I refuse to shop there because of the way they treat their employees.
At a local Walmart, they will only give employees just enough hours to not be considered full time. This way, you see, they do not have to offer benefits.
A friend of mine had trouble with the management in regards to racism. Instead of firing her, they accused her of stealing an item and are pressing charges. The item was for about 5 bucks. So now, my friend has to deal with this on top of losing her job.
I really, really hate Walmart.
They truly screw everyone until they can squeeze every last drop out for their benefit. Then, they leave or move. Having worked in Architecture I can tell you that it very much is worth it for them to pack up and leave or muscle for a better deal with a city. Their buildings are bare bones minimum in regards to quality. They don’t cost that much to make, ergo they can abandon them as needed. The newest Walmart here (where my friend worked) already looks like a dump.
Correct me if I am mistaken, but isn’t there a law against Wal-Marts in Vermont?
I grew up in a small town in the rural South. “Downtown” consisted of two blocks of stores on both sides of Main Street. My Dad had the only grocery and farm supply store there for over 35 years. That’s where the farmers hung out on Saturday nights. Our drugstore really did have a soda fountain. People came from all over the county to shop in our “dry goods” stores. There was a real sense of community. I thought it would last forever.
MonkeyMensch, Wal-Mart can amortize a $5 price increase over how many thousands of stores? When you can shift the costs around like that, absorbing a loss in any one market becomes trivial.
I have studied computer clusters, where gobs and gobs of small, cheap PCs are harnassed into a single juggernaut. Since PCs are, by and large, cheap pieces of crap, you need to be extremely fault-tolerant to wring long uptimes out of a mass of them working together. Google is the current leader in doing things like this, and that is what they have found. Their GFS (Google File System), for example, is a triumph of taking fatal hardware errors in stride. They expect single PCs to fail, so they designed the distributed filesystem to work even if individual machines are dropping like Storm Troopers in a setpiece battle. The loss of any one system doesn’t matter.
My point? Amortization like that is powerful. It allows you to thrive in a hostile, fault-inducing environment without killing yourself saving inessential bits, like the profit margin of every single store. Losing money in Seattle is meaningless if you’re making money hand-over-fist throughout the South and Midwest, for example. You can even increase the overall profit margins by upping the prices of some items ever so slightly over a whole region, which is all but imperceptible except in the big picture.
Bob55: You forget to account for the costs of establishing a store, and the time. If Wal-Mart feels threatened (it wouldn’t, for the reasons I gave above, but if it did) by upstarts, it can schedule severe price drops in the (relatively few) regions where an upstart chain is trying to establish itself. Since the first few months are shaky at best, a price war then can strangle a new enterprise in the cradle. And, due to amortization, Wal-Mart can do it nigh-indefinitely.
The part where I referred to Adam Smith as a communist was a joke. But the rest was serious.
On the issue of price cutting vs price increases, obviously you can’t do both simultaneously on a single profit. But that’s a minor issue. A big company can eliminate competitors in ways that don’t involve price undercutting. For example, sign an exclusive contract with a supplier. If you control 80% of the retail market and you tell suppliers you won’t buy from them if they don’t agree to exclusive contracts, how many are going to refuse? And now how are those theoretical competitors going to compete against you when they can’t buy products to sell? Of course if the money’s right you can just buy the suppliers outright and then decide if you want to sell to your competition. (Naturally, if you’re a supplier that controls 80% of a market, you can apply these same strategies to your retail customers.) Someone already mentioned situations where businesses are granted tax breaks in certain areas. If your competition is paying taxes and you’re not, you can undercut his prices and still make more profits than he is. Or you can drive your competitors out of business by targetting them by niches, by eliminating one geographic region or one product line at a time while using the profits from the rest of your business to subsidize your temporary losses. Or you can just go head to head, in the knowledge that with a hundred times the assets as your local competitors their losses will drive them out of business before yours will. There are real world examples of all of these tactics being used.
Insofar as this was ever a factual question, it has been answered, so I’ll close this thread. Those wishing to debate or rant are reminded that we have other forums for that.