How Wal-Mart changed everything

Jax mentioned something in her post today. I began writing a comment about it, but it got so long, I didn't want to stuff it into her comment box, I decided to post it here.

Please first read her blog, then Kelso's comment, then come on back for my response.

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Why do many people hate Wal-Mart? There are many reasons, here's my take:

Wal-Mart has achieved the status of 500-ton Gorilla in the retail environment. Enough people shop there that if your product isn't being sold there, you will not sell enough product to be profitable. As a result, Wal-Mart abuses this power and drives cost down thus resulting in a loss in quality, too.

Example: Haynes makes t-shirts. Wal-Mart buyer tells Haynes salesman to drop the price of each shirt by 1/2-cent or Wal-Mart will not sell Haynes products. Haynes grudgingly agrees. To offset this loss in profit for Haynes, the manufacturers are forced to find ways to reduce manufacturing costs. When all the obvious cost reduction strategies have been employed (lean manufacturing, 6S, Kaizen), all that is left is quality. By reducing the quality standards for he product, more product is shipped as "good" and less is sent to scrap. Some manufacturers have set up entire production lines JUST for Wal-Mart. The package may look IDENTICAL, but on the inside there is lower quality, less material, etc.

What happens next is what Kelso was referring to. People are slowly lowering their personal standards and buying for price. So, MORE people buy at Wal-Mart instead of the competing retail outlets. So, the manufacturer converts another production line over to Wal-Mart standards. Then another. Eventually the ENTIRE product line is now lower quality and cheaper.

How do I know all this? I work in a manufacturing facility. Our product is NOT sold at Wal-Mart as we are a medical device, direct to hospital environment. I'm quite familiar with the manufacturing process, however. I have direct experience with Uncle Ben's Rice, Haynes and other T-shirts and apparel (sweats, pants, hats). I have an MBA from the Sam M. Walton College of Business where EVERY member of the staff worked with Sam Walton or was on the board of Directors at Wal-Mart. My classmates worked for Pringles (Wal-Mart account rep), Proctor and Gamble (European Wal-Mart Head Account Manager), and another was in sales and marketing for another major food manufacturer. I have personally watched the quality of my t-shirts and underwear dwindle to sub-standard at Wal-Mart and have begun driving 2 hours to the nearest Target.

What’s more, Wal-Mart is encouraging this. I dated a girl who interviewed for a Wal-Mart Buyer’s job. They rotate accounts every 3 months so as to not allow personal friendships to develop. If you’re buying underwear this week, next week you’ll be the buyer for salty-snacks. You are NOT allowed ANY gift. If the salesman offers you a pen to sign the contract, you are encouraged to use your own, but if you use his/hers, you MUST give it back or you will be terminated. THIS is where most of the horror stories of working for Wal-Mart are born. The cashiers have a blast, they sing songs and promote happy workers…of course, they are the direct customer contact.

I don’t hate Wal-Mart. I love them. I shop there often. However, I keep a close eye on product quality. When it dips below my standards, I find another retailer who still carries the high-quality line.