Wal-mart's marketing plan


Last year I wrote a post about Wal-Mart, that I eventually consigned to the dustbin and never published. I'm not sure why. It contained this paragraph:

The other part of the post links to this article which tells the story of a boy who was badly injured by a defective bike sold by Wal-Mart. It seems to me that this sort of thing will be happening more and more, since Wal-Mart's business plan practically guarantees the production of shoddy merchandise. Wal-Mart uses its economic power to force its suppliers to lower prices. It gets hard to achieve savings in labor costs once you have taken the obvious first step of closing your American factory and using slave labor in China. Since Wal-Mart never lets up, the obvious solution is to sacrifice quality. If you think you can get away with using cheaper materials, or one less part, you will. And sometimes, it won't work.

Little did I know that if Wal-Mart can't get an American manufacturer to sell to it at "low, low prices" it simply buys them out, fires the American workers, ships their jobs overseas, and turns the product to crap:

For 122 years, anyone who bought a pair of Herman Survivor boots could be assured of two things: They would pay top dollar, but it would be for a product that would last for years, even under grueling conditions.

All that changed in 2001 when Wal-Mart bought Herman Survivors from a private company. The owners had previously refused Wal-Mart's overtures to let it carry the boots, so Wal-Mart made an offer that Anthony DiPaolo, the CEO of Herman Survivors, couldn't say no to.

Until then, the boots had mostly been made in the U.S. and Poland, sometimes in China, but only with U.S.-made materials, DiPaolo said Thursday in a telephone interview from his offices in Dedham, Mass. He now runs Work 'N Gear, a workers apparel chain.

When his company made the boots, he said, it sold them for $80 to $180 a pair, a lot of money in the 1980s and '90s. Now Wal-Mart sells them for a fraction of that price.

But, he noted, you are not getting the same boot.

"The difference is staggering," he said.

The article, by the Courant's consumer wathdog, tells the story of a Wal-Mart customer who thought he was getting a boot and not just a brand name, only to be disabused in short order.

Some Wal-Mart defenders claim that, while it's true that Wal-Mart pays slave wages, it actually effectively increases income in America as a whole because people can buy previously expensive stuff cheaper. It's quite true that if your dollar buys more, you have effectively enjoyed an increase in income. But the argument only works if the cheaper product is of like quality to the more expensive product. In the case of the late, lamented Herman's Survivors, that is definitely not the case,
Posted: Saturday - March 31, 2007 at 10:32 PM          

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