Please explain the market forces that would keep Walmart from selling crappy socks

Great Debates
1

I know little or nothing about economics. In our current economic system, what will eventually stop Walmart from selling poorly made socks?

Let me explain. About 2 years ago, I bought one pair of dress socks from a department store. I believe they cost me around $7.00. Two years later, they still look pretty good and I can still wear them to work.

About 1 year ago, I bought some dress socks from Wal-mart, I believe they were 2 for $8.00 or something like that. They looked good, they were at a lower price, and they were right there, no need to go to the mall. After wearing each pair for about 2 times each (a month maybe) , the fabric started to “pill up” and the socks lost their elasticity. I could not wear them to work anymore.

Obviously, after buying them, I realized that they were of extremely low quality. I learned my lesson, I will never buy socks from Walmart again, even if they look good, are at a low price, and are convenient to purchase. Next time, I will make the choice to spend the extra money and travel to the department store. I am guessing that the free market system works well on an individual level in this case. The store tried to cut costs by buying a cheap product from the sock factory (or forcing them to make socks at a certain price point), I bought them because of the look, low cost, and convenience, I rejected them, and will never buy them from that store again.

However, one year later, the same brand of socks are still there at Wal-mart and I am sure that they sell a lot of them. I see that Walmart parking lots are full every day. Walmarts sell a lot of stuff. What is there to stop Walmarts from selling crappy socks forever and ever? Is it simply a case of “let the buyer beware”?

Is it my fault? I admit that I did not call them and tell them that their socks suck. I did not take them back. I made the choice that it would have been more time and effort than I wanted to spend on this problem. Did I not tell enough people that Walmart socks suck? What could have I done to help the economic “survival of the fittest” (good products at good prices sell well and will flourish, crappy stuff will eventually disappear) process along?

2

The only thing keeping Wal-Mart from selling crappy socks is knowing that if someone else makes socks with more value, Wal-Mart will lose market share to them.

It’s the same force that keeps Wal-Mart selling all kinds of goods, instead of say, trying to sell dirt or something. They are only successful if they sell what people want.

But Wal-Mart’s management aren’t gods. Your bad sock episode could just as easily have been a bad decision by a buyer for Wal-Mart in some country. At some point, customer complaints or internal quality assurance will alert them that their socks aren’t up to the older socks’ vallue, and something will change.

3

Well, if you do not tell Wal-Mart about the crappy socks they won’t know about your dissatisfaction and will not think about the socks until it is time to order more from whomever makes them. If you inform Walmart, and other who buy the crappy socks voice their displeasure with the socks, then WalMart will probably review the socks to see if they should keep selling them. Otherwise, if no one complains and the socks sell, they will keep them in stock.

WalMart is fairly good about dealing with complaints as far as I have heard. I am extremely happy with the local Walmart. This fairly off topic but goes to the point of what Walmart will do to make customers happy. The other day I bought ~$60 worth of stuff. It was raining outside and in the rush to get my stuff in the car before I got too wet I left a bag in the cart. I didn’t realize it until the next day. So I called Walmart and explained that I left a bag with 2 DVDs and book and a tape measure in the cart and asked if they found it. The girl I spoke with said that they had not found it but I could come down and get the same things for free. I went down to the store and talked with the girl who took my name. She told me to go pick out the stuff. I picked it out, she put a little sticker on it and I left. I was extremely happy. It was my mistake but they replaced the stuff with no fuss whatsoever. I imagine if you complained to the store they would do something about the socks.

The major point is that, unless you say something, Walmart is not going to know there is a problem. They do enough volume that it would take alot of customers to stop buying those particular socks for Walmart to notice. If people complain about the socks and Walmart replaces the socks then Walmart is going to notice that a)customers are unhappy with the socks and b)it is costing Walmart some money to replace the socks. When that happens Walmart will have the incentive to do something about the socks.

One of the things about a free market system and shoddy products is that the buyer must inform the seller in some way that the product sucks or else the seller really has no way to tell except for sales reports. If the seller is a big buisness like Walmart then the sales drop by unsatisfied customers for a low volume*/low cost product like socks is going to be hard to see unless everyone stops buying those socks. If you make a complaint to Walmart I am sure that complaint gets noticed somwhere and if Walmart replaces the socks I know that it will show up on a report. Complaints and $$$ will get Walmarts attention.

Slee

  • I m making an ssumption that the socks Walmart sells are a very very small part of their sales.
4

Any retail store relies heavily on repeat business. If you only sell to each customer once, you won’t stay in business very long–certainly not as long as Wal-Mart.

The fact that the same socks are still on sale leads me to believe that not everyone shares you’re opinion that they’re “crappy”. Maybe some people only dress up once a week to go to church and are satisfied with flimsy socks. Or, maybe they know full well that the $7 socks are better, but they just can’t afford them so the choice is between $4 socks or no socks at all. I don’t know. But I do know that if everybody bought them once and then never more, they’d probably be off the shelves by now.

5

Why should they stop selling cheap socks? I can’t afford good socks, no matter how long they last. Doing laundry is expensive, in terms of both money and time, and therefore it is prohibitive to have a couple pair of really good socks.

If Walmart stopped selling cheap socks, I’d be forced to go sockless 60% of the time—and then my shoes would really stink.

6

In theory, it is the fear that you will get fed up with Wal-Mart’s crappy socks and buy nice, affordable socks from some other retailer in your area.

Of course, if your area doesn’t have any other retailers – possibly because they were all driven out of business when Wal-Mart rolled into town – then you’re SOL.

7

http://www.amazon.com/gp/search.html/104-1680907-9391944?me=&node=1036682&keywords=socks

8

I believe Walmart, more than most stores, would be able to make the adjustment much quicker. (Because of their sophisticated IT systems.) If a certain kind of socks took a dive in sales, they would notice and do something about it.

There is a market for low quality/low price for almost every item. Where that line is drawn is an individual choice, but for some people extremely low price and extremely low quality is a valid choice. Have you seen some of the stuff available in a ‘dollar’ store? (Utter crap, but only costs a buck.) Those stores are serving that market exclusively and seem to be making a go of it.

9

The market for low cost stuff is huge…but at some point, you can make something so cheap that the quality goes to hell. WALMART sells a lot of stuff that is borderline junk…you can buy paintbrushes that will last exactly one time. would imagine that WALMART know exactly what the market wants…like tools that break the first time you use them, paint that needs two coats to cover, clothes that fall apart afetr one washing, etc. Many times you are better off paying a little more…for a product that won;timmediately be ready for the junk pile.
What amazes me is how home builders are able to palm off junk new house…they use the cheapest materials, sloppy construction…and the houses sell for big bucks! After 5-7 years, the kitchen cabinets start falling off the walls, the floors split, and the doors won’t close properly. I have seem $600,000 houses that are absolute junk-they will need major repairs afte a few years.

10

Actually, free-market economics do not need consumers to say anything. They just need to not buy what they don’t want for whatever reason.

11

Sam Stone: The only thing keeping Wal-Mart from selling crappy socks is knowing that if someone else makes socks with more value, Wal-Mart will lose market share to them.

I don’t think so. That wouldn’t necessarily keep WalMart from selling cheap crappy socks. It would just keep them from selling only cheap crappy socks.

As long as WalMart’s socks stay the cheapest, they can continue to count on the low-price/low-quality “bottom of the barrel” end of the consumer spectrum that ralph and Lionel mentioned. And if even that market turns sour on them, because their socks are just too crappy for anybody to put up with, then they can just stop selling them and go on to selling something else.

So it looks like the only way to stop WalMart selling lousy socks (assuming that brand of socks really is so lousy and chriscya didn’t just happen to get hit with a pair that slipped through quality control or something) is to persuade the bottom-feeding sector of their customers to reject them. My guess is that the only effective way to do that would be to educate them on the true cost of the product.

After all, if you buy one pair of socks for $7.00 and one pair for $4.00;

  • and you get, say, 48 wearings out of the seven-dollar socks over two years (going by chris’s “two wearings per pair in the course of one month” estimate);

  • and you get only two wearings out of the four-dollar socks over one month, after which you have to toss them;

  • then you’d have to buy 23 more pairs of the four-dollar socks to get the same performance that the seven-dollar socks are giving you. That’s $92! You ain’t saving no money on those “cheap” socks!

That’s because the price/performance ratio for this product isn’t linear. The crappy socks are only giving 1/24 the performance of the more expensive ones, but you have to pay more than 1/24 the price for them. In fact, you have to pay more than half the price of the good socks to get a pair worth only 1/24 as much. Sucky deal.

Heck, even if js_africanus had to spend a dollar in laundry expenses on each pair of socks all by itself at every laundering, he’d still be saving money buying the non-crappy two-year socks at $7.00 instead of the crappy one-month socks at $4.00.

This is a testimony to the old Car Talk motto, “It’s the Stingy Guy Who Spends the Most”. A lot of “bottom-feeder” consumers think they’re saving money on dirt-cheap items, but they actually end up spending more than they would on better-quality stuff, because they have to replace them so often.

However, I really don’t think chris could get away with giving a speech on wise consumer choices to people buying socks at WalMart, though it might be fun to see the expression on their faces if he tried. :slight_smile:

12

I tend to agree. While it might help to complain about shoddy products, Walmart is going to know if people simply stop buying them.

I don’t shop at Walmart just because I can’t stand the crowds. But my brother shops there all the time and inevitably drags me to a store whenever I visit. I see mostly recognized brands that you could buy anywhere else. The prices are generally lower, but still not worth it to me to have to put up with the cluster-f*ck involved in parking/shopping there. My brother makes good money, but he just has a different mind set-- saving a buck is worth the hassle for him.

The idea that they sell tools that “break the first time you use them” is absurd, as is the idea that they force people to shop there because they have no other shopping choices. This comes up in every Walmart thread, and everytime I challenge the poster to back the statement up with facts, I never get any. There is nothing, NOTHING, that Walmart sells that you can’t get somewhere else-- either at another retail store, over the internet, or thru a mail-order catalogue (if you don’t have a convenient internet connection). Hell, if you really want to screw Walmart, go there to find out the specific model number you want or the exact clothing size you need, then order it from a discount internet/mail order house.

13

Wal-Mart, like all retailers I know of are driven by one thing and one thing only, making a profit.
With this in mind there are several factors they look at to maximize their profits selling socks.

A- How much can Wal-Mart buy the socks for?
B- How much can Wal-Mart sell the socks for?
C- At given price (and quality) how many socks will be sold over X amount of time?

It’s up to buyers and inventory analysts to manipulate these figures for maximum profit.
Will you sell more high quality socks that you bought for $7 and sell for $10 in a months time versus cheap quality socks that you bought for $2 and sell for $6?

Lot’s of playing with supply and demand, selling margins, turnover, and many other factors that determine what will be most profitable for them to sell.

14

JM: * There is nothing, NOTHING, that Walmart sells that you can’t get somewhere else-- either at another retail store, over the internet, or thru a mail-order catalogue (if you don’t have a convenient internet connection).*

That isn’t an entirely fair comparison, though, John. If a store has driven out its physical competitors, so that local consumers who don’t want to shop at WalMart can no longer get a purchase the same day they pay for it (without paying exorbitant shipping costs, that is), and can no longer physically examine it before buying it, then I think it’s fair to say that their market choices have been somewhat impoverished. Not intolerably, but noticeably.

I was reading about this in an article by, oddly enough, conservative pundit Stephen Bainbridge: The Conservative Case Against Wal-Mart:

Yeah, people still have the internet and mail-order catalogues, but then, they already had the internet and mail-order catalogues before WalMart came in. I see no way out of the conclusion that when WalMart drives out retail competitors, the amount of choice available to many consumers diminishes, even if they do save some money on pickles and crappy socks.

15

I can verify that the cheap hand tools sold by WALMART break easily…they sell a 25 piece socket wrench set for about $10.00. I once had to buy a set of cheap sockets, and the 1/2" socket broke on a rusted brake caliper bolt. The screwdrivers will round off and break easily. So, yes, WALMART frequently squeezes its suppliers to the limit-and they respond by cheapening the materials they use. Like the clothing at WALMART-it shrinks because their suppliers use low thread count fabric, which shrinks.
But, people will buy this stuff-which is why they sell it.

16

I’m not so sure where you get off being so insulting to people who shop at Wal-Mart, but your assumptions certainly leave quite a bit to be desired. I have expensive socks (x-mas gifts) and I have cheap socks—yet the usable life of each type is not so obviously different to me. What happens is that I end up with a really expensive sock with the heel worn through but otherwise okay and a cheap sock that worn to hell all over. The main difference is that one is more comfortable than the other. It would be nice if I could afford 300 thread count sheets, too.

Besides, if I had a handful of good socks, they would get far more wear than a sock drawer full of cheap socks. With cheap socks I can wear any given pair once every week and a half; with expensive socks I can wear them once every three days. My laundry time is that much higher—which is expensive for both money and time—as is the wear that chemicals & the washing process causes.

To suggest that a single mom should spend more time doing laundry because you can’t fathom her economic calculation is a bit patronizing. Or that I should, for that matter.

In some cases it is indeed true that one needs to spend more money; e.g. corkscrews. But that doesn’t imply that someone who is poor has the capital to plunk down for that sort of thing. I can’t afford Nokian snow tires for winter even though they significantly reduce my chances of wrecking my car.

I have some shirts that I bought at K-Mart because I needed something cheap as hell to wear when I was dodging cars to perform traffic studies for a city engineering dept. I had three button-down shirts that I rotated and, since I lived w/ a washing machine at the time, they could remain clean. I wore them every work day for a couple of years and they outlived my tenure on the job. The most gossamer of the three had a critical failure perhaps five years after I bought it. (The other two lost the battle to my ever-expanding gut.)

Rather than paternalistically lecturing the bottom-feeders, perhaps you should offer micro-loans with the condition that if the expensive products really aren’t worth the extra money to the bottom-feeders, then they don’t have to pay you back.

17

Kimstu: I have no doubt that Walmart drives some retail outlets out of business. I was responding to statements, such as rjungs, that they drive ALL competitors out of business. If companies can’t compete, either thru price, quality, selection, or customer service, then going out of business is what happens in a market economy.

And btw, I have a sneaking suspicion that Walmart sells more than “pickles and crappy socks”. Just a suspicion, though, since I don’t actually shop there.

18

js_a: . I have expensive socks (x-mas gifts) and I have cheap socks—yet the usable life of each type is not so obviously different to me.

Well then, you are not in the position of someone making the choice that chriscya was talking about, between a pair of good socks and a pair of WalMart socks costing more than half as much but lasting only 1/24 as long.

That’s the particular consumer choice that this thread happens to be about, and I don’t see anything “insulting” or “patronizing” about pointing out that the economic right choice in such a case is pretty obvious.

19

ralph: *I can verify that the cheap hand tools sold by WALMART break easily…they sell a 25 piece socket wrench set for about $10.00. I once had to buy a set of cheap sockets, and the 1/2" socket broke on a rusted brake caliper bolt. The screwdrivers will round off and break easily. *

Reminds me of that illegal underground T-shirt somebody used to sell with the Wal*Mart logo on it (totally unauthorized, of course), except with the star in the middle shown as the yellow-bordered red star of the old USSR.

The motto underneath: “Soviet-Quality Products”. :smiley:

Didn’t see those shirts advertised for very long, you betcha. :wink: I bet the letter from Wal*Mart’s lawyers singed the envelope.

20

And if someone doesn’t have access to the internet, can they come to your house and borrow yours? :wink:

I never said such a thing – I merely said, if the other retailers in your area have been driven out of business, then you are SOL.

No one is denying that some local retailers have managed to hang on despite the presence of a Wal-Mart in their neck of the woods. But to claim that Wal-Mart never drives local businesses to extinction is just as silly as claiming they always do.