September 22, 2006
The Case Against Wal-Mart: Part I
Posted by Gordon Smith

As I have mentioned, I am on a panel at the AALS meeting in January discussing Wal-Mart, and I have assembled a collection of Wal-Mart books in preparation for the event. (Note that I am planning to say some nice things about Wal-Mart, though I am not interested in being Wal-Mart's advocate. The books about Wal-Mart are overwhelmingly negative.)

Yesterday, I started reading The Bully of Bentonville by Business Week reporter Anthony Bianco, and I have taken the title of this post from his first chapter. My plan is to catalog the major complaints against Wal-Mart and, in time, to subject those complaints to more rigorous analysis than is possible in a soundbite. For the moment, I am just collecting complaints, and I thought I would share some thoughts as I go along. Of course, you are most welcome to add thoughts, as I am looking to educate myself.

My first entry relates to Wal-Mart's effect on competing firms. Bianco writes:

What in an economist's language sounds like a bloodless program of national self-improvement is in fact a brutal, Darwinian struggle spilling blood in every shopping mall and factory. Failure to measure up to the demanding efficiency standards set by Wal-Mart has crippled thousands of businesses -- not just corner grocers and family hardware stores, but also the billion-dollar likes of Kmart, Toys 'R' Us, and Winn-Dixie.

When I read anything, I try to use the principle of charity, so I will state up front that I know Bianco is packing a lot into this paragraph, and some unpacking would probably make some of his claims less ridiculous than they seem on their face. But I come at this having studied Kmart in the mid-1990s, and I have little sympathy for the fact that Kmart had difficulty keeping pace with Wal-Mart's "demanding efficiency standards." Kmart's stores were older than Wal-Mart's, and Kmart had not mainained their stores very well. If you visited a Kmart in the late 1980s and early 1990s, you probably remember them as dimly lit and grungy. Moreover, Kmart did not have an effective system of tracking inventory, so they often ran out of items that customers wanted. Wal-Mart did us all a favor.

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