Consumers – I do believe that we have finally met our match…
In lieu of watching the Commercial Bowl this past weekend, instead I came across quite the interesting documentary on CNBC that I ended up watching in its entirely – all two hours of it – pertaining to the rise of Wal-Mart as the global retail giant that it is today. They covered everything from the early days and Sam Walton’s struggles, all the way up to today’s international expanses and the opening of their first Super Center in China, but amongst this was one particularly intriguing topic that I’ve just been dying to discuss here today…and the revolving question is this: at what point has the search for “falling prices” gone too far?
For those to whom it wasn’t already painfully obvious, Wal-Mart is by far the largest retailer in the world. Their net sales for 2004 exceeded some $285 billion dollars and by comparison, their largest competitor – the by-product of the recent Sears / K-Mart merger – is still a mere 20% of their size, so consequently, their financial success also earns them the right to name their own prices when dealing with suppliers. Even the largest of these companies, including Hewlett-Packard, Procter & Gamble, and General Mills, have to deal with this issue because it’s simply part of doing business with the largest retailer in the world, and really when it all comes down to it, they’re just doing whatever it takes to provide us with the lowest prices…right?!
It’s here that we find our conflict of interest because we all know that American companies tend to receive a lot of flack about selling products that aren’t “Made in the USA” and Wal-Mart is certainly no exception. Take, for example, the product highlighted in this documentary, MGA Entertainment’s line of pre-teen favorites, the Bratz dolls. Normally you can find a variety of these collectibles at your local Wal-Mart for anywhere between $15 – $20 a piece, however it was explained that they would actually need to sell these dolls for upwards of $50 – $60 each to support the costs of having them “Made in America.” For the time being, the line will continue to be produced in China.
So this raises the ever-looming question, with cost on one side and unemployment on the other, which is really more important??? We, as Americans, shout to the ends of the Earth demanding that our goods be cheaper, faster, and better, but at the same time, we still seem to want it all done in-house and I’m sad to say that it just can’t be done anymore…
This is truly the perfect example of the full-circle nature of a capitalistic society – you can only drive the prices down so low before those actually making the products simply can’t fit into the same loop as the consumers anymore, and I don’t necessarily think that this is a bad thing. Considering that the cost of living is drastically different in China than compared to our own, essentially it’s ok if their workers are getting paid less than our own minimum wage. Unfortunately, the by-product of such a volume-based pricing structure is that we’re seeing a decrease in the number of available jobs here at home, but as we transcend even further into the model of a global economy, this is simply going to happen sooner or later.
…unless, of course, we all walk into Wal-Mart tomorrow and demand to pay 3x – 4x the everyday, low price for our favorite CDs and clothes and other household necessities…but that’s not going to happen, now is it? And then again, the other side of this story is the question of whether or not you can really maintain quality when taking such evasive measures to cut costs – I’ve run into this issue already with several “store-branded,” generic items and as a result, I find myself really only buying the name brands these days…but then again, I’m still shopping at those same stores all the same.
I’ve got to say that I’m really torn on this one, folks, so drop me a line and let me know what you think! Which do you think is more important???
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