Retail in the United States...Is that part of what is strangling our economy? We all have a desire for low prices and getting the best deals, but that desire has placed a great strain on retailers to be able to meet the customers demand. The largest retailer and distribution network in the United States is Wal-Mart. I think the way Wal-Mart operates their business puts a strain on the United States economy both directly and indirectly. Unfortunately, since Wal-Mart is the leading retail and distribution network, many of their competitors have tried to employ similar business models to find success in their business.

Wal-Mart markets themselves to their customers as a company that provides "every day low prices" while becoming an asset to the community. The "every day low price" has become the norm for customers and the expectation is for Wal-Mart to continuously decrease their low prices. This cycle forces Wal-Mart to find new ways of shrinking their costs so they can please their customer.

Wal-Mart has delivered low prices on a consistent basis, but the issue arises when you start examining how those low prices were delivered. In reality customers may end up paying a higher price in other places to have Wal-Mart deliver their item at that "every day low price." The customer is able to purchase an item at Wal-Mart for a price lower than any other retailer, but the total cost to make that item available to the customer does not change. What Wal-Mart has done is systematically shifted where the cost burden falls to have an item available while making sure to increase their profit margin.
The cost to make an item available for purchase includes a number of expenses such as manufacturing, distribution, overhead, and labor. Suppliers want their product to be a part of one of the largest distribution systems available, so they succumb to outrageous demands from Wal-Mart which forces lay-offs, the use of cheap foreign labor and lower quality raw material. In the Wal-Mart system, suppliers are now bearing the costs that were once passed on to the customer in a traditional system.

Wal-Mart came up with "creative" cost saving techniques by using government subsidies to cut costs of funding new building projects and to save on taxes. These subsidies have hurt smaller communities causing the local government to shift needed funding from other programs such as education. To make things worse, these subsidies and tax benefits usually last

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