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Wal-Mart’s retail strategy was to offer a wide variety of goods and some services at an extremely low price to people who may not have a lot of money to spend on things that are not essentials. By doing this, it not only allowed Wal-Mart to be a one stop shopping destination…
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YOUR FULL HERE] [YOUR [YOUR 19 February Wal-Mart discussion questions Wal-Mart’s retail strategy was to offera wide variety of goods and some services at an extremely low price to people who may not have a lot of money to spend on things that are not essentials. By doing this, it not only allowed Wal-Mart to be a one stop shopping destination for clothing, toys, food, and even computers, but enabled people who otherwise might not be able to afford any extras to not only provide the essentials for their household, but also to pick up a little something here and there, whether it be jewelry, house plants, or decorative car decals.
Wal-Mart has been successful, because due to their high percentage of inexpensively made imported goods from countries such as China, Malaysia, and India, the cost of labor to produce these goods enabled Wal-Mart to keep their prices affordable for people in the United States, while keeping their profit margins higher. This is due to the fact that in the countries that many Wal-Mart goods are created in, what is considered to be an adequate “living wage” is often much lower than the American equivalent. A spatula made in China might cost 99 cents, the same spatula made in an American factory might cost 2 dollars. By reducing the cost of labor, Wal-Mart is able to keep prices low and profit margins high.
Many small town retailers criticize Wal-Mart for driving out local merchants in new locations when they open. This criticism is somewhat fair, because due to the fact that Wal-Mart is a large corporation, they are capable of taking advantage of bulk discounts and importing cheaply made goods in a way that many American small business owners do not find practical on a smaller scale. What the local mechanic needs to charge for what he pays for his shop, his supplies, and still make a profit, is often higher than Wal-Mart, because since their garages are part of the existing store, they already have the location paid for, and they are able to get automotive supplies as cheaply as everything else they get as well. This applies to local clothing stores, jewelry stores, grocery stores, any small local retailer. It is an open market, but it seems slightly unfair that the “big guy” is able to charge less while still making a profit simply because Wal-Mart is a large corporation. But trying to attack Wal-Mart means essentially attacking capitalism, and most people are not prepared to do that.
Wal-Mart does not use the same retail strategy for domestic and global operations. Wal-Mart has never been more successful than right now, and while the economic recession is currently curtailing other businesses, it seems to only help Wal-Mart, as the less money people have, the more they need to stretch it, and the more inclined they are to shop at Wal-Mart than anywhere else. It is a uniquely American situation right now, that due to our current socio-economic issues at home, makes the strategy of selling cheap goods to the poor, not expensive goods to the rich, so profitable for them. If you look at the list of countries that have allowed Wal-Mart to sell within their borders, you see names like Canada, Japan, and even India. But only India has the dichotomy between rich and poor to support both having a Wal-Mart, and producing goods for a Wal-Mart. The thing that almost every country on the list has in common with the United States is that they have a low enough economic bar that they want to purchase inexpensive goods from Wal-Mart, but not so low that their workers are willing to produce the goods for the wages that Wal-Mart is prepared to pay.
As the economy worsens, American resentment towards Wal-Mart grows almost as fast as its pocketbook. Almost everyone knows that they do not treat their workers well, at home, or overseas, and they know that it may be Wal-Mart who is putting their local businesses out of commission, thus creating an even stronger need for a Wal-Mart, but where else is the consumer expected to go? If there is only so much money to go around, and the bills need to be paid, and the babies need to be fed, and the car needs new tires, one can simply go to a Wal-Mart for all of it, and enjoy a nice McDonalds hamburger while doing so, as almost every Wal-Mart features one inside their store. I anticipate that Wal-Mart will only receive consumer backlash if more people choose to become informed on why they are so successful, and how. Since this voluntary consumer education does not seem likely at this time, or in the near future, I forsee a long, profitable reign of Wal-Mart over inexpensive goods for the middle and lower class budget.
Works Cited
Walmartstores.com. Wal-Mart, Home, About Us, International. 2012. Web. 19 February 2012
http://walmartstores.com/aboutus/246.aspx Read More
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