Tonight, I saw Countdown for the first time in a long while (How much vacation time does Keith get, anyway?). Much to my surprise, I saw the Wal-Mart commercial that I wanted to see again for weeks now.
It features a case of ginger ale going through Wal-Mart's distribution center. Now I may not have this perfect, but I wrote down the ending lines as follows:
"Why send Ginger Ale over one of the most efficient distribution systems ever conceived? To keep prices low for you."
This claim deserves a thorough unpacking.
Wal-Mart's distribution systems gets lots of press. Why? Because distribution systems don't hurt anybody. Can you imagine a commercial that ended:
"Why do we pay our employees poverty level wages? To keep prices low for you." or
"Why do we export American jobs to developing countries? To keep prices low for you." or
"Why do we shake down our suppliers? To keep prices low for you." or
"Why do we demand handouts from local and state governments to build anything? To keep prices low for you."
Of course not. But distribution systems depend upon technology and Americans like Tom Friedman (who has named Wal-Mart's distribution system as one of the ten forces that have flattened the world) seem to think that technology has magical powers. The power of technology has its limits. How much extra money can you save making those Pop Tarts appear in hurricane-ravaged towns faster? Wages and benefits, on the other hand, have lots of room to go down and government hand-outs have infinite room to expand on the up-side.
If you've read this diary for any length of time, you know I don't believe that Wal-Mart's prices are all that low. But for the purposes of the rest of this post, let's assume they are. Are they low because Wal-Mart wants to do good by its customers? Of course not.
Wal-Mart distributes goods better than their competitors; they shakedown suppliers and governments better than their competitors; they pay their workers less than comparable retailers and offer worse benefits, yet even the most die-hard Wal-Mart fan recognizes that Wal-Mart's prices are at least in the same ball park as stores like Target and Costco. Why doesn't Wal-Mart just blow them all away? Shouldn't it be an open and shut case that Wal-Mart is always lower? Why doesn't Wal-Mart advertise that it is always the lowest price instead of "always low prices?"
The answer is simple. Wal-Mart's prices aren't that low. They depend on their customers accepting the mythology they've created so that they won't comparison shop (assuming that Wal-Mart hasn't put the local competition out of business already, making comparison shopping impossible).
Wal-Mart is not a charity. They made $10 billion in profit last year. Remember that the next time you see one of Wal-Mart's other commercials. You know, the ones that tell you about all the good they do for everyone other than Wal-Mart.
JR
