Comments on: Wal-Mart Brings Deflation with a Vengeance

By: Reg

Reg — Tue, 01 Dec 2009 07:45:38 +0000

re. money to retool.
America has unused capacity that can be used to make the goods; you know, the plants were no one works any more (Ie. US steel at less than 50% capacity, Ford, GM, Chrysler, Catipillar, GE,etc.). Increased production lowers costs and produces profits that are used to build the manufacturing sector back. . This is what the free entrprise / democratic system is all about. Goverment can lend trillions to the banks so why not to the sector that will return revenue – silly idea, right.
Keep buying foreign, utilization goes down, unit costs go up and we are more uncompetative. Our autos are competative now even when facilities are underutilized and would be very profitable if fully utilized.
Soooo, Make what we need or we go down the tube
All the new powers, China, india, Japan,Russia control what comes into their countries- (Try to sell US grown rice in Japan were the selling price is 10 times as high as here -not allowed by the Japanese-we can compete but are not allowed to )we are the dumb ones that only care that we can save a dime on a $10 item and don’t care if if it’s made off shore.
THE US TRADE DEFICIT IS ABOUT 600 BILLION A YEAR-ie. 10 YEARS= 6 TRILLION NATIONAL DEBT. so cheap goods are not so cheap after all.
One day the factories here will be producing again but the new foreign owners will not have to even pay the wages that they pay workers in their country.
Just one last thought- uncontrolled imports have done more damage to the USA than all the terrorists could every dream of doing and we go to war because of them..

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Read the story in Monday’s Wall Street Journal about Japan’s new $11B Sharp plant if you think we can simply convert old factories in the U.S. and be competitive. One more point: It takes actual savings, not government funny money, to produce capital investment. RA

By: Reg

Reg — Mon, 30 Nov 2009 07:38:42 +0000

Walmart is just a drop in the bucket – We buy foreign cars, Ships, Aircraft, enegy, food, machinery and even large perecentages of out domestic built aircraft are imported (how much of our military equipment is produced internally or from, for example, north american steel), look at the Alaska pipe line – Japanese and korean steel)etc. we don’t even register our ships in north america because it costs too much (ie the goverment fees are too high and we would have to use American labour).
If the noth slope is drilled it will be with offshore built equipment and the pipelines will be offshore steel pipe- imagine the taxes that would be paid by American labour producing this line.
The morth american problem is that we manufacture less and less every day- We have lost most of our high paying manufacturing jobs that produce tax revenue and we are at the point were goverment, financial , medical, merchandising jobs will come under heavy pressure as fewer people have less to spend and tax revenue will decrease further and goverment will go bankrupt.
The only way to reverse this is to stop buying none northamerican and start manufacturing what we nead ourselves even if it does cost more- the altenative is depression and 3rd world living standards.
People will buy cheap , only the goverment can force us to buy our own products.
Nothamerican industry can compete if it is given a chance – and if it is we will have lots of tax revenue to fund goverment and pay of goverment debt.
if we don’t change we will continue downword.

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Reg: From where will the savings come to allow us to retool and ramp up America’s neglected manufacturing sector? These savings will be all the more difficult to come by if we are paying up to “buy American” instead of cheaper foreign goods. RA

By: Jonathan

Jonathan — Sat, 28 Nov 2009 16:40:29 +0000

An oft overlooked source of profit, or at the very least ability to discount heavily, for Walmart is the float it gets squeezing every last day between collecting money and paying it out to vendors and suppliers. A few bps on a few $B adds up to a lot of flexibility…

By: Steve

Steve — Fri, 27 Nov 2009 06:43:23 +0000

I swear I am not hijacking the comments. But I just went to Walmart.com and looked up Palin, Grisham, and King’s latest (which were on this list) – they all are selling at normal discount like other chains (in the 14.50 range).

I guess this is old news now..

By: Steve

Steve — Fri, 27 Nov 2009 06:37:29 +0000

Rick, one other thing. Your prompted me to research what is actually happening. This is only for online orders of ten selections before the release date – and Target and Amazon both are doing the same thing. It is about getting traffic to a website. Frankly, your article was a little light on details. I assumed this was a permanent store pricing model for new best sellers. It is not at present, and the official word is it is not going to be, and that in-store prices after release date will be higher.

This NY Times piece (no friend of the Wall St Journal editorial pages) offers a good balanceI feel. http://www.nytimes.com/2009/10/17/books/17price.html

I found the quotes from Borders and the Independent seller of interest.

By: Steve

Steve — Fri, 27 Nov 2009 03:59:27 +0000

Rick, I see you changed your earlier reply, and I appreciate that. Thus, my reply now. I apologize for any hubris, and my last sentence of my earlier post was far too harsh. I mentioned my own business experience not to brag, but to sympathize. Actually, (to answer your question) it is quite common in soft markets for my (much larger) competition to approach my customers with a premium below profitability – just to win the business. Yes, it makes no sense to offer a business that averages $100,000 a year in claims consistently for 15 years a renewal quote of $90,000 – but it happens. And I have to fight for that business beyond price. We are very fortunate to have a client base not 100% dependent on price, but we also have worked very hard to make that the case….like all small business owners surviving today.

As an aside, I also oversee a non-profit that has an ancillary bookstore, so I am even more ‘in tune’ with this topic. I do stand by my earlier comment that Barnes & Noble, Amazon etc destroyed most of the independent stores over a decade ago (remember the backstory to ‘You Got Mail’) – if Walmart hurts their bottom line now, I really feel no sympathy. And the ones that survived this past 10-15 years, probably can also survive this new challenge – as those owners are obviously doing something right.

Maybe you can revisit the topic in 6-12 months to see if your prediction comes true. I appreciate your writings, and rarely post since I rarely object – at least to be objecting from a position of personal experience. Meanwhile, it is only barely that booksellers large and small have survived Amazon,

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Steve:

I spent 25 minutes responding to your post, only to have my WordPress publishing tool “eat” my mini-essay, along with the tail end of yours. That is as much time as I have in a day for such tasks, but I will say nonetheless that Wal-Mart’s $10 offer — assuming it is for real; your later posts suggests this may not be the case — is, for booksellers large and small, going to be the straw that broke the camel’s back. RA

By: Larry

Larry — Thu, 26 Nov 2009 21:03:16 +0000

I am really glad I do not own any interest in any Malls, strip malls or shopping centers that Walmart may be decimating. But is not that your point!

By: Steve

Steve — Thu, 26 Nov 2009 17:13:17 +0000

So are the independent bookstores that are ’savvy’ enough to survive severe price undercutting by Borders, Amazon etc. for over a decade NOW getting stupid because Walmart is doing the same thing.

So really, you are asking us to shed those tears for Borders, Amazon etc. Sorry, not buying it.

And you left off Costco – who is a huge seller of best sellers at below cost prices. Doesn’t Costco put people out of business too? Where is that editorial?

And for the record..I write as small business insurance agency owner that has survived decades against the Geico, Progressives of the world, and the St Farms and Allstates that can afford to advertise on the Super Bowl and American Idol.

If all a small business can offer the customer is price, they deserve to go out of business…

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Your survival claim is just hubris, Steve. What is your best-selling, bread-and-butter policy? Do you think you could survive if Geico and Progressive were offering identical coverage at a very substantial loss on each policy? As for Costco, they discount books and other items, but not to the point where they are losing money on each sale. And, coupon deals aside, they don’t restrict retail buyers on quantity, so in theory anyone can compete with them on price. RA

By: Ron

Ron — Wed, 25 Nov 2009 21:05:12 +0000

Basic economics understanding shows that Walmart is the symptom of a spending consumption disease and not the cause. “Predatory Pricing” from the prospective of the competitor is just value pricing to the consumer, and it is basic capitalism functioning correctly to benefit the society as a whole.

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There are no benefits to “society as a whole” from Wal-Mart’s driving competitors out of business by selling best-sellers for a loss. RA

By: gary leibowitz

gary leibowitz — Wed, 25 Nov 2009 20:51:16 +0000

A free enterprise system will always gravitate towards corporate America becoming bigger by developing a formula that works. I believe Wal-Mart has found that formula. There is no conspiracy here, no government intervention, and no unfair practice. In fact the free enterprise system is working so well that all the constraining rules and regulations were disbanded. The repeal of the Glass Stiegel Act was the epitome of free enterprise.

Have you ever wondered just why socialism comes roaring back after an economic debacle? I wonder how people would react to your statement about Unions during the heart of the next depression. Once ideology clashes with reality you know which one will win out.

Me, I am a throwback to a society that cherished its high-quality output despite higher costs. I do not believe bigger is better. It’s a phantom drive after all that really accomplishes nothing. What is the end game? Making more money at all costs?

As for productivity, I would suggest that you try altering your perspective on its importance. It’s not productivity that drives a better standard of living for most. Its higher productivity combined with high paying new jobs. The trend today is higher productivity at the cost of jobs and higher pay.

In fact advancement in technology has come along so far that it is now dropping workers that had high pay. Cloud technology is just one example. The high costs associated with Corporations IT Department can now be a thing of the past. No need for high tech people at any firm. Outsource the software, hardware, and technical know-how.

If all we strive for is Corporate profits then the winners become fewer and more powerful.