CARPE DIEM
Professor Mark J. Perry's Blog for Economics and Finance
Wednesday, April 08, 2009
About Me
- Name: Mark J. Perry
- Location: Washington, D.C., United States
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
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21 Comments:
Great Value Spicy Southwest Mustard is a $1 gift from God
...Wondering how many folks they put out of business and strongarmed to get it, I'll pass.
No thanks, but the stuff out of Bentonville might as well be poison.
Seth, hopefully tons!
If those other grocery stores wern't so lazy and overpriced they might have done a bit better. I am still dying for a Walmart to bring competition to my home town.
Food Lion is complete crap but they have a local monopoly in my county. They often ask the high schoolers they slave out to work off the clock to avoid overtime, never have any sales or good prices, and offer almost none of that organic food that I am sure you eat.
I don't eat organic - I leave that to environmentalists.
I do shop at about every other competitor in my area for what food I do buy. On purpose.
"Wondering how many folks they put out of business and strongarmed to get it"
Seth,
Have asked you for some evidence to support your claims and am still looking forward to reading them.
If you need help with posting a link using HTML, see item 8c.
Would appreciate the opportunity to understand your position more fully and evaluate the sources. Thanks for your help :)
I totally love me some mom and pop stores too and it makes me happy that farmers markets are on the rise. I honestly feel like Wal-Mart almost never has the power to put good businesses like this out of business because of people like you and I who buy our food from them. They do a good job of eliminating local hell holes like Food Lion though.
Walmart doesn't always win. Retailer in Britain uses Clubcard to thwart Walmart. British retailer, Tesco, is now opening stores in the U.S.
Extremehobo,
Agree that Walmart does not challenge a really good retailer. In my own community, Walmart is a major challenge for the large chain grocery stores (100,000 sq.ft.) whose prices are extremely high.
The local farmers market, Bulk Barn and 2 independent grocery stores are well patronized and don't seem to be having the same difficulties. You have to check your prices even at Walmart. One of the things that people enjoy about a smaller store is being able to find things quickly and get in & out in 5 min.
What Walmart was able to do was understand its customer's needs and preferences better than its competitors by pioneering the use of barcode analysis.
Wal mart rules. They kill our local grocery chain on price and, generally, on quality. It's great for consumers.
I used to live in Texas where HEB not only withstood Wal Mart, but seemed to thrive in its shadow. They did it with great prices and even stronger innovation on the product and customer experience side. I'm not sure if Wal Mart was less expensive or not, because the HEB experience was so good and the prices reasonable enough that I never felt the desire to switch.
Now that I live in Kansas City and can choose between Hy Vee, Hen House, Price Chopper or Wal Mart, I choose Wal Mart. Why? Because they're better.
Lament the mom and pops, local chains, etc. all you want. If you're good, you'll do just fine next to Wal Mart. If your Albertson's, Kroger, or local overpriced supermarket with limited assortment, look out. The freight train is coming and you're on the tracks.
QT: You dont really expect a logical fact based response from Seth, do you? People like that tend to throw their rocks and then hide.
Wal mart does an excellent job with most every product it carries. A few posters have pointed out that there are some niche markets that compete well in the presence of Wal Mart. Farmer's Markets because fresh, local produce isn't an offering at WM is one example. In the mid-Michigan area, a local chain of grocers - VG's seems to do well. Yes, they are higher price but I choose them for a lot of products because:
1. They are well-staffed with friendy and helpful, customer service-oriented personnel
2. They offer gourmet and unique foods that I can't get at super Wal-Marts or other large chain stores.
Anon. 12:41,
"You dont really expect a logical fact based response from Seth, do you?"
Yes, actually I do. Walmart's success has not been devoid of controversy so there may be valid reasons for seth's position. This website attracts posters who are intelligent and well-educated. Most but not all are familiar with classical argumentation where a claim is proved through the presentation of evidence.
My question is basically to ask what Seth has encountered that has led him to his conclusion. I am open to considering his evidence.
Without evidence, his arguments remains unproven and will tend to be dismissed by others.
Anon. 1:53,
Excellent points. Have to agree that competitors can and do offer better service, fresher vegetables & more extensive selection.
Sethstorm,
I can understand if you feel a bit singled out as it may seem that I am only asking you for your evidence while tacitly accepting the claims of others ie. Anon. 1:53.
The difference is that what Anon. 1:53 stated concurs with my own experience and what I have read about the subject.
Initially, I was very reluctant to shop at Walmart fearing that other retailers in my community would not be able to compete. Not one grocery store has closed in our community since Walmart began selling groceries a year ago. When I did my homework, I came to the conclusion that Walmart was not so evil. Many other retailers also sell Chinese imports including Home Depot, Canadian Tire, Zeller's and the many women's clothing stores in the community.
Conditions in China have improved a great deal since China was opened to the west. Are there lots of problems in China...pollution, human rights, capital punishment, lack of political freedom. Without question but China is making progress. For the first time, China is giving money to the IMF. At present, China is not blocking CNN broadcasts. There's a long way to go but there are signs of improvement in the living conditions of the people. For the first time, ordinary citizens are taking vacations.
"...Wondering how many folks they put out of business and strongarmed to get it, I'll pass"...
I'm guessing that if and that's a mighty big if Wal-Mart strong armed anyone it was losers you are very familiar with sethstorm, people you can easily identify with...
"I do shop at about every other competitor in my area for what food I do buy. On purpose"...
Just think how many Wal-Mart shoppers you make with that attitude... A big round of applause for you sethstorm..
Today I went to a competitor here in the Puget Sound area to see how Wal-Mart's $34.56 dinner competed with one of the local Kroger owned competitors for Easter dinner.
Here is my $40.49 dinner from the union manned store:
36 dinner rolls for $5.00
1.5 mil Vendange Cab-Shiraz wine for $5.99
2 cans DelMonte corn for $2.50
4.5 lb. Hormel Spiral Cut Ham for $7.00
4 lbs sweet potatoes for $4.00
2 lbs fresh asparagus for $6.00
2 "homemade" apple pies for $10.00
I will have 8 more rolls and I would guess better quality pies. So it cost might cost me $6.00 more then Wal-Mart but i have a little more food and it is all freshly made except for the ham. I can also think my fellow citizens, the employees of the store, have health care paid for by Kroger's versus 53% by Wal-Mart (the 95% figure from provided by Wal-Mart is for some member of the family having health care some source (local county public health?)
Any defense of China by posters has to be tempered by the fact they have not read the latest Report to Congress by the U.S.China Economic Security Commission of or the 2009 National Trade Estimate Report of Foreign Trade Barriers by U.S. Trade Representative (especially our biggest trade deficit nation, China).
1,
Let's keep it friendly.
gettingrational,
Thank you for taking the time to make a price comparision. Let us compare Kroger to Wallmart:
4.5 lb. ham $7.00 vs. 7-8lb. ham for $12.64 ($1.55/lb vs. 1.58-1.80/lb)
4 lbs. sweet potatoes for $4.00 vs. $2.00 at Walmart
wine - comparable price
pie - comparable price ($5 vs. 2 for $10)
2 lbs. asparagus $6.00 vs. $3.54
2 cans Delmonte corn $2.50 vs. $1.50
Dinner rolls 36 for $5.00 vs. 24 for $2.50 (14 cents ea. vs. 10 cents each)
In the end, you pay more and end up with an extra pie and way too many dinner rolls while you don't have enough meat to feed 8 people. Then again, 2 bottles of wine is cutting it very fine if you are serving 8 adults.
None of these food items from Walmart or Kroger were produced in China. Just mentioning it since we seem to have moved away from the subject of the post ie. an easter dinner at a reasonable price.
On the subject of chinese imports, the fact remains that chinese imports are not solely confined to Walmart. When you buy a CFL or a light fixture from Home Depot or a blouse from TJ Maxx, the odds are better than even that you are buying a product manufactured in China. You are going to have to boycott a lot of stores if you wish to avoid chinese goods. Walmart cannot reasonably be held responsible for human rights, tariffs or monetary policy in the People's Republic of China.
If you want us to read the reports you cite, one wonders why you don't just post the links.
QT, Here is the link to the 2009National Trade Estimate Report on Foreign Trade Barriers with respect to China. The non-tarriff barriers are a bewildering array of creative resistence to U.S. firms and products entering the Chinese market -- I am interested in your reaction to reading these.
http://www.ustr.gov/assets/Document_Library/Reports_Publications/2009/2009_National_Trade_Estimate_Report_on_Foreign_Trade_Barriers/asset_upload_file868_15464.pdf
I used to think of WalMart as the Evil Empire because of anecdotal evidence from a cousin of mine. She is a grocery store manager and said that WalMart had two practices that I found distasteful:
1) Upon entering a market, WalMart would sell groceries for less than cost, and once the competition was out of business or otherwise weakened, prices would go back up.
2) WalMart was a crappy company to people who made and serviced the equipment they used. e.g. they would buy equipment from a company that had the profit from service of the equipment as their business model, and then get service from a company that had profit from sales as their business model.
I'm still not cool about #1 assuming it's true, but I'm more OK with #2. Those companies just need to change their business model. Thrive or perish.
gettingrational,
Thank you for the link. Unfortunately, I am getting an error message rather than the report. Is there another path I can use?
Sorry to bother you.
misterjosh,
Walmart can certainly buy in massive bulk and is very dogged in pursuit of deals from its suppliers although it carries a limited selection of grocery offerings.
The only grocer has gone out of business in my community in the past 5 years attributed their loss of business to the Town decision to rip up the main street for 8 months along with all of the parking lots downtown area. Unfortunately, Quality Greens was the only grocery store that delivered to seniors and went out of business several years prior to the arrival of Walmart. As Ronald Reagan once said the most terrifying words you will ever hear are "I'm from the government and I'm here to help".
Walmart has only been selling groceries for about 1 yr. in Milton. Will have to see what happens to determine whether my community experiences what you describe.
Mister Josh, Go to Google and put in: 2009 National Trade Estimate Report on Foreign Trade Barriers. When you see the Report contents Click on China and give yourself some time ro read because it is lenghty. I need to figure out how to post a live hyper-link on Blogger. gettingrational
Sorry QT my previous post addressed MisterJosh and not you.
gettingrational,
Thanks. Look fwd to reading the report. :)
Can help with posting a live link also called a HTML tag.
Lessons on HTML are available here. It isn't that difficult to learn and you can copy the standard command formats into a file so that you can cut & paste to create hyperlinks, bold text, etc.
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