administer the discipline to me, hard

i just read that kmart and sears are combining forces to form the third largest retailer behind wal-mart and home depot. on that note...

i watched frontline on pbs last night. is wal-mart good for america?

wal-mart was born in the 1950s with sam walton's five and dime store. sam walton's formula: buy cheap, sell for less, and make your profit on high volume and fast turnover. wal-mart had 38 stores in 1970. now every week 100 million shoppers enter its 3400 stores. wal-mart had $256 billion in sales last year. that's one IBM, one hewlett-packard, one dell computer, one microsoft, and one cisco systems, with $2 billion left. in the past we had pennsylvania railroad, u.s. steel, and general motors, now we have wal-mart headquartered in bentonville, arkansas.

wal-mart has incredible efficiency and amazing logistics. wal-mart uses barcode data to its fullest potential. managers can monitor sales by time and by any product variable (color, fabric, size, etc.). wal-mart kicks ass as a business machine, but do machines have feelings.

how did wal-mart rise to power. people voted for wal-mart with their dollars, not just wal-mart, but big box retailers in general. as a result, manufacturers no longer sell to thousands of retailers, instead, like in the case of rubbermaid, 5-7 retailers represent two thirds of sales volume. big box retailers have incredible power, which has shifted production from push production to pull production. in push production manufacturers decide what to produce and then try to get retailers to buy and sell the products for them. in pull production retailers observe what is selling and then tell manufacturers what to produce and when. wal-mart doesn't negotiate on manufacturer prices. for example, rubbermaid needed to pass the cost increase of resin (raw material) on to the consumer. wal-mart said no. let's review the manufacturer's choices: accept wal-mart's price or see your products disappear from wal-mart's shelves. remember, wal-mart is about 25% of the retail market. so how do manufacturers acquiesce to wal-mart's price demands. they move production to china.

today wal-mart has 6000 global suppliers, 80% of which are in china. remember wal-mart's "buy american" campaign in the late 1980s. that was nice. then sam walton died in 1992 and wal-mart stock started to slide down. my precious, no, not the stock price. wal-mart increased profits through importing merchandise with huge profit margins, as in 60-80% profit margins versus 18-20%. chinese workers earn 25 to 50 cents per hour. cheap labor is cheap.

market forces, free trade, right. the u.s. signed an international trade agreement with china. china joined the world trade organization. maybe not free trade. the last remaining television manufacturer in the u.s. filed a court case against china for illegally dumping below market value. wal-mart sided with china. the manufacturer argued that china's currency valuation is too low, china has unfair labor standards, and the chinese government subsidizes like a mo-fo. the manufacturer won the case and import duties were imposed. duties saved the day. but can duties win the war.

china is the largest exporter to the u.s. economy in virtually all consumer goods categories. wal-mart is the largest retailer in the u.s. economy in virtually all consumer goods categories. china and wal-mart make out in public, and that's gross. at the long beach port in california, china ships $36 billion to the u.s. and the u.s. ships $3 billion to china. fair and balanced, like fox. americans have the income to buy, the chinese don't. the u.s. exports cotton and imports clothing, exports hides and imports shoes, exports scrap metal and imports machinery. hmmm. pray to the smiling curve.

for whom does the smiling curve smile

china: wrong part of the smiling curve

other stuff:

frontline focused on shenzhen, a rice field twenty years ago but now a city of seven million that will soon be the world's third busiest port. shenzhen is located by hong kong and macao. macao has the most desirable casino real estate in the world. but that's another story.

wal-mart has a strategy called opening price points. select advertised items have crazy low prices and will beat the competition, but other items don't necessarily have the lowest price. lure customers into the store with the crazy low prices on select goods and use these opening price points to establish the perception that all wal-mart products are cheaper than the competition's.

frontline didn't talk at all about wal-mart employees, wages, benefits, unions, etc. if you want to read a shitty but popular book about low-wage jobs, read "nickle and dimed" by barbara "all i want is a sinecure" ehrenreich. congratulations barb on you big fucking expose.

in other news. i read that there is an article in nature about how humans evolved to run. i read an editorial that compared colin powell to the guy who follows elephants around at a circus and picks up their shit. i don’t know if it fits, but it’s a good analogy.