As I strolled through the doors of the Wal-Mart Superstore in
Gilroy one recent Sunday evening, I felt a bit like James Bond. I
hadn’t come to buy. I’d come to spy.
What prompted me to come covertly to this goliath of a store was
scientific research on the behavior of a unique species of animal
called the American Christmas shopper (consumerus yuletidius
Americanus).
As I strolled through the doors of the Wal-Mart Superstore in Gilroy one recent Sunday evening, I felt a bit like James Bond. I hadn’t come to buy. I’d come to spy.
What prompted me to come covertly to this goliath of a store was scientific research on the behavior of a unique species of animal called the American Christmas shopper (consumerus yuletidius Americanus).
There is no better time to engage in a field study of these fascinating animals than during the holiday season when they undergo their annual “flock and stock” behavior. In preparation for the cold winter months ahead, the creatures gather together and busily buy up the vast selection of sale-priced merchandise.
In complete fascination, I observed these amazing creatures in their migratory quest for the “always low-priced” bargains Wal-Mart promises. Many of them filled their wheeled carts to overflowing as they passed diligently down the endless aisles of the massive superstore and stripped the shelves of items.
Even the young of this shopper species displayed the hunt-and-gather behavior that Mother Nature has evolved in them. I noted one young male – I judged it to be about 4 or 5 years old – screaming in hysterics and pointing frantically at a toy he wanted. “Consumerism exhibited at early age,” I jotted down in my field notes.
In my scientific observations, I couldn’t help but wonder how many of the shoppers realized the impact their choice of store selection has on the South Valley economy – and on the American economy, too. Probably few knew they were patronizing a store run by the most powerful company in United States history.
Wal-Mart is dramatically changing business – and not necessarily for the better. To put the Wal-Mart story into perspective, here’s a short history of the chain’s humble beginnings leading to its recent rapid growth and titanic influence on the global economy.
The corporation began with Sam Walton, who in 1945 opened up a low-priced variety store called Walton’s Five and Dime in Bentonville, Ark. A franchise of the Ben Franklin chain, his store offered consumers products at slightly lower market prices than his competitors. This tactic resulted in a higher volume of sales – and thus higher profits for the store.
Walton learned a big lesson from this tactic: Americans love a bargain. So in 1962 in the Arkansas town of Rogers, he opened up his first “Wal-Mart Discount City” store offering consumers every-day low prices on goods. The formula proved a huge success. In five years, Walton had 24 Wal-Mart locations in Arkansas. In October 1972, his chain went public and soon was trading on the New York Stock Exchange.
In the 1980s and 1990s, Wal-Mart grew massively and expanded its operations. Today, the chain is a global company and the world’s second highest-grossing corporation (after Exxon Mobil). Every week, more than 100 million Americans – one third of our nation – shop in a Wal-Mart store.
As I closely studied the busy bargain-hunters in the Gilroy Wal-Mart Supercenter, I scribbled down in my field notes: “Suspect few shoppers realize Wal-Mart has created a new model of capitalism, one that is eroding the economic foundations of America.”
I wondered if any of them even cared. I tried to explain to one female Wal-Mart shopper the economic reality of the store’s impact on America. Wal-Mart’s slogan, “We sell for less” – four seemingly innocuous words – has snared American consumers in a sinister Faustian bargain.
Because Wal-Mart attracts millions of shoppers expecting low prices, I told her, its American suppliers are forced to “outsource” their manufacturing overseas. Commonly this is China where the massive labor pool means wages are cheap – often from 25 cents to 50 cents an hour. Thus, in its quest for greater profit margins, Wal-Mart relies heavily on low-cost goods imported from Chinese factories.
Chinese manufacturing companies also receive large subsidies from the Chinese government, another factor helping to lower manufacturing costs. That also attracts American suppliers to outsource manufacturing there. Wal-Mart has invested heavily in China’s manufacturing companies to lower costs and create a faster turnaround time to get products to the American consumer.
Essentially, Wal-Mart and China have formed a joint venture that is dangerously starting to dominate the U.S. economy. This deal has resulted in a record $166 billion U.S. trade deficit with China. Chinese consumers don’t have the income to buy goods from America, so this trade imbalance will grow worse.
American jobs are lost to China as U.S. factories close down due to the unfair competition. Small family-run stores in downtown districts also find it hard to compete with Wal-Mart’s prices. Many of them have been forced to close in recent years, hurting a community’s heart.
Wal-Mart’s impact continues to endanger the economies of many American communities – including those here in our own South Valley. Because of Wal-Mart’s partnership with China, job opportunities and the standard of living for the next generation of Americans will be much lower today than in the past.
Unfortunately, my economic discourse on Wal-Mart and China had little influence on the Gilroy store shopper I spoke with. “Well …” she told me flatly, “all I know is, I save money here at Wal-Mart.”
Sam Walton, the original guiding spirit of Wal-Mart, was a patriotic American who cared about the small communities his stores served. He died in 1992. After his death, Wal-Mart lost its way as Walton’s family – the richest family in the United States – grew greedy. I think Walton would be shocked to see how the chain store he proudly founded now endangers America’s economic foundations.
But Walton also gave us a solution to this serious problem that impacts us all. His words are something that South Valley’s Wal-Mart shoppers would be wise to heed – especially now during the holiday season’s time of heavy consumer spending. Walton once said, “There is only one boss: the customer, and he (or she) can fire everyone in the company from the chairman and down, simply by spending their money somewhere else.”
Martin Cheek is the author of ‘The Silicon Valley Handbook.’ He can be reached at ma**********@***il.com.
