Walmart and the ethics of cheap retailing
Wal Mart is America’s largest retail chain. It is also a global company with more than 1. 3 million associates, 5000 stores and wholesale clubs in over 15 countries. Wal Mart’s philosophy of sourcing cheap products globally and then sell them in the US under cutting the price of local manufacturers has frequently come up for criticism as it affects the jobs and livelihood of American people and small firms.
A common refrain is that Wal-Mart forces suppliers to make goods cheaper thereby ships jobs overseas which are against American interests of buying and selling goods which are “Made in America. ” To understand this issue, we need to seek answers in two phenomenons in retailing. The first one is of trade discounts which came about in the 1960’s with companies as Kmart, Target and Wal Mart able to provide customers cheap products by effective management of the supply chain and off sets from trade discounts.
Wal Mart’s credo as stated by Sam Walton in his autobiography is to give customers, “what they want”, be it assortment of good quality merchandise, lowest possible prices, satisfaction, service or convenience of shopping. The second aspect which has affected retailing is globalization of production and supply chains particularly of mass use consumer goods available in Wal Mart stores. Thus it is sourcing merchandise from markets which offer quality products at the cheapest rates.
Countries as China have become factories to the World and thus Wal Mart is turning to them rather than American producers. Given this reality and Wal Mart’s stated vision of providing its customers goods at the cheapest rates, it cannot be faulted for its policy of outsourcing goods from abroad. Small businesses could take advantage of its policy of associates to network with Wal Mart and reap benefits of its effective supplier net. The issue thus needs to be seen in the perspective of benefit to the American consumer and not as harm to the suppliers or small businesses.