June 28, 2005

Assorted Links

1) WakeUpWalMart notes that the CT attorney general wanted WM to remove allegedly illegal and dangeous fireworks from the shelves of the 28 stores that carried it, which WM did. I comment there that the firework seems be legal under state law.

2) WM downplays Eastern European expansion hyped by rumor-hungry press...

3) A failed carjacking in the parking lot of the MetroWest WM in Orlando, FL leads to a chase and capture of the assailants... more and even more...

Posted by Kevin at 2:59 PM

Raze Supreme Ct., Build WM (UPDATE)

The Kelo decision is leading some people to have a little fun with the situation:

The Supremes don�t need their large building in Washington, D.C., to do their work. They could function just as effectively from offices in a large tent or warehouse building. Local government in Washington D.C. needs to tear down the Supreme Court building and replace it with something that will generate more tax revenue for the city, such as another Walmart store.

UPDATE: Meanwhile, Randy Barnett notes something similar:

On Monday June 27, Logan Darrow Clements, faxed a request to Chip Meany the code enforcement officer of the Towne of Weare, New Hampshire seeking to start the application process to build a hotel on 34 Cilley Hill Road. This is the present location of Mr. Souter's home.

Clements, CEO of Freestar Media, LLC, points out that the City of Weare will certainly gain greater tax revenue and economic benefits with a hotel on 34 Cilley Hill Road than allowing Mr. Souter to own the land.

The proposed development, called "The Lost Liberty Hotel" will feature the "Just Desserts Caf�" and include a museum, open to the public, featuring a permanent exhibit on the loss of freedom in America. Instead of a Gideon's Bible each guest will receive a free copy of Ayn Rand's novel "Atlas Shrugged."

A thing of beauty...

Posted by Kevin at 2:57 PM

June 27, 2005

European Vacation

Lee Scott, CEO, went to Europe to check up on the competition:

But he is not completely without a to-do list. Taking in Europe for Mr Scott, flanked by an entourage of advisers, also means lots of store tours. As every good retailer knows, that is much more about checking out what your competitors are doing than just looking at your own - struggling - operations in Germany and the UK.

So in Germany he was touring rivals Lidl and Aldi and Metro. In Brussels he was visiting Carrefour. In the UK, where Wal-Mart owns Asda, he took in a raft of competitors, such as Tesco and J Sainsbury, the first and third largest supermarket operators, and Matalan, Argos and Next, which Asda competes with on non-food ranges such as clothing and cameras.

Mr Scott, whose company generated a staggering $285bn sales last year in the US and nine other countries from Brazil to China, says he has learnt a lot from this trip.

He picks on the Carrefour outfit he saw in Brussels. "The Carrefour store is very specifically aligned to the market area they are in. They use the one price, it is a modest income area here and that store is dominated by number one price. They are addressing the consumer and the store was incredibly busy," he says with a hint of admiration.

His mind jumps to Tesco, the UK's most successful retailer by some stretch with a 30 per cent market share of supermarket shopping. "You go to a Tesco and there was a couple of items in Tesco that I haven't seen in Asda in a feature space which is probably doing well. So I look at pricing across some of the markets and Asda pricing in relation to that."

From what I understand, Wal-Mart isn't doing nearly as well in Europe. Aldi, in particular, is a tough competitor who has a large share of the German budget shopper. They are cheap, yet have better margins than WM.

Posted by Bob at 9:04 PM

John Walton Killed in Plane Crash

Jon Gales of mobiletracker.net informs us that John Walton died today:

It is with great sorrow that Wal-Mart Stores, Inc., announces the death of John Walton. A Vietnam War hero, member of the Wal-Mart Board of Directors and philanthropist, Walton was killed when the ultra-light aircraft he was piloting crashed shortly after take-off from the Jackson Hole Airport in Grand Teton National Park. The crash occurred at approximately 1:20 p.m. CDT and the cause has not yet been determined. Walton, 58, was the aircraft's sole occupant.

Walton was the second son of Wal-Mart founder, Sam Walton.

May he rest in peace.

Not much else is available yet. Reuters has a snippet (so does the AP), and ABC has slightly more, while CBS has two respectable photographs. Marketwatch has the financial side of John's life.

In 2005, John was the 11th richest person in the world, according to Forbes. Here's a 2002 interview John had with Businessweek about the Walton Family's charitable giving, and another in 2000 about school choice.

Some Farkers are having fun at the dead man's expense, but others are thanking him for his military service.

The Morning News takes a look at the impact John's death will have on
WM stock ownership by the Walton family.

Posted by Kevin at 8:59 PM

Benton, Upscale

Michael Barbaro writes that Benton County is showing its wealth:

Benton County, once a sedate backwater, is quickly morphing into a swanky oasis in the middle of the Ozarks.

The result is an unprecedented migration of high-paid executives to the northwest corner of Arkansas -- professionals from amenity-rich cities like New York, San Francisco, Atlanta and Miami, who bring not only their six-figure salaries, but an appetite for Jaguars, sushi, pet day-care centers, Gucci shoes and Chanel sunglasses.

It's not Wal-Mart executives buying these things, it's the employees of WM's suppliers.
Jeff Collins, an economist the University of Arkansas's Sam Walton School of Business, said the thousands of suppliers who have moved to the region are "trying to recreate the world they knew back home, wherever that was, and they have the money to do it."
Wal-Mart executives should take this as anecdotal evidence that personal contact is influencing decisions in subtle ways -- away from the standards considered by the home office to be optimal or most efficient.

You'll notice, though, that Chinese-owned suppliers are not noted to have any Bentonville presence at all...


The article does contain some stupidities, however, including:

Wal-Mart's unchallenged dominance in American retailing
Just what would you call Target and every other retailer that make up 70% of household consumables, unchallenging competitors?

Posted by Kevin at 11:35 AM

The Law as Bludgeon

It seems that many of ALP's readers wholly support unions and union activities against Wal-Mart in the US, Canada, and beyond North America. Some readers may think that I'm just misguided; others believe me a dangerous and ignorant monster, especially since my distrust for unions appears one-sided. But my distrust is not for collective bargaining itself, but for the bludgeon-like nature of the law governing employer-employee relations, and how union leaders have figuratively incorporated the bludgeon into their negotiations, rhetoric, and PR.

I'd like to offer somebody else's explanation (taken completely out of his very different context), why I think current law regarding union-certification and arbitration is not "fair" (if I may use such a word intelligibly):

There is an enormous chasm between a situation in which both parties in a dispute seek arbitration from a third party, and a situation in which one party in the dispute is able to force the other party to accept the decision of a third party arbiter. In the first case, the two parties have mutually agreed to let someone else settle their differences. In the second case, there is no such agreement....

All that is necessary to provide the pretext for judicial review is to have one single plaintiff ask the court to decide whether the court should decide -- and each time the court decides that, yes, it should decide, it simultaneously decides that, no, the people cannot decide.

The law presents a pretense of mutual agreement, when in fact none exists. In other words, unions want to use the power of law to create "rights" -- to form a union itself, to a living wage, to a share of profits, to determine hours of work -- that would not exist in a society of mutual agreement on the terms of exchange.

Posted by Kevin at 9:01 AM

June 24, 2005

There is no Publix Blog

Josh Hallett notes that there is no corporate Publix Blog; there doesn't seem to be an anti-Publix blog either, although there is an anti-publix blogring.

With that link, will we have launched his post to top billing in "Publix" Google searches?

Posted by Kevin at 3:12 PM

WM & Eminent Domain

The aftermath of the Kelo decision is a an excellent time to renew my call for Wal-Mart to quit using eminent domain to obtain store locations.

It's wrong; it violates the very essence of a market economy, and it does your image no good to use the force of law to evict people from their homes and businesses.

Let me be clear. A Wal-Mart store is NOT a "public use" of land, even if the store does (in the eyes of its owners, employees, and shoppers) serve a public purpose. Wal-Mart should cease and desist from this practice...

I could be taking this too far, but I'd argue that in fact, Kelo means two things for readers of this blog:

1) A city council controlled by Wal-Mart and developer interests will have an easier time of taking private property to put in new big-boxes and strip malls.

2) A city council controlled by anti-sprawl activists and anti-boxboxers will have greater power to shut down megastores if they're considered by the council to be against the best development interests of the area.

Eminent domain as tool just got easier to justify. In other words your private real property is really on loan to you by the city council. You do not have the final say to how it is used; at one time, as long as you agree on a remedy to the harms your uses and your neighbors uses presented to one another, nobody else had any say except for very limited takings.

Now a city council can tell you (by calling in a crank economic "expert" with his predetermined "economic impact report") that the local grocer will "make people better off" by "keeping money in town", and Wal-Mart and Wegmans and other stores can be forced to sell their land and buildings. Or the city council can call in a different "expert" who opposes big-boxes, insisting that they destroy neighborhoods, and should be gutted in order to create a new urban landscape.

This is not a good outcome for anybody, really, except local politicians who can now bid up their demands for political support.


Posted by Kevin at 11:48 AM

June 23, 2005

Yelm City Council Bans Discussion of Wal-Mart

The Yelm City Council won't let people mention Wal-Mart or big-box stores, and have pronounced a moratorium on moratoriums, all of which to me is utterly bizarre:

Yelm's city attorney, Brent Dille, said council members were fed up with requests that the city impose a moratorium on the large stores. But he also said they don't want to appear biased if an appeal of Wal-Mart's application comes before the council.

This isn't the first time the council has silenced the masses.

In April, it unanimously approved a motion banning the word "moratorium." That was in response to citizen requests that the council enact a moratorium on big box stores so the city's staff could review the city's decade-old zoning.

The reasoning is straight-forward, however:
"You can understand if you're barraged for two months at meetings - the same people saying the same thing."
[H/T: Fark]

Posted by Kevin at 11:35 PM

Becker & Posner on WM Health Insurance

Posner and Becker discuss Wal-Mart and employer-mandated health insurance. Lanny Arvan has an interesting post too.

Posted by Kevin at 11:06 AM

Wal-Mart and Health Insurance

As Kevin wrote last month, the claim that Wal-Mart sucks at the tit of the taxpayers by forcing their workers to accept jobs without health benefits [my words, not Kevin's] is incorrect and incomplete. But that hasn't stopped Ted Kennedy et al. from introducing a bill designed to address this situation.

Several congressional Democrats introduced a bill yesterday that would force states to report the names of companies that have 50 or more employees who receive government-funded health care, an effort to pressure Wal-Mart Stores Inc. in particular to improve employee health coverage.

How many fast-food outlets, pizza parlours, hair salons, drug stores, etc., bulk up on part-timers and offer no benefits? LOTS.

And yet people take these jobs. The primary reason people take these jobs is that they receive benefits from parents or spouses. Those who don't, still are not suffering from the monopsony power of Wal-Mart. Wal-Mart does not locate in small isolated communities where employees have no other options; rather it locates where there is a large number of buyers, and that usually means there is also a large number of employment alternatives, too.

Posted by TheEclecticEconoclast at 9:08 AM

June 21, 2005

Time on WM in China

A nice overview of both stores and procurement in China. It includes this section on which jobs Wal-Mart is destroying:

Only about 10% of the firm's purchases from 2,500 suppliers in China today come from companies owned on the Chinese mainland. Andrew Tsuei, managing director in charge of Wal-Mart's global-procurement operations, says the rest come from longtime suppliers in other parts of the world that have moved their manufacturing to China in search of lower costs. That means Wal-Mart's China trade may indeed be eliminating factory jobs--but in South Korea, not South Carolina.
Hmmm... That doesn't really follow, since non-US/non-China based firms could have been producing goods in the U.S., but it was a nice try...

Posted by Kevin at 12:20 PM

June 20, 2005

Wal-Mart Promotes Diversity

I cannot wait to see how the anti-Wal-Mart lobby responds to this: [link via Newmark's Door]

Wal-Mart Stores, Inc.... announced today that it has been named one of "The 30 Best Companies for Diversity" by Black Enterprise magazine. The companies that made the list outperformed other corporations in their peer group in four key areas: percentage of total procurement dollars spent with companies owned by African Americans and members of other ethnic minority groups; the percentage of African Americans and members of other ethnic minority groups represented on their corporate boards; the percentage of senior management positions held by African Americans and members of other ethnic minority groups; and the percentage of African Americans and members of other ethnic minority groups represented in the total workforce.

...Wal-Mart has been widely recognized for its ongoing commitment to diversity and inclusion. Wal-Mart was recently ranked among the top 50 companies for diversity in the U.S. for 2005 by DiversityInc. Magazine and was named one of the top corporations for multicultural business opportunities in 2004 by DiversityBusiness.com. This year Wal-Mart was also listed on the Hispanic Association on Corporate Responsibility's (HACR) Corporate Index as one of the top 10 companies for Hispanics. Asian Enterprise magazine also included Wal-Mart in its listing of the top 10 companies for Asian Americans.

Posted by TheEclecticEconoclast at 8:13 AM

June 17, 2005

Quick Links - June 17

1) Reuters gets in on the WM going Upscale meme.

2) A German court rules that WM associates can flirt with one another and WM cannot require that associates squeal on one another. It was probably not consulting with the worker's councils that did the policy in. WM Germany can appeal, but come on guys, is it really worth it?

3) Is Menards Different from Wal-Mart?

4) The St. Petersburg, FL zoning commission tries its hardest to keep Wal-Mart out, but Wal-Mart decides to take their "modifications" seriously, and keep pressing on. The council gives it's OK. A choice quotation:

But the discount giant has found few allies in this fight. Although it received a recommendation for approval from the city staff, John Hixenbaugh, the city's zoning offer, said the staff tried everything possible to discourage Wal-Mart.

The staff members attached 30 conditions to its approval, and Wal-Mart agreed to meet them. When asked for road improvements, Wal-Mart offered $5-million to widen Gandy Boulevard from four lanes to six.

"Every time we asked for more information, they gave it to us," Hixenbaugh said.

Still, he apologized to Wal-Mart opponents Wednesday, saying he wished St. Petersburg's laws allowed him to do more to restrict the development.

The St. Pete Environmental Development Commission still killed the planned development because WM could not mitigate the destruction of a swamp wetland on the vacant parcel.

5) Woman accidentally leaves 2 year old alone at Wal-Mart.

Posted by Kevin at 7:58 AM

Stupid "Open Availability" Policy Terminated

Corporate slams a store manager for being too-hardline on hours:

Wal-Mart headquarters overruled a policy decision by one of its store's that would have terminated any worker who failed to agree to be available to work any shift between 7 a.m. and 11 p.m., seven days a week, according to the Charleston Gazette (West Virginia)....

"It is unfortunate that our store manager incorrectly communicated a message that was not only inaccurate but also disruptive to our associates at the store," Dan Fogleman tells the Gazette. "We do not have any policy that mandates termination."

The Gazette (rr) is more extensive:
In announcing the any-shift-any-day policy, store manager John Knuckles had told employees that Wal-Mart headquarters had mandated the change at stores across the nation during a conference call earlier in the week.

He repeated the claim in an interview with the Gazette on Tuesday. �It�s the most positive thing I�ve seen in 15 years at Wal-Mart,� he said then.

But corporate officials deny that version of events. �Wal-Mart ha

Posted by Kevin at 7:51 AM

Woman Accuses WM Associates of Racial Bias

WM associates in Eagan, Minnesota accused Gayle Bryant of writing a bad check, because they were convinced her starter checks (which were naturally missing several security features of standard checks) were fake. They called the police even though the check cashing system approved her check. She claims racial bias played a role. WM and the police deny that.

Let's take a look at the case:

Store employees had accused the Ramsey County social worker of using a bad check to buy $92.69 worth of bottled water and household goods. They called police, who waited for her to leave the store and then stopped her for questioning.

Ultimately, Wal-Mart agreed her check was good and offered $1,000 for her trouble, blaming the incident on an over-alertness for fraud but admitting that employees hadn't followed policy.

Her evidence:

"It's what you feel. It's an internal gut feeling. Race is the last card I pull," she said. "But I know if I went in there and had been white, this never would have happened."
I hate bigots of all stripes, but I need more than her feeling as evidence, especially given the context:
Although Bryant said she believes she was singled out because of the color of her skin, the Eagan Police Department also is emphatic that race played no factor in the incident.

The only factor was what her checks looked like, police said.

"Wal-Mart called us. We'd respond to any call for service," Johnson said.

Employees were on the lookout for fraud because a customer with fake checks had duped Wal-Mart only the night before. Everyone's guard was up when Bryant came in with her printed starter check, he said.

But the mess-up was "absolutely not" race-related, Wal-Mart's Clark reiterated.

It's impossible for us to really know the motives of the accused employees; the author interviews a professor who notes that implicit racial profiling is rampant, but also notes that a large number of the compaints to the Department of Human Rights are dismissed or dropped.

What is the probability that she was singled out for her race? What is the probability that she wasn't racially profiled but sincerely thinks she was?

Posted by Kevin at 7:31 AM

June 16, 2005

Dems Taking Wal-Mart Money

Sure, Wal-Mart PAC gives mostly to Republicans, but it also gives strategically to Democrats:

Sen. Hillary Clinton (D-NY), the current frontrunner for the 2008 presidential nomination, received a $5,000 check from Wal-Mart in February. Congressman Harold Ford (D-TN), a Democratic candidate for Senate and rising star within the party, also took a $5,000 contribution. And Congressman Bob Menendez (D-NJ), chairman of the House Democratic Caucus, received $5,000 from Wal-Mart in April. This year, Wal-Mart's giving has been nearly even between the two parties.

If Wal-Mart is so bad, why are Clinton, Ford and Menendez cashing their checks? And if Wal-Mart is so anti-worker, why is the firm's PAC contributing to liberals?

The article has much, much more on non-political subjects. [H/T: Don Boudreaux]

Posted by Kevin at 3:55 PM

June 15, 2005

More Diversity, More Lawsuits

Wal-Mart makes Black Enterprise's top 30 best companies for diversity, and WM VP David E. Jackson is one of the most powerful black corporate executives in the country. Here's a profile of Mr. Jackson from 1997, and another from February of this year.

Yet a disturbing logic is clear; greater diversity means a greater probability of being sued because of alleged discrimination:

This year, Wal-Mart was also listed on the Hispanic Association on Corporate Responsibility's (HACR) Corporate Index as one of the top 10 companies for Hispanics. Asian Enterprise magazine also included Wal-Mart in its listing of the top 10 companies for Asian Americans....

The magazine also noted, "... In fact, one of the ironies of corporate diversity is that the fewer minority employees a company has, the less likely it is to face a workplace discrimination suit. While the business of diversity may sometimes be difficult, it is important to laud those who are aggressively pursuing initiatives toward changing corporate America's status quo."

Wal-Mart is currently facing the largest-ever U.S. class action on charges that it discriminates against women in pay and promotions.

Posted by Kevin at 9:55 AM

June 13, 2005

Invisible Heart

Phil Miller, of the blog Market Power, reviews the economics-romance novel Invisible Heart by Russell Roberts. In his review, he quotes the following passage, adding that he wishes spokespeople from Wal-Mart would show some courage and say these things. This is a quotation of the economics hero speaking:

Just once, I�d like to hear a corporate spokesperson when asked to defend the company�s profits respond like this: �We make high profits because consumers are wildly enthusiastic about our superior products at a price that provides value. We encourage all our competitors to try and match our performance. We encourage our customers to stay with us only as long as they are satisfied. If you are dissatisfied with... our performance, be it where we put our factories or how much we pay our workers or the prices we charge, we encourage you to start a rival enterprise and outperform us. We thank our customers for enjoying our products and allowing the current level of profit. We intend to use those profits to further improve our fine products and to reward our investors who took a chance on our risky venture. Thank you very much.�
Posted by TheEclecticEconoclast at 12:59 PM

China Merchandising

Ashwin Navin of ash was here is surprised to find that Wal-Mart has different standards for what they'll sell in China:

While wandering down the isles of this megastore, i was curious about the retail price of Hollywood movies and music -- especially since the same titles are available literally one block outside the door for $1 on the street (pirated of course). to my surprise, i discovered a wall of porn! not segmented by curtains or velvet ropes, but literally right above the children's movies... isn't this the same retailer that makes american magazine publishers change its covers to get shelf space in america's favorite family store??

Thanks to Barry Ritholtz at RealMoney.com

Posted by Bob at 2:47 AM

June 9, 2005

Peter Kanelos Leaves WM Tomorrow (Updated)

I think this is a big loss for Wal-Mart:

The Wal-Mart community affairs director for Arizona and Southern California, whose office approved an advertisement that appeared to equate a local zoning proposal with Nazi book-burning, has resigned, the giant retailer said.

Peter Kanelos, who oversees the chain's public relations effort in both states, will leave the company Friday...

Kanelos seems to have been pretty effective in many other campaigns...

UPDATE: WUWM insists that:

tens of thousands of Wake-Up Wal-Mart supporters demonstrated the power ordinary Americans have to change Wal-Mart and make Wal-Mart a more responsible company.
As Fark would put it, .

Posted by Kevin at 12:58 PM

June 8, 2005

How Should Wal-Mart Go Upscale?

Daniel Gross has a truly pathetic piece about Wal-Mart in the latest Slate. As Kevin noted earlier [see the first link here], Wal-Mart is considering moving upscale, to some extent.

First, Gross is skeptical:

The problem is trying to get people to buy the good stuff from a place associated with the bad stuff.

... Retailers can drop from the luxury market to the mass market. (See, for example, the cheaper Jaguar X-types and the more expensive XK models.) But it's not clear they can do the reverse and move from low-end to high-end. What if Hyundai were to unveil a $50,000 luxury SUV? It would have difficulty getting its existing customers to trade up.

This is just plain ignorant. Honda started as a small-engine company, making small motorcycles long before they entered the U.S. auto market. Toyota initially was a small, economy car company, but look at their high end now. And, in fact, Hyundai is bringing out a luxury sedan [thanks to Kevin for this link]. He even cites McDonald's, but remember 40 years ago when all they offered was a basic 15-cent burger and contrast that with the McDonald's menu today. In other words, upscaling is successfully done often.

Then he gives some really useless advice:

(1) Make an intense study of Restoration Hardware's inventory management. Rather than pile up cheap goods to the ceilings, Restoration tastefully sprinkles expensive tchotchkes around even-more-expensive leather chairs.
Maybe, but I doubt it; this strategy seems to work for small, niche-market shops, but it probably contributed to the demise of old-time department stores. If you come to depend on high-margin junk, you're dead when Wal-Mart or similar stores begin selling it at low prices.

Even worse is this:

(2) Dispatch teams of anthropologists to Southampton, N.Y., in August to watch folks strolling up and down Main Street. Convene focus groups to plumb the psychology of customers, who, already possessing 200 pairs of shoes, are willing to spend their ancestors' hard-earned cash on four more pairs at Saks. (To get people to show for the groups, forgo the usual $50 plus punch and cookies. Offer Botox and vitamin-spiked water instead.)

Arrgghhh.... anthropologists?? in teams??? as marketing specialists??

I love reading about and studying anthropology; it has much in common with the new institutional economics. But I'd be careful about relying on them for marketing advice.

(3) Establish greeter re-education camps. The handshake, the smile, and the friendly welcome may go over big in rural North Carolina, but upscale customers like to be ignored, mistreated, and discouraged. For a hefty fee, trainers from Barneys and Bergdorf-Goodman will teach Wal-Mart greeters to instantly recognize A-listers and to identify the telltale signs of big spenders (seventysomething men accompanied by twentysomething blondes) and of tourists who will look but not buy (Gap bags).

What exactly is he trying to say? That the Wal-Mart greeters should be rude to attract upscale business? Maybe in some instances, but most of the time this is just plain wrong (except for those snobs who are ashamed to be seen in Wal-Mart).

One thing Wal-Mart does very well is sell known-quality, brand-name products at low prices. There is no reason they cannot do this for mid-scale and up-scale merchandise along with the merchandise they already carry.

My advice if Wal-Mart wants to attract more upscale customers is two-fold:

1. Ignore Daniel Gross, and
2. Try to get rid of the plastic-rubbery-chemical-type smell in the stores.

Posted by TheEclecticEconoclast at 6:04 PM

WM's Man in Washington

A highly-regulated national economy puts pressure on every organized interest to... um... influence politicians:

WASHINGTON -- Looking to expand its federal presence, Wal-Mart Stores, Inc., has hired the chief lobbyist for the National Restaurant Association to lead its growing lobbying team in the nation's capital.

The Bentonville-based retail giant has tapped Lee Culpepper, a 12-year veteran of promoting restaurant industry interests among Washington leaders.

"He'll be the face of Wal-Mart in Washington, D.C., and will help us define our strategy and implement it in Washington," said Ray Bracy, Wal-Mart vice president of federal, state and international public affairs.

The way that this can be twisted and spun is rather disgusting:
"We are big enough and our business crosses so many aspects of our society that it's important that we participate," Bracy said. "We really have an obligation to be involved."
Participate! Obligation! No. No. No!

The function of lobbying is not to inform legislators of the truth, but to persuade them that they shouldn't cross you. Lobbying is at best an unavoidable transfer of wealth to the political classes in exchange for political support; at worst, it is a wasteful, pernicious, and anti-social menace that provides a continual, irresistable incentive for the cartelization of power.

It's important to WM to "particpate" because its opponents already do. Serious business affecting WM -- pressuring Chinese currency revaluation, trade laws, minimum wage laws, trucking laws, environmental laws, etc. -- will be modified in DC whether or not WM has a presence there...

Posted by Kevin at 2:56 PM

Piggly Wiggly's Biometrics

Wal-Mart is not always first in technology:

Continuing its company-wide deployment of biometric technology, Piggly Wiggly's Greenwood, S.C. store went live on its own new payment system yesterday.

The Greenwood launch is the operator�s fifth installation of the Pay By Touch system, which allows shoppers to pay for their purchases with the touch of a finger, eliminating the need for checks, IDs, credit/debit cards, membership cards, or loyalty cards.

You can enroll in this award-winning system by going here.

Posted by Kevin at 9:19 AM

June 7, 2005

Wal-Mart and Reality Television

Wal-Mart is entering the realm of "Reality Television", only it won't be as a sponsor of super-physical, survivor-type shows.

For the first time, Wal-Mart Stores is becoming a major sponsor of a reality television show, by signing a branded-entertainment agreement with ABC for "The Scholar," a summer series that begins a six-week run on Monday night. Wal-Mart will be woven into the plots of episodes of the show, which is centered on a competition among 10 high school seniors from across the country for a grand prize of a full college scholarship, valued at $250,000, covering tuition and expenses.

The students will compete in a variety of academic, creative and social tasks, including team challenges, oral exams and defending themselves before a scholarship committee. In one challenge, the five members of the winning team each receive a $2,000 Wal-Mart gift card to outfit their dormitory rooms. And Wal-Mart is underwriting the cost of the scholarships for the nine runners-up, totaling $300,000. (The Broad Foundation in Los Angeles is donating the grand prize.)

There will also be commercials during the show promoting the Wal-Mart and Sam's Club Foundation's long-running program offering scholarships to students in towns where it operates stores and distribution centers.

Apparently Wal-Mart's motivation is to try to counter some of the image problems they think they have been having. The fact that they think they have been having image problems suggests that perhaps the anti-Wal-Mart forces have been having an impact.

Posted by TheEclecticEconoclast at 5:04 PM

It's Sexy to be Overseas

Wal-Mart's 5-Year Plan includes massive overseas expansion, and John Menzer's Hot on India. But Target wants to focus on the domestic market:

Meanwhile, Target expects to add more than 600 stores over the next five years, the company told shareholders at its recent annual meeting.

During a May 12 conference call about its first-quarter earnings, one analyst asked Target about rumors that it might link up with Tesco to grow overseas. But Target said there is still growth to exploit stateside.

"We know we can double the number of stores in the continental United States," and factoring in existing stores' sales growth will "lead us to be able to triple in size in this country," Target CEO Bob Ulrich said.

"It's sexy to be overseas, but there's a strong return for our strategy here, so I think overseas is still a ways off."

Posted by Kevin at 10:09 AM

WM Still a Buy

So says Bill Dreher of Deutsche Bank Securities... others are not giving the stock the thumbs down WM opponents are hoping for.

Posted by Kevin at 9:55 AM

On Crime and Gangs

Did you ever read that Wal-Mart raises the crime rate, and that police budgets must swell to meet their needs? I've seen no solid evidence that this happens, although of course a WM will require more police resources than barren land. And anecdotally, crime rates have dropped as the number of Wal-Mart stores has skyrocketed.

I had thought that Wal-Mart might be redistributing crime to nearby areas, but police groups in Napa don't agree:

"Even with all the new home construction in the immediate area (near Wal-Mart) there's really not anything I can come up with that is a problem," Stockton Police Lt. Ron Stansbury said. "There just isn't anything there."

While robberies, murders and gang activity in Stockton push the city's crime rate above the national average, there have been no serious crimes reported at the Wal-Mart Supercenter since it opened last year. Police agencies that monitor retail-only Wal-Marts in Napa and Vallejo also say there is little to buttress the argument that Wal-Mart attracts crime or gangs, despite opponents' fears.

"As far as Wal-Mart goes there's nothing that jumps out at us as far as the number of calls for service. It's about par with any other business that size," Napa Police Cmdr. Steve Potter said....

Vallejo Police Lt. Lori Lee said the Wal-Mart near the city's border with American Canyon is a relatively safe place to be.

"I can say with some level of confidence that our Wal-Mart is not a nuisance," she said. "And probably with our community it's not any different than with the Kmart or Target."

Still, Wal-Mart's hard-line prosecution of shoplifters does take more police resources than other stores. But that a benefit as well as a cost...

Posted by Kevin at 9:39 AM

June 6, 2005

Links of the day

1) Wal-Mart to clean up stores:

Executives at the world�s biggest retailer said their �game plan� for this year involves targeting wealthier shoppers who may buy basics like food at Wal-Mart but look elsewhere for fashionable items like clothing and housewares.

�We aren�t where we need to be, especially in the Wal-Mart stores in the US,� chief executive officer Lee Scott told a crowd of 20,000 gathered for the annual meeting here.

2) 12 Safeway stores in Northern Ireland are bought by Asda:

William Morrison Supermarkets Plc, which bought Safeway Plc last year, agreed to sell 12 Safeway stores in Northern Ireland to Wal-Mart Stores Inc.'s Asda, Britain's second-biggest supermarket chain.

3) 72 year old Wal-Mart greeter no match for shoplifter:

A store security guard was chasing shoplifting suspect Bradley Chapman out of the door when the security alarm sounded. The greeter got the suspect on the ground, but officials say Chapman got free and got into the car with his wife and son.

4) H. Lee Scott wants WM to go organic:

Scott proclaimed he is "excited about organic food, the fastest growing category in all of food, and at Wal-Mart." He said people in all income brackets want organic food products for their family, and lower-income families should not be denied such goods due to high prices.

Posted by Kevin at 9:28 AM

The Market Should Regulate Wal-Mart

A letter writer in the Philadelphia Daily News recognizes something all too easily forgotten -- that markets perform regulatory functions:

But "Sprawl-Mart" and other companies should not be forced to offer the health benefits cited in your editorial. The market should regulate Wal-Mart's bad policies: employees should find other jobs at places that pay better and offer better benefits, then Wal-Mart will be forced to pay more and offer better benefits in order to compete. Likewise, people should boycott Wal-Mart, as I do, to show that they do not approve of their policies.
What's required to end the growth of Wal-Mart is much more than this; complaining and politicking is a feel-good response. Anybody who wants to crush Wal-Mart has to get a critical mass of geographically-concentrated consumers -- not newspaper owners, not politicians, not movie stars -- to do it for them. And to do that, you have to give them better alternatives. Wining about wages, bickering about benefits, and hollering about hours is just wind without meaning. My gut tells me that this battle will NOT be decided by ideas and philosophies.

What the letter-writer doesn't seem to realize is that the market is already "regulating" businesses in exactly the way she desires; it's using Wal-Mart to regulate WM's competitors. Inasmuch as Wal-Mart is crushing the little guy, the market is regulating the little guy... in a way he hadn't been regulated before.

The only way Wal-Mart will be stopped is if a real competitor figures out how to crush it. So if you oppose Wal-Mart, you should be doing your best to make local and state regulation as benevolent to competition as possible. I've often pointed out that big-box restrictions usually only apply to Wal-Mart; but that's not completely true. BB restrictions apply to potential future competitors too. By limiting the size of stores, and requiring too-onerous economic and environmental reviews, it is very possible that a locale is making it harder for the next generation retailer to overcome Wal-Mart.

Posted by Kevin at 9:11 AM

June 5, 2005

Anti-Trust in Two Easy Lessons

About a month after I began blogging at The Eclectic Econoclast, I wrote the following:

Anti-trust in 2 Easy Lessons

1. You must compete.
2. You must not win.

At least that's how too many people think of Walmart.

I was reminded of this lesson by Kevin's post several days ago, citing the investment blog, Motley Fool.

Here is more from that article:

In my humble opinion, Wal-Mart's real sin is that it has been successful. Extremely successful.

Americans seem to have an odd sort of paranoid schizophrenia with respect to wealth. On one hand, we enthusiastically pat ourselves on the back for living in a country that offers unparalleled economic opportunity. On the other hand, Americans are generally suspicious and resentful toward the wealthy or successful, and "class warfare" is a time-tested political strategy.

In some ways it's too bad that Wal-Mart can't enjoy more of its own success (though the heirs to Sam Walton's fortune don't seem overly glum). After all, Wal-Mart has built itself into a colossus principally because it has delivered what people want -- when, where, and how they want it.

I am really distressed that people would like to limit the successes of firms like Wal-Mart; the successes of these firms make consumers better off, and they typically create better jobs and better working conditions than had been available in the businesses they displace [K-Mart, anyone??]

Posted by TheEclecticEconoclast at 8:30 PM

June 3, 2005

Effects of Living Wage Laws

Many Wal-Mart opponents want Wal-Mart to start paying a "living wage". However, empirical evidence contrasting areas with "living wage" laws with those that rejected them shows that when wages go up, opportunities for the least skilled go down:

Living wage campaigns have succeeded in about 100 jurisdictions in the United States but have also been unsuccessful in numerous cities. These unsuccessful campaigns provide a better control group or counterfactual for estimating the effects of living wage laws than the broader set of all cities without a law, and also permit the separate estimation of the effects of living wage laws and living wage campaigns. We find that living wage laws raise wages of low-wage workers but reduce employment among the least-skilled, especially when the laws cover business assistance recipients or are accompanied by similar laws in nearby cities.
LW campaigns have little effect; LW laws to have effects. Here are two snippets from the paper, taken from the results of putting data into a complicated model:

1) The passage of a living wage, on average, increases wages of the bottom decile of the wage distribution by 1.68 percent 21 when compared with all other cities, 1.52 percent when compared to set of cities with failed and derailed living wage campaigns, and 1.34 percent when compared only to the set of cities with derailed
campaigns. (pp. 20-1).

2) [W]hen compared with all cities, a living wage law lowers the employment rate of the less-skilled by 2.34 percentage points, which implies an elasticity of about −0.09.23 The employment results using the alternative control group of cities with failed and derailed (or
just derailed) living wage campaigns are similar. (p. 21).

Here's an earlier, free version of the paper.

Here are two other papers by David Neumark on the living wage.

Posted by Kevin at 3:34 PM

The Scholar

Whether for charity or PR, it's worth noting that WM will be co-sponsoring a reality-TV show -- The Scholar:

For the first time, Wal-Mart Stores is becoming a major sponsor of a reality television show, by signing a branded-entertainment agreement with ABC for "The Scholar," a summer series that begins a six-week run on Monday night. Wal-Mart will be woven into the plots of episodes of the show, which is centered on a competition among 10 high school seniors from across the country for a grand prize of a full college scholarship, valued at $250,000, covering tuition and expenses.

The students will compete in a variety of academic, creative and social tasks, including team challenges, oral exams and defending themselves before a scholarship committee. In one challenge, the five members of the winning team each receive a $2,000 Wal-Mart gift card to outfit their dormitory rooms. And Wal-Mart is underwriting the cost of the scholarships for the nine runners-up, totaling $300,000. (The Broad Foundation in Los Angeles is donating the grand prize.)

There will also be commercials during the show promoting the Wal-Mart and Sam's Club Foundation's long-running program offering scholarships to students in towns where it operates stores and distribution centers.

Here's the ABC website; the high-schoolers are a top-notch bunch... Also, here's a press release about filming a commercial for the show in Tallahassee

Posted by Kevin at 1:11 PM

Stephen Simpson's no Fool

A well-rounded analysis, though lacking supporting details.

America's largest retailer, Wal-Mart (NYSE: WMT), is undoubtedly one of the most successful companies of modern times, but it also appears to be among the most disliked. Whatever the merits of the complaints levied against it, there's no denying that Wal-Mart has become a target and a cause celebre amongst those opposed to big business. The question remains, though: Does Wal-Mart deserve this, and should investors be worried?
We really don't know the size and strength of dislike for Wal-Mart. In fact, I gather that Wal-Mart is simultaneously the most liked and disliked of companies...

[H/T: The Eclectic Econoclast]

Posted by Kevin at 8:33 AM

Shareholder's Protest (Updated)

As often happens, the media nearly outnumbered the protesters last night at Against the Wal's march against Wal-Mart. Nothing much to report. There were about twenty-five people walking up Dickson street and chanting anti-WM slogans. The whole thing seemed a bit disjointed as they chose to protest in Fayetteville's bar district rather than thirty-five miles away in Bentonville where Wal-Mart is actually headquartered.

UPDATE: (Same or Different?) protestors are arrested:

wmeattown.jpgPolice said five men and one woman used glue early Wednesday to stick posters that criticized Wal-Mart on several campus buildings. One of the posters said "Everyday Low Wages," and the other said "I Will Eat Your Town and Smile."

Officers said the group also spray-painted anti-Wal-Mart slogans on campus...
Five people were arrested and charged with criminal mischief. Two of those arrested are from Fayetteville, and the others involved in the case are from Arizona, Texas, Oklahoma and New Jersey. No names were immediately released.
Posted by Angus at 6:26 AM

June 2, 2005

Annual Shareholders Meeting

Wal-Mart's annual shareholder meeting is Friday. Here is a list of links, which will be continually updated over the next few days:

1) The melting pot:

Mickey Finn�s Irish Pub on Dickson Street was packed with Wal-Mart employees Tuesday night. "It was probably the funnest night I�ve ever had in my life," said Mickey Finn�s bartender Adam Linz. "You�ve got Japanese, Mexicans, Brazilians, Canadians, Americans and Irish all in one itty-bitty place � all getting along. It was the best atmosphere I�ve been around in a while." Linz said he rang up triple the business of a normal Tuesday night.

2) Groups complain:

The group Wake-Up Wal-Mart, backed by the United Food and Commercial Workers Union, staged events Wednesday to call for states to adopt legislation that would require Wal-Mart to provide employees affordable health care.

Wake-Up Wal-Mart director Paul Blank said the group wants to do more than create media pressure on the Bentonville-based retailer.

"It is a little bit broader than public opinion. This is a grass roots movement across the country of Americans who want to change Wal-Mart," Blank said.

Blank said Wal-Mart should set the standard for how workers in the nation are treated and should sacrifice profits to help ensure its workers live above the poverty line.

3) Standards Review

A group of Wal-Mart investors led by city controller William Thompson and Illinois State Investment Board chairman Edward Smith called on the company's board to name a committee of independent directors to review the retailer's legal and regulatory controls.

The group, which controls $545.8 million of Wal-Mart shares, said in a statement it was concerned by the government's investigation into the use of illegal immigrants to clean Wal-Mart stores. The retailer paid $11 million to settle that case.

4) Rob Walton shows humility:

"They're not standing in line for lower pay or less benefits," said Lawrence Jackson, executive vice president of human resources, which Wal-Mart calls its "people division."

But the loudest cheer was reserved for a moment of humility when Chairman Rob Walton acknowledged that executives were "human" and "sometimes we make mistakes."

Protesters were nowhere in sight at the University of Arkansas basketball arena where the meeting was held, although some marched through Fayetteville on Thursday night with banners criticizing Wal-Mart's pay and benefits.

5) Martha Burke has her say:

A feminist leader drew rounds of applause from Wal-Mart shareholders Friday as she chided company managers for having only two women on its 14-member board. In the end, Wal-Mart asked shareholders to reject initiatives she backed.

Martha Burk, chairwoman of the National Council of Women's Organizations, said Wal-Mart should give a breakdown, by race and gender, on how stock options are distributed.

Posted by Kevin at 8:57 AM

WM Documentary

In case you just can't get enough of Wal-Mart, there is to be a new documentary entitled Wal-Mart: The High Cost of Low Price:

Their plan is to depict what they and a growing number of critics perceive to be Wal-Mart's sins against society: unfair competition and erosion of the fabric of communities; exploitation of its American workers, and of the government welfare programs many rely on to supplement their wages and benefits; union busting; reliance on suppliers with sweatshops overseas; and environmental negligence, among others.

They also intend to show how the retailer exerts its outsized influence on American culture through the so-called "Wal-Mart effect," by limiting the choices of products like clothing, music - and movies - that are available to consumers.

"Nobody else has a million and a half workers..."
Except, of course, the U.S. military, which has never been accused of determining the wages of non-military personnel.

[H/T: Producer Jim Gilliam]

Posted by Kevin at 8:47 AM

New WM in Beijing Sells Black Market DVDs? (UPDATED)

Frank Yu describes his experiences in a new WM in Beijing, interspersed by relevant quotes from Star Wars movies. Frank had a great time, but he became suspicious that Wal-Mart was selling bootleg DVDs:

One chilling discovery during the visit came when we went to investigate the DVD movie selection aisle on the first floor. Along with the usual local Chinese movie DVDs encased in hard plastic box packaging, there were also foreign DVDs polywrapped in plastic with simply the cover sheet and the DVD inside packaged in the same manner that pirated DVDs were sold in China. Most surprising of all was that the price of Disney�s Dumbo was only about 6 yuan(that's less than 1 USD). Pirated DVDs from other Beijing stores cost about 10 yuan while poor-quality street versions cost about 8 yuan. These DVDs were cheaper than the pirated versions sold around Beijing. I cannot confirm if those in the store were actually legitimate or not, but given the price and packaging I would make a guess that they were not. I should not be surprised since pirated DVDs have been found to be sold in Chinese post offices and government buildings by vendors who set up a table inside. Since almost all retailers in Beijing seem to do the same thing as well, one gets desensitized to the practice until you realize that this is Wal-Mart.
If the DVDs are legitimate, then Wal-Mart is undercutting the prices of movie pirates, which is simply astonishing.

UPDATE: In the comments, Frank, the author of the linked article, notes that he has posted a photo of the DVD shelf in question. Thanks, Frank!

Posted by Kevin at 8:19 AM

June 1, 2005

Taxes from WM Support Smart Growth in Denver

Residents of the New Urban Stapleton development want the nearby big boxes gone... if only they weren't the backbone of the tax structure:

An ambitious project like Stapleton requires a vast amount of financing, much more than can be generated from residential property taxes alone. So, to enter Stapleton from Interstate 70 is to be confronted with the very emblem of suburban sprawl, a conventional 750,000-square-foot big-box shopping center called Quebec Square with huge parking lots that can accommodate 5,000 cars, a Wal-Mart Supercenter, a Sam's Club warehouse store and a Home Depot...

As a generator of tax revenue, however, retail is much more significant than housing. Hank Baker, a senior vice president at Forest City Stapleton, said that Quebec Square, which opened in 2002, brings in $8 million annually in property and sales tax, nearly seven times the amount from the project's first 1,000 homes. (An affiliated company, Forest City Ratner, is the development partner of The New York Times Company for its new headquarters in Manhattan.)

And in fact, it's the sales taxes from the rural poor who are supporting the new urbanites:
Unlike communities built on undeveloped land, Stapleton is surrounded by mostly low-income neighborhoods whose residents were traveling beyond city limits to shop at stores like Wal-Mart, Mr. Gleason said. This demand helped city and community leaders reconcile themselves to Quebec Square...
I'd like to see the relative prices of food and other goods, since the WM Supercenter is nearly adjacent to CostCo.

Posted by Kevin at 8:13 AM