Exjackly

Wal-Mart is not an uncontroversial company in America. In many ways, the story of Wal-Mart is the story of two companies. One is the ultra-competitive retail giant that is able to force suppliers to help them sell us lots of products at low prices. The other is a mega-corporation that is so obsessed over profits that it is contributing to the loss of thousands of American manufacturing jobs.

For the record, I have not been compensated to write either viewpoint. This is a corporation that is a part of many people’s attempts to be frugal. As such, it is a good topic for personal finance, and one that I hope can generate some quality discussion on both sides of the debate.  For comparison, here is The Simple Dollar’s post Wal-Mart is evil! Wal-Mart is good?

There will be a companion post to this one that discusses the down side. This one will touch lightly on the benefits of Wal-Mart. For a head start on both arguments, Slate has a dialogue called Is Wal-Mart Good For The American Working Class? Also for starters, the Wall Street Journal has conducted a poll asking Overall, has Wal-Mart been good or bad for the American economy?

Efficiency and Productivity

Over the decades and centuries of this unique American experiment, lightly regulated markets have long been appreciated, lauded, and encouraged. This remains true today. We celebrate and encourage businesses and individuals to make the most of themselves as possible. As consumers, we choose what companies will be successful through patronage.

Wal-Mart is arguably the most efficient company that has ever existed. Their efforts in the use of bar codes and RFID chips to tightly manage inventory is tops in the world. Their tight 1-2 day restock time on over 120,000 items is due to their powerful and well leveraged IT investments.

That efficiency does not end with Wal-Mart. Suppliers who want to do business with this behemoth find that they must become more efficient and productive as well. For some companies, it is their introduction to some of the most recent innovations in product manufacturing. Despite the cost to become a Wal-Mart vendor, the improved efficiency helps those companies improve productivity for all their customers and can lead to increased revenue and profits.

100 Million Customers a Week

Customer Loyalty

American consumers may behave like sheep in some ways - seeking out the same items in mass, being willing to put up with crowds and lines to get what they want, and having a certain inherent predictability for what they will want. I will hesitate to call American consumers idiots however. If they were not finding what they wanted at a price they were willing to pay, would so many of them keep coming back week after week?

100 million shoppers a week visit 3443 stores spending $226 Billion a year in the US. International sales count for another $77 Billion in sales a year. That is a lot of repeat customers and adds up to the largest corporation in the country.

If the prices are not a sufficient inducement, the wide variety of goods available draws people in. There are few places - even other big box stores included - that provide the wide gamut of products Wal-Mart does. The ability to visit one store for multiple needs certainly adds to the convenience factor for many people.

Employment

Wal-Mart employs a lot of people as well. Over 1.9 million Americans are paid by this mega-company. These employees cross the spectrum of diversity. Different races, religions, age, range of ability and career level are all represented. Plus, there is no shortage of people applying for employment - in some cases more than 100 applications per open position.

Their 2007 annual report indicates that they provide health care coverage to more than 90 percent of their US associates. That is more than 1 million employees covered. For some employees, this alone is a huge benefit over other opportunities at similar pay rates.

Summary

Wal-Mart has a positive impact on the US economy due to a number of factors. By fostering efficiency within its entire supply chain, there has been an increase in productivity that some economists credit with lifting the productivity of the country as a whole. Customers benefit by paying fair prices and being able to satisfy a wide range of wants at once. Many people are employed by this giant company as well.

Wal-Mart is not perfect, and some of the arguments for the company being bad for this country will be addressed in another post. I will divulge which side I am on later, after people have had a chance to comment on both posts. I invite everybody to weigh in on the discussion, but I do ask that you keep it civil and on topic.

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