The Walmart Effect

Fresh off a debate/argument with a relative, I decided to take to the keyboard, before the discussion devolved into fisticuffs (my cousin looked like he was about to break a chair over my face, Jon Novin style).

I won’t beat around the bush. I love Walmart. I love everything about the company, from the stores to their business practices and ethics. It’s come to a point where I actually get offended when someone speaks ill of the retail giant, and there have been more than a few times when I have felt compelled to come to its vehement defense, as evidenced by the aforementioned arse-beating I narrowly avoided today.

As a consumer, I feel like Walmart is ‘fighting for me.’ They are like a big-box big brother, always (“always!”) looking out for my best interests, always ready to step in if and when they have to.

Major retailers will fight to the death!
Major retailers will fight to the death!
Without sounding too much like a commercial, low prices rule at Walmart. Dave (my cousin) took issue with the pricing system, alleging the company ‘tells’ manufacturers what they’re willing to pay to showcase products in their stores. He said it’s “like a punishment” and that smaller companies can’t compete, so they have to give into the “blue Devil.” I can’t speak to the accuracy of the comments, but even if it were true… so what?

Say you like Coca-Cola. Coke knows a lot of people who like their stuff also shop at Walmart. So when they price their products at, say, $1.75 for a two-liter bottle, and Walmart says they’re only going to accept a price of $1.25, Coke is faced with a dilemma.

Do they stand firm and risk not having their drinks in Walmart stores — knowing it would cost them thousands in revenue — or do they ‘take the cut,’ understanding that 50 cents is not worth losing all that potential cash?

Dave says this makes Walmart the bully, but consider this: the other day I noticed that Coke was $1.60. It means they pushed back and won. Coke is a huge company, too, and they have more than a little bargaining power. I wish I could have seen that negotiation. It probably would have been like an old sci-fi movie of Godzilla and Mothra.

So in this case, Walmart had to decide if they were going to let Coke walk out the door, or pass on a few extra cents to the consumer. Since I love Coke (and I can still get it cheaper at Walmart than anywhere else) I don’t mind paying a bit more now. I know by summer the price will be back down to normal. Everything’s cool.

Sure, in this scenario smaller companies may have to “take a hit” (as Dave says), but it’s in their best interest to have their products in Walmart, since most people (myself definitely included!) aren’t going to go traipsing around town to a bunch of specialty stores, when they can do a ‘one-stop-shop’ at Walmart and be done with it.

And once enough shoppers try and like your products, then your company grows, and eventually you’ll have the pull of Coke and you can work out a better deal. After all, everyone has to pay their dues.

What I won’t accept is paying out the nose for products that aren’t worth it. Nike, for instance, will have you shell out $90+ bucks for a shoe that costs them about $3.50 to make. I don’t play that kind of greedy marketing, and neither does Walmart.

Look, Walmart isn’t going anywhere anytime soon, and neither are loyal shoppers like me. Whether you like it or not, more and more companies are adopting the discount model, and making deals on price point, instead of just accepting whatever bloated costs the manufacturers decide on.

That free ride is over. The consumer is now king. And Walmart is our Camelot.

 by Paymon West | Editor | Residential Life Magazine 

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One thought on “The Walmart Effect

  1. Pingback: House Always Wins – Gaseoustania Tonight

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