, but some activists have raised concerned over workers' wages and potential effects on smaller businesses in the area.

"There has been controversy, yes, but it's been extremely successful since it's opened," Holcomb said of the store.

"We took the bomb scare seriously since something like this has not happened in the recent memory," said Holcomb.

Posted by Kevin at 9:30 AM

The Action

Palmer, Alaska officials will not ban Wal-Mart for 6 months. Why? To help the consumer? To hurt the little guy? No, to help the politicians!

Enacting a moratorium, Councilman Ken Erbey said, would risk pushing Wal-Mart outside city boundaries, where it can serve the city population without having to comply with city zoning codes or the details of the large-retail ordinance.

"We can revise the LRE and make it so strict as to get them to say 'We don't have to abide by the LRE,' " Erbey said. "They don't have to go up the Palmer-Wasilla Highway, they can go just up the street by the fairgrounds. Then we have no say-so in what they build and, worst of all, we don't get any of the action."

Posted by Kevin at 9:23 AM

May 25, 2005

WM Versus the Cowboys

Craig Depken notes that the new Cowboys stadium is being constructed adjacent to a new Wal-Mart Supercenter. This could spark a disagreement between two powerful political players:

This picture shows where the proposed stadium will lie. The parking lot directly to the north of the proposed stadium site was a Kmart and Walmart is in the process of building a Super Walmart right there - food, beer, etc. It will be interesting to see who wins the battle between the Cowboys and Walmart - the Cowboys will likely bar food and beverage into the stadium, and Walmart will likely lobby for food and soda being brought into the stadium.
I can't imagine Wal-Mart will have that much leverage in this decision.

Posted by Kevin at 4:22 PM

$5 Basketballs: Then and Now

John Palmer reveals his true self : he loves shopping at Wal-Mart!

As I walked down one aisle, I was blown away by a display of basketballs. A huge cage of yellow, smiley-faced, Mr. Rollback Mascot basketballs. They were under $5, so I bought one. I love it....

When I first moved to Canada, about 68 years ago, I bought a basketball for, I think, about $5 then, which would be the equivalent of about $50 today. Being able to buy a really nice basketball today for one-tenth the price of one back then just amazes me.

And no, John is not Elvis.

UPDATE! John updates his post with a photo of the ball:

WM Basketball - John Palmer.jpg

Posted by Kevin at 6:32 AM

WM Pez

smileypez.jpg
Found here.
Posted by Kevin at 6:24 AM

May 24, 2005

More on Crystal Bridges

The Crystal Bridges Wal-Mart museum is taking shape:

The new Crystal Bridges museum of American art is designed by Moshe Safdie, the Canadian-Israeli architect whose previous work includes the recently opened Yad Vashem holocaust museum in Jerusalem. It will be built within walking distance of the main square of Bentonville, Arkansas, home town of the world's largest retailer....

The museum, funded by the Walton Family Foundation and expected to cost above $50m, will house works by Winslow Homer, Norman Rockwell, Marsden Hartley and other American artists that have been steadily acquired for the foundation by Alice Walton, Sam's daughter, over the past 15 years.

Related Entry: "Kindred Spirits"

Posted by Kevin at 12:32 PM

Buffalo Needs Wal-Mart

Well, I think even Wal-Mart's opponents should recognize that, even by their own view of WM's regional impact, having a new Wal-Mart is better than the status quo in Buffalo, NY. MARY KUNZ GOLDMAN opines

Yes, to many folks, Wal-Mart is the Giant Shop of Horrors. Organized labor, angry that the store isn't unionized, warns that it pays low wages. Citizens are happy to take up the cry. "Wal-Mart is pure evil," reads one typical rant on the Internet.

So let me offer Wal-Mart a word of advice: You can pack up those $8 camisoles and $13 swimsuits and take them to the City of Buffalo!...

We could get a Wal-Mart and still keep the Elmwood clothes shops and the Hertel antique shops. Remember the flap a few years ago over Starbucks possibly driving Spot Coffee out of business? It didn't happen.

So let's talk turkey. What about a Wal-Mart in our downtown AM&A's building? If $500 dresses didn't sell there, $10 skirts might. Or, how about one of those old warehouses in Black Rock?

Posted by Kevin at 12:24 PM

May 23, 2005

No Cleveland Wal-Mart Updated

If you care about Cleveland, and you care about keeping out Wal-Mart, No Cleveland Walmart is a group blog for you.

This deals with the Steelyard Commons, which I briefly blogged about here.

The Steelyard Commons project hit a wall when Wal-Mart bowed out of the deal earlier this year.

City council tried to put limits on the store.

But, Mayor Jane Campbell got Wal-Mart to take a second look.

Now, they�ve taken out building permits with developer Mitch Schneider to start work on a store that will include the kind of supersize grocery council feared would hurt local stores and workers.

�The day we open, grocery prices will get much more competitive in the city regardless of where residents shop and that�s a terrific value for everyone shopping in the city of Cleveland,� said Keith Morris of Wal-Mart community affairs.

Needless to say, Wal-Mart's opponents have gathered forces once again...

UPDATED: 100 protestors show up at a City Council meeting to protest Cambell, who wasn't even there.

Posted by Kevin at 6:54 PM

May 19, 2005

NetFlix beats Wal-Mart into Submission?

netflix_wm.bmp
Reuters is reporting that Wal-Mart has either been beaten or has been successful, but either way in June, Netflix will take over its DVD rental operations:

The online arm of Wal-Mart Stores Inc., Walmart.com, said in an advertisement on its Web site Thursday that it will shut down its DVD rental service in June and is offering customers the chance to sign up with rival service Netflix Inc.

Walmart Online, in the advertisement that appeared early Thursday, said the company will not accept new members and offered a link to Netflix (Research), where Walmart.com customers can sign up for the DVD rental service at their existing Wal-Mart (Research) rates for one year.

I don't have any further information yet, but I think Wal-Mart has realized that Netflix does this a lot better (cheaper) than Wal-Mart can.

UPDATE: In other words,"You know you must be doing well when Wal-Mart decides they don't want to compete with you." Jason Pearce is pleased,"The good news is instead of leaving my high and dry, they built an easy way for me to transfer my Wal-Mart account to Netflix, movie list and all. Thanks to both parties for making this easy on the customer. I wish more services were like this (e.g. switching cell phone providers)."

Double Viking: "Blockbuster must be kicking themselves for not buying these guys out years ago."

Indeed, (via Life Distilled), Blockbuster wants those Wal-Mart DVD customers really, really bad: "Blockbuster Inc. on Thursday extended a new rental offer to subscribers of online movie-rental company Netflix and Walmart.com, offering two free months of service to customers who switch to Blockbuster Online. It said the subscribers could receive a free DVD rental and that it will offer them the chance to subscribe to Blockbuster Online at the current price they pay for the rival services. "

Kip Esquire: "Wal-mart, like any other successful business, only became prosperous and powerful by giving customers what they want. If and when a business fails to continue doing so, it loses its dominance and its "obscene" profits to others who do a better job of giving customers what they want."

Posted by Kevin at 8:27 AM

May 17, 2005

Apt Descriptions?

Clipped from Kitty's Tale:

Wal Mart is the tricky, abusive, trailer trash boyfriend of stores. It looks so nice and unpretentious on the outside. So inviting. It's saying, "Hey baby, come back to me. You know I've got what you need. I'm gonna be so good to you."
....
Target is the passive-agressive, emotionally manipulative girlfriend of stores...but that's another story.

Posted by Kevin at 3:40 PM

Fake Rollback Prices?

I cannot verify this story, but sone man alleges that Wal-Mart is faking rollback prices:

"Rollbacks". The price on the self [sic] at Wal-Mart said the price was rolled back to $74 from $88. When I got it home and looked at the box, the "original" price was $74. In other words it was "rolled-up" then "rolled-back". Tricky, huh?
Later in the forum, one person decries the stuipidity of the orginial poster not being able to get the DVD player to work.

[H/T: Examining Guest Relations]

Posted by Kevin at 3:32 PM

Getting Hitched at WM: Part II

In our previous post on this topic, we linked without comment to a wedding ceremony at Wal-Mart. But the folks at Stay Free Magazine blog feel the need to amuse themselves at Associate expense:

In recent years Wal-Mart has hosted dozens of its employees' weddings. My heart breaks for Beverly McCutcheon, who got married at an upstate New York store. She has so internalized Wal-Mart's draconian labor policy that is almost seems romantic that her friends are economically imprisoned at work during normal wedding hours....

Yes, why follow up the ceremony on the happiest day of your life with camraderie and dancing when everyone can just get back to work and you can pick up a new garden hose.

I personally think getting married in a Wal-Mart is silly, but no sillier than having Elvis as officiant, or worrying that 4 lbs. of shrimp per person isn't enough at the cocktail hour, or having a horse and buggy pull you across the park, or insisting that on the superstretch Hummer limo, or the very concept of matching, ugly, one-time-use bridesmaid dresses...

Question: Men, what would you do if your wife had secretly arranged you to be married at Wal-Mart?

Posted by Kevin at 3:21 PM

The Quality of WM Clothes

There is much customer disagreement on the quality of clothing at Wal-Mart. Disappearing Blog overheard a discussion between a mother and her children about it, and adds in his own two cents:

I listened to a mom arguing with her kids about clothes. Her kids wanted to shop at the Gap, and Dillards, buy shoes at Foot Locker, and jewelry at Zales. And the poor mom explained that they didn't have the money for those stores. But she could take them to Wal-mart and get them quite a bit of clothes for what they would pay for one shirt at one of those stores.

The kids replied,"Wal-Mart clothes suck. Only poor people shop there."

I just smiled. The kids have a lot to learn....

The clothes look just the same, only less expensive. And the mom is right. I buy three or four outfits, for what someone would pay for a shirt or pair of socks at Dillards. Really. A shirt costs me between $60 and $70 at Dillards. I could get three shirts, a pair of shorts, a pack of new socks and underwear, and a pair of shoes for the same price at Wal-Mart.

"But they aren't the same quality, Wal-Mart stuff doesn't last as long!" you say. Well, think again. My clothes have lasted quite a while from there, and while you are still trying to stay in the latest fashion or go the opposite direction, and start your own, I am not having to buy new clothes. And they are high quality.

Posted by Kevin at 2:21 PM

May 16, 2005

Fark's Take on WM's Nazi Bookburning Ad

You can read all the details of Wal-Mart's foolish use of a photograph depicting a Nazi bookburning at Wal-Mart Watch and Wake-Up Wal-Mart, but for the real story you have to go to the Fark comments and just keep scrolling -- the debate seems simultaneously vulgar and civilized, which I hadn't thought possible...

FWIW, I thought putting Hitler's face on Wal-Mart's infamous bag-man was perfect.

Posted by Kevin at 10:40 PM

Small Business Importing from China

Here's one very important view I hadn't really thought of at all:

And that's the next phase of problem for large retailers like Wal-Mart. Large numbers of Chinese factories are setting up warehouses inside U.S., ship their products to the mainland USA, and sell direct to small retailers at low profit margins. Believe me when I say this: When it comes to entrepreneurship, the Chinese entrepreneurs are second to none. With thousands upon thousands of factories in China making products for export, some smarter ones have figured out that it is to their advantage to set up warehouses in the USA so that they can sell in ever-smaller quantities to their U.S. customers. Believe it or not, the Chinese factories are now selling their products directly on eBay from within U.S. borders. We are an importer of products from China and I now see Chinese suppliers in the U.S. who are selling the same products I am importing, at or slightly above my direct container quantity cost with no minimums. How can the likes of Wal-Mart compete with that?

Read the whole thing, NOW!

Posted by Kevin at 2:59 PM

IBD: WM Stock is Still Recommended

Investor's Business Daily notes with caution that many financial newsletters support the purchase of Wal-Mart stock, based on analysis of fundamentals.

Nevertheless, Wal-Mart still has strong supporters among investment letters.

Currently, nine letters recommend it.

That's a solid score -- making it tied for thirteenth place among stocks recommended by letters followed by the Hulbert Financial Digest. The most popular stock, Pfizer (PFE), is recommended by 17 letters.

And, yes, the most recommended stocks do tend to do better.

Wal-Mart's advisor score is actually higher now than at the start of 2004, when the stock was above $50 and seven letters recommended it.

Posted by Kevin at 2:52 PM

Customers to the Rescue

I don't think people where I live would know how to do this:

In fact, a deer initially escaped the Wal-Mart greeter's attention last week when it entered through the exit of the supermarket part of the store...

After doing a little looking around, the deer was tackled by a customer. Others then tied its legs so it couldn't kick, placed it in a shopping cart and pushed it outside....

The deer caused no damage and no one, including the animal, was hurt...

Posted by Kevin at 11:40 AM

May 15, 2005

More Pics of Wal-Mart in Korea

Each store in Korea has a thumbnail image in the stores section of walmartkorea.com. I like the Kangnam and Anyang Pyungchon boxes the best.

Posted by Kevin at 3:21 PM

"Kindred Spirits" Bought by Waltons

The Metropolitan Museum and National Gallery were jointly outbid, so the painting will be displayed in the future Bentonville museum:

Over the last two or three years Ms. Walton has been a major buyer of American paintings at Sotheby's and Christie's, snapping up works by Winslow Homer, Martin Johnson Meade, Edward Hopper and other artists. But the Durand is expected to be a cornerstone of the new museum's collection.

The painting, which depicts the painter Thomas Cole and the poet William Cullen Bryant standing on a rocky ledge overlooking the Catskills, is titled after a phrase in a Keats sonnet and has long been considered one of the finest examples of Hudson River School painting. It was commissioned by Jonathan Sturges, one of Durand's most important patrons, as a gift for Bryant, and it remained in the Bryant family until his daughter, Julia, donated it to the New York Public Library early in the 20th century.

The Walton Family Foundation's museum, to be called Crystal Bridges, takes its name from an inspired glass-and-wood design that traverses a local spring-fed stream. Designed by the Boston-based architect Moshe Safdie, the museum will "present perspectives on the flow of America's history and heritage through the eyes of the nation's most influential artists," according to a statement released yesterday by the Walton Family Foundation.

More on Crystal Bridges from the AP and the Wal-Mart Family Foundation's press release.

Posted by Kevin at 3:16 PM

May 14, 2005

Thomas Sowell on WM

Nothing new or fancy from Tom Sowell, but his opinion on Wal-Mart is worth noting:

The New York Times says a book "by a group of scholars" is to be published this fall. It argues that Wal-Mart has an "obligation" to "treat its employees better."

This can hardly be called news. Nothing is easier than to find a group of academics � "scholars" if you agree with them � to advocate virtually anything on any subject. Nor is this notion of an "obligation" new.

Decades of lofty talk has centered on the "social responsibility" of businesses or a "social contract" between the generations when it comes to Social Security. Do you remember signing any such contract? I don't.

This pious talk means that when third parties want somebody else to pay for something, they simply call it a "social responsibility," an "obligation" or a "social contract."

So long as we keep buying this stuff, they will keep selling it...

To make such demands look like more than just the arbitrary notions of busybodies � which they are � some of these busybodies refer to the official poverty level, as if it were something objective, rather than what it is, simply an arbitrary line based on the government bureaucrats' notions.

The New York Times says Wal-Mart's average employee earns an income that is above the poverty line for a family of three but below the poverty line for a family of four. What are we to conclude from this?

The fashionable notion of "a living wage" is a wage that will support a family of four. And, sure enough, The New York Times finds a Wal-Mart employee who complains that he is not making "a living wage."

How is he living, if he is not making a living wage?

Should people be paid according to what they "need" or what their work is worth? Should they decide how big a family they want and then put the cost of supporting it on somebody else?

[H/T: Ross Nordeen]

Posted by Kevin at 7:28 AM

U.S. Reimposes Quotas on Chinese Textiles

The executive branch chose yesterday to impose the toughest legally permitted quotas in imports of Chinese textiles:

The administration action will impose limits on the amount of cotton trousers, cotton knit shirts and underwear that China can ship to this country. American retailers say that will drive up prices for U.S. consumers.

In announcing the decision Friday, Commerce Secretary Carlos Gutierrez said a government investigation had found that a surge in shipments from China since global quotas were eliminated on Jan. 1 was disrupting the domestic market....

"The fast action to re-impose quotas by the Bush administration today has saved thousands of textile jobs in this country and we are extremely grateful," said Cass Johnson, president of the National Council of Textile Organizations. "The U.S. government has sent a strong message that it understands the real crisis that these enormous surges present to our workers...."

The United States has the power to impose caps of 7.5 percent growth in textile and clothing categories on China under an agreement that cleared the way for China's membership in the
World Trade Organization in 2001.

Here's what will actually happen:

CITA [Committee for the implementation of Textile Agreements] will request consultations with China by the end of May with a view to easing or avoiding market disruption. Consultations must be held within 30 days of receipt of the request by the Chinese government. The United States will make every effort to reach a mutually satisfactory agreement with the Government of China to ease or avoid the disruption in the U.S. market for these three product categories within 90 days of such request. In the event a mutually satisfactory agreement cannot be reached by the conclusion of the consultations period, the quota will remain in place through the end of 2005.
In other words, it's a unilateral imposition of a quota used to purchase the votes of textile employees in the U.S.

Posted by Kevin at 6:57 AM

May 13, 2005

Always Low Thoughts, Always

Regardless of your view of Paul Krugman's ideology, you must recognize that he is perhaps the most divisive and unhelpful economic commentator in mainstream media. In fact, his latest editorial leads me to wonder if Krugman actually knows that he is using data dishonestly.

The average full-time Wal-Mart employee is paid only about $17,000 a year. The company's health care plan covers fewer than half of its workers.
The first statement cannot be correct; I'd love to see Krugman's source. In 2001, the annual earnings of all full-time hourly employees were $18,609 for men and $17,459 for women (a weighted average of $17,802 for all). So Krugman is $800 short -- and four years behind. If you add in the salaried full-time employees, the annual wages figure is substantially higher. If you move forward to the present, you'd note that Wal-Mart's nominal hourly wages have increased, probably above $18K.

The second statement is true, of course, for full-time associates, but not for all of Wal-Mart's full-time workers. (86%*56%)=48.2% of Wal-Mart's hourly associates were covered by Wal-Mart's plan. If you add in the salaried workers, this number is probably higher than 50% (though not by much). I have no idea where Krugman got the idea that "workers" equals "hourly associates"; he probably didn't think about it.

True, not everyone is badly paid. In 1968, the head of General Motors received about $4 million in today's dollars - and that was considered extravagant. But last year Scott Lee Jr., Wal-Mart's chief executive, was paid $17.5 million. That is, every two weeks Mr. Lee was paid about as much as his average employee will earn in a lifetime.

Not that many of them will actually spend a lifetime at Wal-Mart: more than 40 percent of the company's workers leave every year.

I'm not trying either to romanticize the General Motors of yore or to portray Wal-Mart as the root of all evil. GM was , and Wal-Mart is, a product of its time. And there's no easy way to reverse the changes.

WM and GM are products of their times, but more importantly, WM and GM are products of the cost structures of their industries (which technology has changed over time). They are also products of very different labor markets -- and the inability of unions to increase the costs of big-box retail while dominating the auto industry. When GM didn't have to worry about Japanese and Korean competition, it could afford its wage policies by extorting the domestic consumer; GM has made itself uncompetitive today by making promises it can't keep. Wal-Mart has intense domestic and international competition in retail with corporations, like Target, that are little different from it. It is not making foolish promises to its employees.

Indeed, a growing number of working Americans have turned to Medicaid. As the Kaiser Family Foundation points out, that's why children have for the most part have retained health coverage, despite a sharp decline in employer-based health insurance since 2000.
Surely, Paul Krugman knows that Kaiser itself has data that shows there have been ups and downs in employer-based health insurance since 1996, and currently the share of firms offering health coverage is higher than it was in the 1990s. Way to choose your base-year!

The attack on the safety net is motivated by ideology, not popular demand. The public isn't taken with the vision of an "ownership society"; it seems to want more, not less, social insurance. According to a poll cited in a recent Business Week article titled "Safety Net Nation," 67 percent of Americans think we should guarantee health care to all citizens; just 27 percent disagree.
What the public wants, and what the public is willing to pay for are two separate things, and the latter is very dependent on the incentive structures put into place by policy.. For an economist to ignore both willingness to pay and incentives is a betrayal of his calling.

The question is whether the public's desire for a stronger safety net will finally be seconded by corporations that haven't yet adopted the Wal-Mart model of minimal benefits and always low wages.
Exactly what is Krugman's justification for believing that the compensation policies of the largest company in the retail industry will determine the compensation policies of other companies in other industries? Please show me the evidence of Wal-Mart's effect on compensation policies outside of its direct effect on unionized grocers. Are the wages and benefits paid by Wal-Mart jobs lower than 1) a few, 2) some, 3) most, or 4) almost all jobs eliminated by the competition? If you answered either 1,2,3, or 4 then you did so by guessing, since as far as I've seen, there's little or no data about the wages of mom and pops compared to the wages of Wal-mart.
Posted by Kevin at 2:46 PM

Pay Data Alone Cannot Determine Discrimination

The unions think they can shame Wal-Mart into giving its wage data to Democratic members of Congress. In response to the sex discrimination lawsuit, Wal-Mart has already given all its wages for 2001 to its opponents.

Personally, I'd like to have Wal-Mart's data, because it would make an interesting study, but I'm not in the businesses of intentionally distorting numbers to hurt the company. And I don't think releasing such partial information can do anything but continue to obscure the actual impact discrimination has had on the women of Wal-Mart.

I think that a much better (though much harder to obtain) dataset would include not just gender, hours, positions at WM, performance reviews, and wages, but the educational and work histories -- including performance on skills tests and hours and pay at non-WM jobs -- of a random sample of employees. Then, and only then, could one determine the impact of discrimination (as opposed to the impacts of education, prior experience, and continuous employment) on wages and promotions.

Many studies have found in other circumstances that when you adjust wages for these and other factors, the alleged sex discrimination in pay narrows considerably or disappears. The only data that could really determine the impact of discrimination would not just demonstrate unequal pay for equal work, but unequal pay for equal work, given equal education, skills, willingness to change jobs, ambition, and prior experience. Without the latter, the pay data demonstrate very little...

CNN/Money has the skinny.... Wal-Mart responds at length -- with charts!

Posted by Kevin at 7:42 AM

Sales "Below" Expectations

April same-store sales increases were below expectations in the sense that the 9th floor is below the 10th floor:

The nation's discounters, whose customers have been particularly hurt by high gas prices and job weakness, had another lackluster month. Wal-Mart had a 0.9 percent gain in same-store sales, slightly below the 1 percent consensus prediction of Wall Street analysts polled by Thomson Financial.

Wal-Mart did get a boost from Sam's Club, which posted a 4.9 percent gain for the month. That compared with the company's flagship discount stores, which had only a 0.1 percent increase.

Also note that the previous figures IGNORE Wal-Mart's expansion. These don't:
Wal-Mart said quarterly net income grew to $2.5 billion, or 58 cents per share, in the three months ended April 30 from $2.2 billion, or 50 cents per share, a year earlier. The company said first-quarter earnings were boosted by $145 million, or 3 cents per share, from tax and legal resolutions. Excluding the items, earnings per share totaled 55 cents per share, a penny below Wall Street expectations.

Sales rose 10 percent to $70.9 billion from $64.76 billion a year ago, while total revenue including sales and other income grew to $71.7 billion from $65.4 billion a year ago.Here's the full press release.

Let's include H. Lee Scott's comments, for the fun of it:

Chief executive officer Lee Scott said: "We achieved record results in the quarter. Yet with higher gasoline prices and a cooler and wetter spring than normal, we missed our plan. We are making the necessary adjustments and I anticipate better results in the second half of the year."

In a recorded message, he told journalists: "Our results were not up to Wal-Mart standards," adding "The biggest unknown is the impact of gasoline prices on our customer base. If oil prices stay at the current level or hopefully go lower, we would see better sales momentum."

In other words, we can't predict the weather and we don't control oil markets, so bugger off.

Posted by Kevin at 7:01 AM

May 12, 2005

Julie Christensen in the NY Times

Bigboxreuse.com makes a big splash with an article in The New York Times:

Ms. Christensen, who has made the field of big-box reuse her academic and artistic specialty, has already logged some 20,000 miles during two previous trips over the past two years in pursuit of former Wal-Marts, Winn-Dixies and Kmarts. Along the way, she has become an expert in the ingenious and innovative ways that communities have reclaimed abandoned, architecturally uninspiring megastores.

The article is well worth your time.

Posted by Kevin at 7:29 AM

May 11, 2005

Seiyu Issues WM $95Mil in Shares

Wal-Mart will soon own 42% of Seiyu:

TOKYO - Japanese supermarket operator Seiyu Ltd. said Wednesday it will issue about $95 million worth of new shares to Wal-Mart Stores Inc.

The move will boost the U.S. retailer's stake to 42 percent from 37 percent in Tokyo-based Seiyu, which operates about 400 stores nationwide.

The purpose of the new share issue is to strengthen Seiyu's capital base by raising funds to be used for yet-to-be-specified general business projects, Seiyu said.

It might actually break even this year.

Posted by Kevin at 1:18 PM

Goings on in India

John Menzer will meet with Indian politicians and bureaucrats... The press asks: Will Wal-Mart enter the 97% mom-and-pop dominated Indian retail market? Will Wal-Mart increase Indian sourcing by 30%?

Posted by Kevin at 1:16 PM

A Concert in Electronics

Do you think anybody will show up for this, in any store?

Did you somehow manage to miss AOL Music Live's 2005 kickoff concert featuring Simple Plan?...AOL has partnered with Wal-Mart to play this awesome concert on Friday, May 27th in participating Wal-Mart stores! It will be playing in the electronics department, as well as on Wal-Mart TV monitors throughout the store.

Posted by Kevin at 1:09 PM

May 9, 2005

The Neighborhood Retail Alliance Blog

If you're interested in how small business groups view Wal-Mart, and you want to know more about the resistance to Wal-Mart entering NYC, The Neighborhood Retail Alliance Blog is the place for you. Their latest post talks about the sales tax in NYC; it reveals what the group is about, and the nature of the arguments it uses against Wal-Mart:

Which brings us to the Staten Island Wal-Mart controversy. Before the Mayor, Congressman Foscella, or other elected officials try to convince folks that building box stores will prevent retail leakage to New Jersey they better first level the playing field by dramatically reducing the cost of doing business in NY. If they don�t and a Wal-Mart is built on the South Shore, than we predict you�ll find as many Staten Islanders still shopping in Woodbridge, NJ as you�ll find at the outlet on Richmond Valley Road... Islanders will continue to flee and instead of keeping customers in New York, the Staten Island Wal-Mart will draw people in from the other boroughs. Therefore, consumer dollars will simply be transferred from existing NY retailers to Wal-Mart while the fundamental cause of the leakage will remain ignored.
I agree that "leakage", meaning the dollars spent by NYC residents choosing to shop outside of NYC, could be lowered by competing with New Jersey's lower tax rates. But the idea that NYC businesses are somehow deserving of these retail dollars is, in my mind, not compelling at all.

If the Alliance has specific proposals to lower the cost of businesses in NYC, as opposed to just transferring costs to other types of businesses, I'd really like to hear them. But wouldn't any such proposal also lower Wal-Mart's cost?

Granted, lowering the sales tax would help neighborhood businesses compete against WM since a sales tax increases the relative cost of shopping at higher-price neighborhood stores. But the sales-tax is not the cause of higher pre-tax prices...

----

Also see their main homepage about WalMart. I'm almost amused that they accuse Wal-Mart of routinely pricing below cost, even though (from my experience) two-for-one specials and pricing below cost are routinely used by neighborhood businesses to clear out poor-selling merchandise.

And guys, if you're going to discuss lawsuits against Wal-Mart for predatory pricing, might it not also be relevant to note which cases Wal-Mart actually won.

Posted by Kevin at 7:56 AM

May 6, 2005

Hours of Service Issue

Trucker Dick Williams has a conflicting first-hand opinion on the failure of Wal-Mart to get changes in permissible trucking hours:

Congress just agreed to stay out of the Hours of Service issue - there was a proposal and potential House amendment that would have liberalized the Hours of Service - permitted more on duty time - mainly an initiative by a Wal-Mart friendly Rep from Arkansas. But he didn't push the amendment and Congress stayed out of directly writing trucking regs. Wal-Mart was unhappy, the Teamsters and traffic safety folks were happy. Guess I was happy too in the interest of common sense but I would actually like to see one additional hour of on duty time - total of 15 versus 14 hours. That would fit my particular needs and allow an additional hour of on-d uty non driving time for more flexibility in napping. But it would be abused - heck we abuse the hours now. Sort of like setting a speed limit at 70 to keep people under 80.

Posted by Kevin at 4:55 PM

Supercenter #908

Caustic Musings uses Wal-Mart to help her get closer to her cultural roots, and in passing notes:

That reminds me�I must check out the passably clean and tidy Kirkman Wal-mart (not the rancid Ghetto-Mart on John Young Parkway) for some cheap ground turkey for the Moo Shu Turkey experiment this weekend,
She's apparently dissing Supercenter #908 in Orlando (see map); these people don't seem to think anything nasty about it.

Posted by Kevin at 4:45 PM

WM Bows to Unions (Humor, Of Course)

Scott Ott has a lot of fun:

"Our union critics were right," said H. Lee Scott Jr., Wal-Mart's chief executive, "We have an obligation to behave like General Motors did in the 1960s. And we've come to believe that the discount retail industry is primed for a chain that pays high wages to create the perception of high value through high-priced products. In addition, our focus groups indicate that Wal-Mart customers yearn for the emotional payoff that comes from providing bigger paychecks to the folks in the blue vests."

As part of the reengineering of the company, Wal-Mart will change its slogan from 'Always Low Prices' to 'Always Union Wages'. Prices will be marked up throughout the store, and many products will receive stickers indicating their higher perceived value with words like 'deluxe,' 'grand' and 'limited edition'.

In the short-term, analysts said that investors can expect to see their $48/share Wal-Mart stock (WMT) "level out" around $3 and then begin its upward climb as the store reestablishes its brand identity as the place where Americans shop to provide higher-wage jobs for less fortunate Americans.

Posted by Kevin at 4:16 PM

May 4, 2005

The Jonquiere Closing

ALP has covered the unionization and closing of the Jonquiere store. As our last entry, we link to an NPR story with the following caption on a photograph:

Jean Tremblay serves as the mayor overseeing Jonquiere. "We don�t like Wal-Mart anymore," he says.
H/T: Brian St. Pierre

UPDATE Can Wal-Mart be blamed for destroying jobs when it opens stores AND when it closes them? Wake-Up Wal-Mart thinks so, but I don't, and said so in their comments:

If you're saying that by closing a store, Wal-Mart eliminates as many jobs as it has people working in the stores, then when Wal-Mart opens a store and hires 250 people, it must be creating 250 jobs.

This logic runs counter to much of the anti-WM argument that all Wal-Mart does when opening a new store is substitute lower-paying jobs for higher-paying jobs.

If this latter argument is true, won't the recently fired people eventually find higher-paying work? Isn't WM making them better off in the long run?

Just asking.

Posted by Kevin at 2:28 PM

Can't WM Pay More?

Russell Roberts picks apart Stephen Greenhouse's "fake" NYTimes story about Wal-Mart paying too little:

There's no real news story here. It's not like someone discovered that Wal-Mart is using slave labor or not paying the minimum wage. That would be a news story. What we have instead is what I'd call a fake news story, generated by a press release from activists that plays to the sensibilities of a newspapers editors, reporters and readers.

Posted by Kevin at 2:07 PM

May 3, 2005

Beating Wal-Mart

Both Businessweek (ht: BP) and Business 2.0 ($)have recently focused on how to beat Wal-Mart.

The skinny: YOU CAN'T BEAT WAL-MART BY BEING A WAL-MART CLONE:

From the former:

Jungle Jim's might well be America's wackiest supermarket, but there is method to Bonaminio's madness. Instead of trying to beat the big chains at their price-squeezing game, Bonaminio has built a funhouse maze of a store north of Cincinnati that draws 50,000 shoppers a week from as far away as Indianapolis and Lexington, Ky. "The Jungle" is not all fun and frivolity; its other defining trait is a huge selection of specialty foods from 75 countries. Sales totaled $63.5 million in 2004, up from $29.8 million in 1995 -- not bad for a college dropout who got his start in 1971 selling produce from a roadside stand. (Bonaminio says he turns a profit, but he won't disclose numbers.)

From the latter:

COSTCO is whipping Wal-Mart by targeting different customers: people who have cash and want cachet on the cheap.

VITAL SIGN: Costco sales per store, 2004: $115 million. Sam's Club: $67 million.
...

DOLLAR TREE attacks Wal-Mart's strength with simple pricing and a less painful shopping experience.

VITAL SIGN: Dollar Tree operating margin, 2004: 9.7 percent. Wal-Mart: 5.9 percent....

SAVE-A-LOT grocery stores bring back the bygone Main Street feel and focus on underserved neighborhoods.

VITAL SIGN: Save-a-Lot profit margin, 2004: 3.5 percent. Wal-Mart (groceries only): 2.6 percent....

DICK'S SPORTING GOODS has created a sales team with true expertise that coddles customers.

VITAL SIGN: Dick's revenue growth, 2004: 34 percent. Wal-Mart (sporting goods only): 16 percent.

Granted, it's easy to pick and choose statistics to make one side look better than it is...

Posted by Kevin at 3:37 PM

St. Louis Post Dispatch on WM

Patrick Grote sends in two articles from the St. Louis Post-Dispatch by Mary Jo Feldstein. The first sprawls between discussion of low prices, competition, and union opposition:

After the grocery strike here in 2003, union officials and grocers said they needed to fight the big-box retailers, such as Wal-Mart, that were nipping at sales.

Wal-Mart hasn't faced much opposition in the St. Louis area so far, Horn said. But union officials say that's about to change.

A union seminar this week in St. Louis will be devoted to Wal-Mart, said Jim Dougherty, president of United Food and Commercial Workers Local 655. Paul Blank, director of the union's Wake-up Wal-Mart Campaign, will speak on how to combat the retailing giant. The national union hired him to lead a new movement targeting the retailer.

The second is a discussion of a Wal-Mart success story:

Cindy Galati was facing money problems in November 1981. Her husband had been laid off, and she needed a job.

Galati applied for what she thought would be a temporary job as a cashier at the Belleville Wal-Mart.

She still works for Wal-Mart, but now she's a district manager overseeing 3,000 employees and stores with sales of about $400 million a year. Her territory is the Interstate 70 corridor in Missouri.

The woman realized that Wal-Mart's health benefits were "good" only when she needed to cover catastrophic costs....

Posted by Kevin at 3:25 PM

The Motley Fool on Wal-Mart

The Motley Fool has many interesting articles about Wal-Mart, and Serena Maranjian (rr) provides links and honest commentary:

The issues Wal-Mart faces are kind of big and can't be easily solved. It has come under attack for allegedly putting mom-and-pop businesses out of work, treating employees unfairly, and more. But the firm is trying to do some good, along with delivering low prices to consumers. It does engage in a lot of charitable giving, and it wants people to know about its good work. Learn more at www.walmartfacts.com. And type "Wal-Mart" into Amazon.com's search box to find a slew of books with strong points of view, positive and negative.

Posted by Kevin at 9:38 AM

May 2, 2005

"Mother of all Mother's Day Cards."

Tomorrow, "Love Mom, Not Wal-Mart" is headed to the big apple:

As part of the press conference, speakers will join together in signing the "Mother of all Mother's Day Cards." The enormous eight foot-by-eight foot card calls on Lee Scott, CEO of Wal- Mart, to honor and respect our nation's women and mothers by ending the company's discrimination against women. The giant Mother's Day card will be mailed to Scott with the names of thousands of supporters.
On ALP, tomorrow's activism today!

Posted by Kevin at 9:19 PM

New Supercenter in Rio Rancho

Wal-Mart's version of what happens when a new supercenter opens is part of the story:

Randale refuted claims that Wal-Mart would hurt business in Rio Rancho.

"A new supercenter generally attracts commerce (for other businesses). It keeps the community shopping locally," Randale said. "It's not uncommon; there are a lot of franchises and local businesses that like to locate near Walmart."

Will "business" will be hurt? That's a senseless question -- a generalization that ignores the very changes that will come about when a Supercenter arrives. I do not see how one can "refute" a senseless question.

Surely, some businesses will be hurt; others will prosper. Grocery stores will have to compete on price or better service and selection. Many smaller stores will seek to locate (or relocate) near the Supercenter.

Lively downtowns will have to be reconfigured, since they are no longer the general merchandise center of areas. If businessmen aren't obstinate, downtowns can become vital spaces. But tf they are obstinate, then reconfiguration will take a longer time...

I don't know any examples of WM's effect on already dead downtowns...


(Another question is whether the sales or property tax base of a city or county will be hurt; this is not a concern about the health of commerce; it's a concern with how much can be sucked out of commerce.)

Posted by Kevin at 9:14 PM

Planning Commissioner Uses Fake ID at WM

One wonders whether this guy had to approve of a WM Supercenter:

VISTA --- Former Escondido Planning Commissioner Bruce Quick pleaded guilty Monday morning to felony charges involving methamphetamine and fraud, and agreed to a sentence of one year in jail...

Quick faced more than 60 charges related to drugs and identity theft. He plead guilty to three felonies on Tuesday, including manufacturing methamphetamine, obtaining false identification, and burglary for trying to use fake identification to buy goods at a Wal-Mart store.

Posted by Kevin at 9:03 PM