Wal-Martians: The Art of Bribery and Propaganda (part 1, first draft)

This is the first draft of a particularly long article I'm working on, so it's basically copied directly from my notes into Gather. I'm not done with it yet, but thought it would make interesting reading anyhow. Since it is a draft, and mostly done while at work, this hasn't been run through the usual process I have of research, although it does have a few personal anecdotes. Obviously, since I'm only an associate at a Supercenter, much of the content here is opinion-based, however much day-to-day evidence was used in supporting these conclusions.

With that said, let's get on to the article, shall we?

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Opening: 

Propaganda - advertising for a particular political, business, or personal belief, opinion, or practice - has been in existence longer than literacy. The advent of literacy, printing, telegraphy, radio, television, and now the Internet has strongly increased the impact of propaganda on the individual. This article, written by an employee of Wal-Mart who is attempting to convince you of the manipulative powers Wal-Mart uses as part of its business practices, is itself a work of propaganda, capable of influencing readers around the globe.

Just as I have the right to convey my personal opinions, Wal-Mart has the right to portray itself in the most favorable light possible. This is an accepted part of society, and I do not question their rights in this regard. However, I do question the belief espoused by some that Wal-Mart's actions and overall behaviors are as good for the community as Wal-Mart prefers to claim.

First and foremost, Wal-Mart is a multinational corporation with the express focus of increasing its current and future profits. This is a staple of most successful businesses - measuring the tangible return on investment of its proposed projects and strategies and discarding those that seem to have insufficient calculable returns to justify the expenditures made. The pitfalls of this attitude have made Scott Adams and his comic, Dilbert, astoundingly successful, given a topic of discussion to countless pundits, and inspired the ire of employees of every job sector.

When looked at in these terms, many of Wal-Mart's decisions and policies have the thin veneer of legitimacy and profitability meant to divert people from the painful - but often more difficult to financially quantify - impact on their way of life. While the media frequently focuses on Wal-Mart's impact on its associates, there are also significant concerns to be raised about Wal-Mart's impact on customers and the world.

We Take The Savings And Pass The Costs On To You!:

Much has been said of Wal-Mart's capabilities when it comes to lowering their prices. They most commonly attribute this success to their efficiency in shipping, inventory management, and their distribution model - all of which do indeed have a positive impact on the expenses Wal-Mart incurs in acquiring their products. However, their most effective way of lowering prices is in the buying process, whereby Wal-Mart's buyers negotiate with vendors - whether major pharmaceutical companies or local farmers - over the prices of the products they are looking to stock in their stores, and what these vendors are willing to do to ensure they receive Wal-Mart's valued business.

Wal-Mart takes it as a point of pride to state that it does business with local vendors. It makes them sound as though they provide business to these smaller vendors instead of driving them out of business, and by doing business locally, Wal-Mart is able to avoid the shipping costs involved in long-distance transport of bargain goods. However, Wal-Mart is notorious for its brutal negotiations over the costs of items, and for getting companies to bend over backwards to support it: Dreamworks, for example, regularly makes commercials where their movie characters hawk Wal-Mart merchandise; Rubbermaid has built a 'Wal-Mart Division' only a minute's drive away from Wal-Mart's Bentonville headquarters, complete with a replica Wal-Mart store showing patterns of product placement and a calendar devoted to Wal-Mart's fiscal year. When Wal-Mart's buyers are busy asking, 'What can you do for us?' to the biggest manufacturers in the world, what are they doing to the smaller vendors?

A local glassblower friend I knew worked for a company that entered into negotiations with Wal-Mart to sell locally-made glass bowls. The deal fell through because, according to this glassblower, Wal-Mart demanded a particular price for their bowls, which the glassblowers refused to sell at because it was below the cost for them to manufacture the bowls. Upon learning that the locals simply weren't going to sell at the price they wanted, Wal-Mart huffily informed them that they could get them cheaper elsewhere and broke off negotiations.

Although I obviously can't be certain, I suspect the buying process must go something like this:
Buyer: Well, we could buy five million of your product for $30 each... or we could buy twenty million at $25 each.
Seller: I'm sorry, but we aren't negotiating the price.
Buyer: But you'd be selling four times more product!
Seller: And decimating our profit margins. It costs $24 to make these.
Buyer: So see, that's twenty million in profits! And well worth it - you'd be selling for less than your competitor, so you'd be selling more.
Seller: Well...
Buyer: Of course, if you'd rather, we could order fifty thousand at $30 and see how the customer reacts when your product costs more than your competitor's at the register.
Seller: Alright, alright, $25!
Buyer: Good. Now let's discuss the promotional opportunities you're including...
Seller: (groans)

Often, in order to recover revenue or avoid negative quarterly profits, the unlucky seller turns around and starts cutting benefits and payroll at their facilities; those who refuse these deals find their products relegated to dark corners of the store or simply eliminated from the products Wal-Mart carries, while those who are willing to negotiate get better exposure of their goods, and as such, more sales - at much lower profit margins. I haven't confirmed this yet, but it would go a long way toward explaining our product placement techniques.

I can't imagine the local businesses having it any better, especially in the agriculture industry. Judging from their profit margins, I can almost imagine them shopping the competition to find prices, setting their prices 10% below that, and setting their offer to the farmers 10% below that, or perhaps only 5% if they're 'preferred suppliers'. For all that I hear about Wal-Mart 'supporting local farms and businesses', though, I have yet to hear a happy vendor story.

Wal-Marts generally keep their prices similar - but not necessarily the same - from store to store. Ever wonder why that is - why a Wal-Mart can charge 50 cents for a two-liter at one store, 58 cents at another, and 64 cents at a third, when all three of them receive their shipments from the same distribution center? Like many businesses, Wal-Mart prices generally reflect what the market will bear - with more competitors with similar prices on the market, Wal-Mart sets prices close to their buying price. With less competition, or with higher prices in a particular market, comes higher prices for Wal-Mart products. (One of Wal-Mart's policies involving price changes: a store must wait thirty days after the closing of a competitor before raising the prices of its merchandise, to ensure that it isn't taken as a sign that Wal-Mart is taking advantage of the situation. Why do you think that policy exists?)

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As I said, this is only one part of the article, and furthermore, it's a first draft with elements that may not fit the final piece. Still, I thought it would be interesting to share - let me know what you think.