Brad's post on the pro's and cons of Wal-Mart is a good one, not least because he's more balanced than most shrill lefties (read: me) on the subject. One thing I do have to take issue with, though:
The low prices increase wages for other people. (Wal-Mart's entry in an area can drive down grocery prices 15 percent.) For low-income families, groceries are a somewhat big percentage of the budget.
Wal-Mart's low prices are severely overstated. The company's done such a good job of branding itself your checkbook's guardian angel that folks have begun to believe them. It's not so, though. Wal-Mart squeezes pennies on about 1% of a store's merchandise, what are called cost-sensitive items.
How does the number-one retailer maintain an image of low prices? First, by actually making sure its prices are lower than its competitors, at least on key items. These items are called "price-sensitive" items in the industry, and it is commonly believed that the average consumer knows the "going price" of fewer than 100 items. These tend to be commodities that are purchased frequently.
A mid-size Wal-Mart supercenter may offer for sale 100,000 separate items, or stock-keeping units (skus). Wal-Mart and other major retailers believe that the general public knows the going price of only 1 to 2 percent of these items. Therefore, each Wal-Mart store shops for the prices of only about 1,500 items in their competitors' stores. If it is ever found that a competitor has a lower price on one of these items than Wal-Mart, the store manager will immediately lower his or her price to be the lowest in the area.
These items are, of course, given prominent display throughout the store, further tattooing Wal-Mart's low-prices brand into consumer minds. Other pieces of merchandise aren't at such low prices and, in some cases, are surprisingly expensive, but because consumers don't know what they should cost, that goes unnoticed. The point here isn't that Wal-Mart is enormously cheap on many things, but that it's not so cheap on so many that it can justify the labor standards, labor abuses, or hostility to unions. This isn't a competition issue, it's a branding issue. And progressives shouldn't let it be rephrased into a liberal hostility to lower prices.
