The difference is that Wal-Mart expanded without ever losing its focus on operating efficiently, nor ever eschewed its custom of passing savings along to consumers. That's because Wal-Mart, which produced huge savings when it revolutionized the distribution and delivery of goods to stores on a massive scale starting in the 1970s, has never forgotten the lessons that it learned during its early years...
Still, the Wal-Mart Effect circa 2008 is different in several crucial ways. Two years ago, for instance, Wal-Mart saw an opportunity because of rising prescription drug prices, and it kicked off a campaign to sell generic drugs for $4 for a 30-day prescription.
The move, which the company eventually expanded to all of its pharmacies, sparked a pricing war around the country as big pharmacy chains slashed their own prices on generics. Wal-Mart estimates that Rx customers at its stores alone have saved more than $1 billion.
That might be chump change, however, compared with what's happening in the grocery business. Once primarily a general merchandise discounter, Wal-Mart embarked on rapid expansion of stores selling groceries when it noticed that local supermarket chains were taking a bigger and bigger bite out of consumers' pocketbooks — in some markets doubling their profit margins during the 1990s.
Today, Wal-Mart operates some 2,500 stores selling food items, and food prices at Wal-Mart's stores are typically from 10% to 25% lower than at competitor stores, depending on the food category.
Even if you don't shop at Wal-Mart you're likely to save 5% on your food costs when the retailer enters your market...
(Few of Wal-Mart's general merchandise competitors, like Target or Kohl's or Kmart, are unionized)...
That battle, with Wal-Mart as the subtext during a presidential campaign, helped to galvanize every anti-Wal-Mart constituency.
This disparate group united in their single-minded loathing of the chain includes: (long list follows)
Members of Wal-Mart's founding family, the descendants of Sam Walton, have also angered activists and made the business a target because they have used their fortune to support conservative and free-market causes, especially the choice movement in public education.
Apparently, it's one thing to use the family fortune to back anti-smoking initiatives in the developing world, like New York Mayor Bloomberg's foundation has done, or to advocate for the rights of prostitutes in Africa, as George Soros' Open Society has done, but quite another to promote free-market principles here in the U.S.
Still, despite the unique ability of Wal-Mart to drive a certain type of activist into a frenzy, consumers have mostly just yawned at the anti-Wal-Mart hysteria.
Now, let's talk about pay and benefits:
He notes, for instance, that calls by activists that Wal-Mart pay its entry-level workers more fail to acknowledge that Wal-Mart's overall margin of profits-to-revenues is small, as are its profits-per-worker, and that other retailers with higher salary scales serve a different, more upscale customer.
Furman also disputes the notion that Wal-Mart benefits from "corporate welfare" because some of its workers (4.5% to be precise) are on Medicaid, noting that for entry-level workers, the choice of Medicaid over a company-sponsored plan that requires co-pays simply makes economic sense, and that the benefits of the program accrue to the worker, not Wal-Mart.
I do enjoy shopping at Wally World.