# The downfall of WalMart **URL:** \ **Category:** In My Humble Opinion\ **Created:** [June 24, 2007, 10:39pm UTC](https://boards.straightdope.com/t/the-downfall-of-walmart/409243 "2007-06-24T22:39:04Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![JohnT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnt/32/15048_2.png) [@JohnT](https://boards.straightdope.com/u/JohnT)\ **Post date:** [June 25, 2007, 10:22pm UTC](https://boards.straightdope.com/t/the-downfall-of-walmart/409243/41 "2007-06-25T22:22:06Z")
[QUOTE=carnivorousplant] Does it flood in Alaska? I know they had that earthquake in the 60’s. [/QUOTE] The, uh, part of it that extends into Arkansas floods all the time. 😉 ---
**Author:** ![Billdo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/billdo/32/315_2.png) [@Billdo](https://boards.straightdope.com/u/Billdo)\ **Post date:** [June 25, 2007, 11:06pm UTC](https://boards.straightdope.com/t/the-downfall-of-walmart/409243/42 "2007-06-25T23:06:18Z")
I agree that bad management will be what eventually does them in. I think being headquartered in the isolated Bentonville, Arkansas will add to this, because the management will be inward-looking, rather than exposed to other comparable companis. However, I think that the poor management will kill WalMart in conjunction with another factor that WalMart has aggressively fought for years: unions. At some point, particularly if WalMart continues to have poor human resources practices, a union will get a foothold in some part of WalMart, and will expand that foothold to cover a large portion of the chain’s employees. (If I recall correctly, one group of WalMart butchers, I believe in Canada, voted to unionize and WalMart promptly closed their store.) Somewhere in there will, no doubt, be unfair labor practice litigation, where WalMart will be smacked by the NLRB or courts for heavy-handed management practices, which will cause resentment and add steam to the unionization drive. Once WalMart is unionized, it will continue successfully for quite a few years, though labor/management relations will likely harden over time. However, eventually the reduced flexibility caused by dealing with a union and unionized workforce (and inward-looking management) will make WalMart less nimble and less able to deal with new competitive pressures that will come up in the future. Like WalMart’s aggressive growth and hyper-efficient supply chain management killed predecessor retail giants like Sears and K-Mart, it will be killed by some new retail management innovation. ---
**Author:** ![Gatopescado](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gatopescado/32/5711_2.png) [@Gatopescado](https://boards.straightdope.com/u/Gatopescado)\ **Post date:** [June 25, 2007, 11:24pm UTC](https://boards.straightdope.com/t/the-downfall-of-walmart/409243/43 "2007-06-25T23:24:18Z")
[QUOTE=Erati] IMHO, Self-Checkout is ludicrous. [/QUOTE] I hate it, too. So I make them pay by giving myself “instant discounts”. I’ll never pay extra for the “Jumbo” avacado again! 😃 ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [June 25, 2007, 11:33pm UTC](https://boards.straightdope.com/t/the-downfall-of-walmart/409243/44 "2007-06-25T23:33:17Z")
[QUOTE=Billdo] I agree that bad management will be what eventually does them in. I think being headquartered in the isolated Bentonville, Arkansas will add to this, because the management will be inward-looking, rather than exposed to other comparable companis. However, I think that the poor management will kill WalMart in conjunction with another factor that WalMart has aggressively fought for years: unions. [/QUOTE] I like this one. A Democratic administration and Democratic Congress may stop giving WalMart a pass on union busting. A big nasty fine when a store gets closed due to a union might discourage them. Companies with decent labor practices might either not get unionized or have the impact be small. (Is Costco unionized?) For WalMart to start treating employees decently would require a major management attitude change, which will be tough for them to pull off. ---
**Author:** ![Sunspace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/sunspace/32/1250_2.png) [@Sunspace](https://boards.straightdope.com/u/Sunspace)\ **Post date:** [June 26, 2007, 1:42am UTC](https://boards.straightdope.com/t/the-downfall-of-walmart/409243/45 "2007-06-26T01:42:12Z")
[QUOTE=Dangerosa] …and low margins are really susceptible to being wiped out by SG&A increases… [/QUOTE] What is SG&A? ---
**Author:** ![Otto](https://avatars.discourse-cdn.com/v4/letter/o/bbe5ce/32.png) [@Otto](https://boards.straightdope.com/u/Otto)\ **Post date:** [June 26, 2007, 3:20am UTC](https://boards.straightdope.com/t/the-downfall-of-walmart/409243/46 "2007-06-26T03:20:08Z")
[QUOTE=Baraqiyal] I like the self-checkout on occasion. When the checkers are buried three to four shoppers deep, and all I have is a couple of items (cough)condoms and booze(cough). Whatever gets me on my way faster. [/QUOTE] You can self-check alcohol? How do they prevent underage people from buying it? ---
**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\ **Post date:** [June 26, 2007, 4:05am UTC](https://boards.straightdope.com/t/the-downfall-of-walmart/409243/47 "2007-06-26T04:05:47Z")
[QUOTE=Sunspace] What is SG&A? [/QUOTE] Sales General and Administrative. When you figure margin, you figure price - cost of goods sold = gross profit. Divide that out for gross margin. For a retail operation, COGS is pretty much the price that Walmart paid. So if Walmart pays $100 for a television and sells it to you for $105, the gross profit is $5 and the gross margin is 5%. But cost of good sold doesn’t contain a lot corporate costs - advertising isn’t in there. Paying your corporate staff, most IT costs, even things like transportation from your distribution centers to your retail outlets - that’s all SG&A. The slimmer that gross margin is, the less money you have to advertise, the harder you get hit by your own transportation costs, or the increased cost of health care for your employees. Walmart is a low margin company. I don’t think Unions will have an impact in the U.S. - they just aren’t a political force anymore (and they haven’t delivered the vote for the Democrats, I don’t think they’ll get distance out of a Dem admin and congress). They WILL have impact in Walmarts attempts to move international - particular if they want to move into Europe. ---
**Author:** ![Cervaise](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cervaise/32/16693_2.png) [@Cervaise](https://boards.straightdope.com/u/Cervaise)\ **Post date:** [June 26, 2007, 6:01am UTC](https://boards.straightdope.com/t/the-downfall-of-walmart/409243/48 "2007-06-26T06:01:29Z")
[QUOTE=Otto] You can self-check alcohol? How do they prevent underage people from buying it? [/QUOTE] Computer: “Please show your ID to the cashier.” Me: turns around and displays grizzled puss to counterdrone. Computer: “Age check bypassed. Please continue.” ---
**Author:** ![Larry\_Borgia](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/larry_borgia/32/156_2.png) [@Larry\_Borgia](https://boards.straightdope.com/u/Larry_Borgia)\ **Post date:** [June 26, 2007, 6:25am UTC](https://boards.straightdope.com/t/the-downfall-of-walmart/409243/49 "2007-06-26T06:25:18Z")
[QUOTE=Sunspace] If they can somehow create _food_ with one of those, at a lesser total energy and labour cost than growing it, _then_ I’ll sit up and take notice [/QUOTE] Tea. Earl Gray. Hot. ---
**Author:** ![Regallag\_The\_Axe](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/regallag_the_axe/32/445_2.png) [@Regallag\_The\_Axe](https://boards.straightdope.com/u/Regallag_The_Axe)\ **Post date:** [June 26, 2007, 6:52am UTC](https://boards.straightdope.com/t/the-downfall-of-walmart/409243/50 "2007-06-26T06:52:33Z")
I don’t go to WalMart because the one nearest to me is dirty. And the people in it (both employees and other shoppers) are skeevy. I’d rather go somewhere else and pay $0.17 extra for the 12-pack of tube socks. The only way I see unions being a big problem is if they go on strike. This is America; I’m not gonna cross a picket line to get groceries, and I imagine very few would. ---
**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\ **Post date:** [June 26, 2007, 4:23pm UTC](https://boards.straightdope.com/t/the-downfall-of-walmart/409243/51 "2007-06-26T16:23:49Z")
[QUOTE=Dangerosa] The slimmer that gross margin is, the less money you have to advertise, the harder you get hit by your own transportation costs, or the increased cost of health care for your employees. Walmart is a low margin company. [/QUOTE] I’ll add that Walmart can keep prices low because they combine low gross margins with low SG&A - they’ve been exceptionally good at controlling their SG&A. (I’ve heard that the corporate offices are not exactly luxurious). But there is only so much SG&A you can control and WalMart hasn’t had any fat in their to trim - WalMart for all their power, can’t control gas prices. They are being pressured by government to increase their health care options for part timers (ok, provide them at all). So Walmart will have a choice - increase gross margins or lower SG&A where they can. Increasing GM happens two ways - increase your price or buy cheaper (Walmart doesn’t have a lot of room on the buy cheaper end, that’s what they’ve already done and they already have bleeding stones for suppliers). Decreasing your SG&A - well, you layoff your corporate staff (Walmart already runs lean), you stop investing in IT or innovation (WalMart has significant spend here it could cut, but it would be shortsighted), cut the advertising budget (another shortsighted move). They do have a third choice, decrease net profitability. Wall Street won’t like that and they’ll have a hard time doing any expansion. And a lot of people believe in “expand or die.” Not sure I’m convinced, but I’m leaning towards that being true. ---
**Author:** ![chappachula](https://avatars.discourse-cdn.com/v4/letter/c/d2c977/32.png) [@chappachula](https://boards.straightdope.com/u/chappachula)\ **Post date:** [June 26, 2007, 5:08pm UTC](https://boards.straightdope.com/t/the-downfall-of-walmart/409243/52 "2007-06-26T17:08:32Z")
Walmart is a huge bureacratic organization. But huge bureacratic organizations get bogged down in their own weight, and resist change when the need arises.Management becomes conservative, afraid to take risks, and just plain stupid. For example, Walmart has already failed— big-time---- in [Germany](http://www.dw-world.de/dw/article/0,2144,2112746,00.html). They made some mistakes because they are based in Arkansas and knew nothing about German culture. > [@](#): > > Wal-Mart’s American managers pressured German executives to enforce American-style management practices in the workplace. Employees were forbidden, for instance, from dating colleagues in positions of influence. Workers were also told not to flirt with one another. > A German court ruled last year against the company’s attempt to introduce a telephone hotline for **employees to inform on their colleagues** (my bolding) And they made other,stupid mistakes that make you gasp- > [@](#): > > “Like, did you know that American pillowcases are a different size than German ones are?” he asked. Wal-Mart Germany ended up with a huge pile of pillowcases they couldn’t sell to German customers ---
**Author:** ![Baraqiyal](https://avatars.discourse-cdn.com/v4/letter/b/ecccb3/32.png) [@Baraqiyal](https://boards.straightdope.com/u/Baraqiyal)\ **Post date:** [June 26, 2007, 6:29pm UTC](https://boards.straightdope.com/t/the-downfall-of-walmart/409243/53 "2007-06-26T18:29:16Z")
[QUOTE=Otto] You can self-check alcohol? How do they prevent underage people from buying it? [/QUOTE] There’s an employee at a terminal supervising all the self checkouts (who will also take customers when the self checkout line gets long). When I scan alcohol, the terminal requires the employee to click something on their terminal before I can continue. I give the employee a wave and I’m set. Sometimes they actually check my ID, which makes my day. ---
**Author:** ![Phlosphr](https://avatars.discourse-cdn.com/v4/letter/p/c68b51/32.png) [@Phlosphr](https://boards.straightdope.com/u/Phlosphr)\ **Post date:** [June 26, 2007, 7:41pm UTC](https://boards.straightdope.com/t/the-downfall-of-walmart/409243/54 "2007-06-26T19:41:16Z")
The odd part about the whole thing is that Target filled the gap of higher priced crap for everyone. They underselled Sears and just barely topped off Wal-Mart. Basically, Target gave what an upper middle class was asking for, and this evened out the market for generations to come. I do not see a real end even with this gross overgeneralization, but I’m not so sure Wally World will be going anywhere anytime soon. ---
**Author:** ![Spiny\_Norman](https://avatars.discourse-cdn.com/v4/letter/s/9de0a6/32.png) [@Spiny\_Norman](https://boards.straightdope.com/u/Spiny_Norman)\ **Post date:** [June 26, 2007, 8:13pm UTC](https://boards.straightdope.com/t/the-downfall-of-walmart/409243/55 "2007-06-26T20:13:19Z")
[QUOTE=chappachula] For example, Walmart has already failed— big-time---- in [Germany](http://www.dw-world.de/dw/article/0,2144,2112746,00.html). They made some mistakes because they are based in Arkansas and knew nothing about German culture. [/QUOTE] That got to be pretty embarrassing - it’s as if they tried to make every conceivable mistake. The Germans turned out not to like greeters (“Do I know you?”), or to be interrupted in their shopping under the 10-foot rule, or even baggers (“Please don’t handle my foodstuffs”) - and the CEO apparently preferred living in England and not learning any German. Smooth. (I wonder if they tried to get German employees to do the Wal-Mart cheer? And how that went over… :dubious: ) German misadventures aside, Wal-Mart seems to fit perfectly into the current “more cheap stuff is better” consumer paradigm, but if social mores change towards buying fewer things of higher quality and holding on to them longer (a man can dream, can’t he?), Wal-Mart will be hurting. ---
**Author:** ![Projammer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/projammer/32/559_2.png) [@Projammer](https://boards.straightdope.com/u/Projammer)\ **Post date:** [June 26, 2007, 9:00pm UTC](https://boards.straightdope.com/t/the-downfall-of-walmart/409243/56 "2007-06-26T21:00:29Z")
Our Wal-Marts are clean, but I can’t argue the attraction of the average customer. I know I’m not the handsomest fellow in town but any time I walk into Wal-Mart I can’t help but to be aware of the procreative properties of alcohol. ---
**Author:** ![Zebra](https://avatars.discourse-cdn.com/v4/letter/z/c0e974/32.png) [@Zebra](https://boards.straightdope.com/u/Zebra)\ **Post date:** [June 26, 2007, 10:08pm UTC](https://boards.straightdope.com/t/the-downfall-of-walmart/409243/57 "2007-06-26T22:08:07Z")
Well, there have recently been some major manufacturing snafus coming out of China. Bad pet food, bad toothpaste. A few more mistakes like that and some Bill O’Rielly type, on AM radio starts up a ‘Don’t buy crap from China’ campaign and POOF! No more Wal-Mart. ---
**Author:** ![eleanorigby](https://avatars.discourse-cdn.com/v4/letter/e/ee7513/32.png) [@eleanorigby](https://boards.straightdope.com/u/eleanorigby)\ **Post date:** [June 26, 2007, 10:26pm UTC](https://boards.straightdope.com/t/the-downfall-of-walmart/409243/58 "2007-06-26T22:26:54Z")
I don’t like the greeters either–to me they’re creepy as hell. But if they give a retiree some purpose in life, so be it. I don’t really shop at Walmart (the greeters are only small reason), it doesn’t matter to mw. I find the Germany story interesting. It makes you wonder how ethnocentric a company can be. Did the sheets fit? ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [June 27, 2007, 12:24am UTC](https://boards.straightdope.com/t/the-downfall-of-walmart/409243/59 "2007-06-27T00:24:00Z")
> [@](#): > > A few more mistakes like that and some Bill O’Rielly type, on AM radio starts up a ‘Don’t buy crap from China’ campaign and POOF! No more Wal-Mart. And then the corporate executives that sign their paychecks will yank hard on their leash and hit them with a rolled up newspaper to remind these media commentators that anything that a big corporation is doing is a glorification of the free market and they should stay on message about how unions and goverment regulations are ruining America. ---
**Author:** ![slaphead](https://avatars.discourse-cdn.com/v4/letter/s/e9bcb4/32.png) [@slaphead](https://boards.straightdope.com/u/slaphead)\ **Post date:** [June 27, 2007, 10:47am UTC](https://boards.straightdope.com/t/the-downfall-of-walmart/409243/60 "2007-06-27T10:47:30Z")
Without the benefit of much real-world Wal-Mart experience, I’m just speculating from what I’ve read in the media, but it seems to me that Wal-Mart may have confused being a great retailer with having a great idea about retailing. Their idea of using excellent logistics to deliver cost reductions (and hence lower prices) was very good, and gave them a big edge. But that pricing edge covered up the fact that they’re not actually that good at running stores people want to shop in. Now that many other companies have mastered the necessary logistics, the focus is no longer solely on price, but on the basics of the retail experience - at which they are not so good, because they’ve not had to be. Unions, gas prices, government intervention, Chinese interference - none of those will be needed if a few competitors can manage to copy reasonably well Wal-Mart’s strength while attacking one or two of it’s weaknesses. The ordinary process of capitalist competition in a free market would gut it. If it plays out in this way, it would be an exact repeat replay of the Ford Model T experience, where the “a single car, in any colour you want as long as it’s black” premise first build the worlds biggest and most profitable company, and then nearly destroyed it when GM came along. [Previous page](https://boards.straightdope.com/t/the-downfall-of-walmart/409243.md?page=2) [Next page](https://boards.straightdope.com/t/the-downfall-of-walmart/409243.md?page=4)