Is Wal-Mart as bad as its opponents say it is?

No

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by Patricia Gilliam

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While I do think parts of Wal-Mart's business model have strayed away from what Sam Walton probably would have wanted, I have what I think is an even-minded view of it as a business. There's aspects of what they're doing that are smart, and other things that I think they're taking for granted when it comes to their customers. I think you can say that about a lot of businesses however.

Basically I think a lot of it depends on your own personal experiences. Some people think Wal-Mart is the best thing ever, and others think of it in terms of a plague. Either way, you need to be consistent with your view and your actions. I've known a lot of people who complain about it all the time and yet still spend their money there. That's funny and a little annoying all at the same time, especially if you're the one hearing the person complain.

I'm honestly somewhere in the middle. I do think the way Sam Walton streamlined distribution to his stores was brilliant. Basically at the time, a lot of retail stores were going through a lot of middlemen to get products from manufacturers to customers. Sam Walton basically started going directly to manufacturers a little at a time, making distribution cheaper which meant more profits for him and a slight discount to customers.

That in a nutshell is how Wal-Mart got so big so quickly. Other companies couldn't adapt to this way of doing things, so they went out of business. That's general business economics and not anything evil that Wal-Mart did. Sam created a retail business model that worked better than everyone else's at the time, and he was financially rewarded for it because he was able to serve customers better with it.

Today the Internet however has created a very competitive environment to the Wal-Mart system in general. Manufacturers can now ship directly to customers, eliminating the need for big stores and expensive overhead. Wal-Mart now has a very large web presence as well, but they don't have as big of a hold on retail item distribution as they once had even a few years ago.

There are several large Internet companies that have the ability to carry almost anything Wal-Mart does with the exception of perishable food. I know because I personally shop with a few of them. I still go to Wal-Mart for groceries and immediately needed items, but at 24 I'm equally comfortable shopping on-line as I am with shopping in a store, especially when it saves me time and money. Even many smaller websites, the new "Mom and Pops," are able to provide great service with extremely little overhead.

This is why you're now seeing things like "Site to Store" and more self-checkout lanes than cashiers. They're trying to cut costs, but there's a fine line there that if they're not careful employees will go elsewhere if wages get too low, and customers could be lost due to frustration with service.

My personal projection is that within 10-20 years Wal-Mart stores will be smaller warehouse/retail "hybrids" that will allow people to buy on-line and pick-up items just as much if not more than allow people to shop for items in a traditional retail setting. That's really the only way I can see them keeping up long-term with changes that are happening in customer spending habits. I think it's going to be interesting and overall a good thing for customers because of a wave of increased business competition happening again. I think this will improve Wal-Mart, as well as any business willing to compete with them. I personally interested in seeing how things turn out.

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