The Wal-Mart Effect

Fast Company's Charles Fishman's new book The Wal-Mart Effect is creating a considerable stir within literary and business circles.   The author paints the message that Wal-Mart is a fact of our society, is neither good nor bad, and that the fundamental question is how to preserve the good that Wal-Mart produces, while reducing the bad.  Fast Company's blog for the book, located at their web site, is jammed with very emotional feelings about the retail giant.

In a similar vein, MIT economist Jerry Hausman, an econometrics expert, has established that Wal-Mart overall produces a 3.5 percent improvement in consumer welfare.  See reference for link to article.   

Irrespective of one's feelings about Wal-Mart, the road ahead looks rather bumpy for the Bentonville, Arkansas goliath.  A number of states are drafting legislation that would require the firm to provide medical benefits to its employees, or as in the case of Maryland, spend 8 percent of their payroll on medical benefits.  Labor unions indicate that they will be pushing for similar legislation in 30 other states.  Wal-Mart is the target of a number of class action suits by current and former employers relating to inproprieties in how breaks were handled under respective states wage and hour laws.

Fishman believes that Wal-Mart's dominance is waning, pointing to a continuing slowdown in the firm's historical rate of revenue growth.  Target, on the other hand, Wal-Mart's most astute competitor, accents style and has seen a steady growth in retail sales.  In short, Fishman believes that Wal-Mart will have a difficult time growing significantly in the U.S. due to its saturation of various retail markets, and globally it faces some challenges.  Supposedly, it is losing money in Germany and Japan.  Stay tuned......