1. Welcome to SportsJournalists.com, a friendly forum for discussing all things sports and journalism.

    Your voice is missing! You will need to register for a free account to get access to the following site features:
    • Reply to discussions and create your own threads.
    • Access to private conversations with other members.
    • Fewer ads.

    We hope to see you as a part of our community soon!

Newsweek Columnist on WalMart

Discussion in 'Anything goes' started by poindexter, Sep 7, 2006.

  1. Ace

    Ace Well-Known Member

    Wal-Mart wasn't bad. It just went too far.
     
  2. poindexter

    poindexter Well-Known Member

    I'm just surprised the "All the Answers" crew spends so much time slumming here, instead of running large, multinational corporations, or national governments. They're experts on everything.
     
  3. Pastor

    Pastor Active Member

    Market economics say that the wages will balance out. It is possible that Ma and Pa will receive the "lower" quality wage earny, yet they were never receiving someone of that high quality to begin with.

    Basically, we're talking about high school kids.
    Yes, it is but only sort of. Wal-Mart's prices are reduced artificially. Mom and Pop won't be charged the same as before, they will be charged more.

    Stapler company sells staplers for $5/piece @ 10 units, $4/pc @ 15 u, $3/pc @ 20 u, etc. Wal-Mart comes in and says, "We'll purchase your staplers and sell them for $2/pc." Stapler company wanting the business agrees. He recognizes that there is no profit earned when selling this way, since he's only taking in about $1/pc. Thus, in order to keep the staff that produces the staplers and pay for management, the stapler price for Mom & Pop shifts to $7/pc @ 10u, etc.

    Sadly, this is kind of true. When you have 85% of America shopping in a store, your product needs to be there.
     
  4. BTExpress

    BTExpress Well-Known Member

    I can only hope the American consumer isn't ignorant enough to do what you suggest they might do. But the fact that the Neon sells ANY cars suggests that you may be right.

    Forget fuel efficiency.

    Corolla = most reliable car on the planet and the best bargain on any car lot.

    Neon = least reliable car on the planet and --- despite its meager price --- the worst bargain on any car lot.
     
  5. Funny, I thought a bunch of people "shopping elsewhere" is what helps generate capitalism. Silly me.

    OK, JR, I've got a way to satiate you:

    Americans are stupid, lazy, insular, uncaring of anybody but themselves and responsible for all the world's ills.

    There, you happy now? Now maybe you can make some rational arguments when you post. Oh wait, there goes your whole raison d'etre.
     
  6. BTExpress

    BTExpress Well-Known Member

    I know it's chic to call Wal-Mart "evil" and use their running Mom&Pop Shop out of business as Example A.

    But what would happen if another Mom&Pop Shop opened business in the same locale as Mom&Pop I?

    Would Mom&Pop I not do everything they could to run Mom&Pop II out of business? And if not . . . why not?
     
  7. Frank_Ridgeway

    Frank_Ridgeway Well-Known Member

    Competitive pricing is legal, what's illegal is predatory pricing -- selling key items at a loss or very small profit margin in order to crush a competitor, and then, after the competitor dies, jacking up the prices. A new mom & pop is usually not going to have the resources to do that to another mom & pop. (Although a couple years ago I was in my favorite local homemade ice cream place, which I would continue to patronize regardless of price because their ice cream was the best ever. A small chain put in an Italian ice place across the street. The local owner told me, "That's OK. We'll start selling Italian ice, too, and we'll sell it cheaper than them because we have customers and they don't yet, so we can afford to take the loss." I didn't want to tell him it's illegal.)

    Predatory pricing happens to be illegal but is hard to prove. Gannett was accused of it in some markets a while back -- selling ads really cheap to undercut a competitor -- in Salem, Santa Fe and Green Bay. The book I mentioned on this thread says it's not unusual for WalMart to price things so low in a new location that it loses money -- and then jack prices way up when competition folds. Also, I saw a documentary a couple years ago that says WalMart isn't cheaper for customers across the board -- certain items (a "loss leader") will be cheaper to draw people, but many items actually will be priced higher or will be cheaper but of far inferior quality.
     
  8. The Big Ragu

    The Big Ragu Moderator Staff Member

    Predatory pricing isn't just hard to prove. It's most certainly not as prevalent as people like to think. It is rare because it is an irrational practice and it more easily backfires and eats profits than gives you a monopoly. The flip side of Wal-Mart purposely pricing things at a loss is that Wal-Mart loses more money than anyone from that sort of practice--due to its large market share. That isn't an insignificant factor. And as big as Wal-Mart is, it is not so much bigger than everyone else that it can stomp out all competition. The retail industry has plenty of other players that are large enough to be able to to play chicken with Wal-Mart, and Wal-Mart can't keep a predatory price low forever. If it gets into a game of chicken and has to blink, it not only hasn't created a monopoly, it has caused itself big losses trying.

    I can give you dozens of 20th century examples of predatory pricing having failed miserably. I challenge anyone on here to show me a case of predatory pricing creating a monopoly.
     
  9. JBHawkEye

    JBHawkEye Well-Known Member

    As I've pointed out in the Wal-Mart discussion before _ after Wal-Mart opened a SuperCenter here, a Midwest chain that had two grocery stores here expanded its main one, a statewide grocery chain opened a store here and a local businessman bought out a family-owned grocery store and moved it to a new, larger building near downtown. One grocery store did close, but that's because the entire chain went out of business. And that building was filled with a Hobby Lobby about a year ago.

    As for the chain stores in town, Target and Kmart still do good business.

    There's been no evidence that Wal-Mart has hurt the economy. They don't advertise with us (bastards), but all of their competitors do, and have increased their advertising as they expanded.

    And no, I don't shop at Wal-Mart.
     
  10. Frank_Ridgeway

    Frank_Ridgeway Well-Known Member

    That's not how they do it, according to the book. Pricing is not the same across the WalMart empire. The book says they do it when they enter a new market that has competition. They stop doing it when competition ceases. They are not going to lower prices universally in order to squeeze out competition in Dubuque.
     
  11. The Big Ragu

    The Big Ragu Moderator Staff Member

    I haven't read The Wal-Mart Effect. But I am familiar with the claims of predatory pricing nationally (i.e. pricing toys below cost to drive Toys R Us out of business) and locally, the way you are describing. But I have never seen one of those claims backed with any evidence. Just people alleging it. No one has ever shown a case of Wal-Mart driving all local competitors out of business with predatory pricing and then raising the prices when the competition was gone.

    In most markets it's an impossibility, because Wal-Mart has a Target or a Costco or a Walgreens--who can withstand that sort of practice--to compete with. It's why predatory pricing never works. There is always someone big enough to play chicken with you. And even if it did drive out all local competition, if it then sets prices too high, people will presumably drive to the next town where someone else will be cheaper (i.e. a Wal-Mart).

    The thing that seems more evident is that the company is single-minded when it comes to pricing. It's goal is to find ways to underprice the competition and drive business by doing it. That is backed up with actual evidence. You just have to go comparison shopping.
     
  12. Birdscribe

    Birdscribe Active Member

    See: Oil, Standard. Cross reference it with Rockefeller, John D.
     
Draft saved Draft deleted

Share This Page