Silent Archimedes

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Book Review: The Walmart Effect

Posted by silentarchimedes on March 20, 2009

The Walmart Effect

How the World’s Most Powerful Company Really Works – and How It’s Transforming the American Economy

Author: Charles Fishman

walmart-effectWHY I READ THIS BOOK

I do not like Walmart, yet I shop there. It is messy and dreary, yet I plan a trip to Walmart every few weeks. It is expansive, yet crowded and claustrophobic. I feel like I’ve spent just as much time there looking for either a product or an employee to assist me as I have actually shopping. I try to minimize my time there but the trip always ends up over an hour and I’m beat by the time I leave. Why do I keep going back there? To make things worse, all these stories about Walmart’s secrecy and unethical business practices keep popping up. Yet that has not stopped me from shopping there. The fact that Walmart has become ubiquitous with middle-class (and poorer) shopping has led most people to subconsciously accept it. So what is going on with Walmart?

THE AUTHOR: CHARLES FISHMAN

It must take someone with guts to take on the Walmart behemoth; especially after you read the book and realize that for most of its  history, Walmart has considered any type of publicity and media a threat to its business model. But Fishman has been known as an investigative reporter that attempts to bring to light the workings of institutions or groups that have been relatively unknown. According to the book’s website, Fishman has spent the past 20 years investigating organizations such as NASA and Walmart. He was also the first reporter to be allowed inside a Tupperware factory, and first in 30 years inside the nation’s only bomb factory.

SHORT SUMMARY

walmart_lowpricesIn an attempt to understand the inner workings of Walmart Inc. and its effects on job creation, global economy, work environments, suppliers, competitors, communities and other issues, Fishman talks with everyone that might be affected by Walmart but Walmart itself. Due to the secrecy of Walmart and the lack of transparency in its statistics, Fishman is forced to rely specifically on his investigative acumen. What he finds out is that Walmart is the ultimate definition of a dichotomy, a contradiction that baffles all levels of society; from the individual to the community to the country to the global economy. On one hand, Walmart is unpretentious, is no frills, provides hundreds of thousands of jobs, provides the cheapest prices for consumers and has always stuck to its core values. However, on the other hand, it has a dictatorial grip on its suppliers and competitors, kills almost as many jobs as it creates, indirectly destroys local natural ecosystems, promotes cheap labor and unfair labor practices, has no transparency or guilt and chips away at the core values of the free market system. It pushes the limits of good and bad capitalism and is the poster child of globalization.

REVIEW

This book really does a good job of trying to understand the Walmart effect. However, although Fishman tries to stay neutral on the positives and negatives of the issue, it is more common that his investigations lead to a negative perception of the company. It’s hard not to have a more negative view after reading the book. There is only one major positive about Walmart, it provides the lowest prices for many of the things families need. However, this is a huge positive and is shown even more during this recession. Walmart’s growth in same store sales have been increasing for the past 22 months while Target’s have fallen the past eight months (Source: Walmart vs. Target: No Contest in the Recession, Time Online). It’s not even a contest and shows that this positive is all that consumers need to turn a blind eye on all the other issues. And for sure, there are a lot of other issues, which Fishman does a great job of detailing and bringing out.

The book flows really well, from the beginning to the end… although the last chapter is the required “so after all this investigative work, what should we do or care about Walmart to make this world a better place?” The first chapter is pretty much a summary of Walmart’s influence on society. The rest of the book goes into detail about each issue by discussing academic studies on the company dating back to the mid-1980s, successful and failed interviews with former supplier executives from big and small companies, the impact of Walmart on things we take for granted now (like deodorants that sell without the useless boxes they used to come in) and talking to opponents of Walmart, from environmental groups to factory workers of their suppliers.

The most damaging against Walmart has to be that a lot of the investigation leads to the same conclusion, Walmart is a big cheapskate. Which was fine when it was a small company, but now that it is the biggest in the world, this sense of being cheap at all costs seems somewhat unfair. Unfair to other companies and unfair to the ecosystems and poor countries’ lax labor laws it depends on to produce such massive quantities of products. Fishman tries hard to not take a position, but the writing is in the book. There are no positives about Walmart that can be concluded from the Chilean Atlantic salmon farms, or the countless companies mentioned in the book that went belly-up after becoming a supplier of Walmart. There’s just too many examples to list. And it’s quite obvious that even the large companies that work with Walmart are under the control of Walmart.

There are some interesting stories in the book. The one I like best is about the company that decided supplying to Walmart was detrimental to its future existence, so it decided to end the relationship. However, Fishman argues that companies that don’t supply to Walmart are highly affected by them anyways because of the devastatingly low prices. Another interesting tidbit was that Fishman believes Walmart may hit a ceiling at some point and there could be, what he calls, Walmart saturation and exhaustion.

VERDICT

This is a very insightful book. Although there are only a few unbiased and encompassing studies on the Walmart effect, Fishman does a good job of investigating and doing his own research. This book sums up my initial motivation for reading  about the world’s largets non-oil company. Walmart is such a dichotomy it’s really difficult to come to a conclusion on whether it is good for society or bad. It has changed so much of everything that it is beyond anyone’s control. Many of the numerous statistics in the book are downright unbelievable. The book is a quick read, very interesting to read and will make you think twice about globalization and also your personal moral responsibilities to it.

The book was written in 2006 and only talks about the perceptions and actions of Walmart in the context of 2005. The major views of Walmart has not changed since then. However, the signs of Walmart exhaustion have gone out the window now that we are in a recession and most people have turned even more to Walmart for cheap prices. Walmart also has done more to improve the negative perception against it. Just a few days ago Walmart announced that they would be awarding $2 billion dollars to their employees. If Walmart decides to also target the higher end products, like Target, this might create a whole slew of new problems.

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Rating: 9 out of 10 Walmart smileys


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