[spence]

Originally Posted by detbuch

This "modeling" has been going on in the U.S. for well over a century. Walmart is just another in the line of department store types in which the new model finds ways to sell at lower costs. Just about all the usual brand items have gone through this selling process--even automobiles with Henry Ford's assembly line manufacturing and the growth of dealerships. And this "modeling" is based on the age-old model of haggling where the consumer tries to buy at the cheapest price. Any type of intervention to "model" the consumer into buying at smaller, single owned outlets at a higher price will have to overcome the natural and reasonable desire to save money, and will have to be done by force against free market principle. Whenever this has been done, either by price fixing or by socialist governments, economic activity dwindles, and instead of job growth, unemployment and shrinking economy results.

That's the academic analysis. I think what I've read in this thread is that people see the rise of Wal-Mart (and other similar stores) precisely as a product of the free market and they are concerned with the long-term impact.

Reducing manufacturing costs should be the aim of competitive manufacturers. If lower quality results, then there will be a market for better quality producers. There are many niche products of all types that sell on the basis of quality at a higher price and they do well.

I said to reduce the costs, as in total costs so they can buy at a lower wholesale cost. While some niche products do sell well, my observation is that they're increasingly being crowded out.

Have you been to a Walmart? Many, if not most, of the goods are brand items. It's not all junk. Most of it is not junk. And this is just a guess--I'd guess that most Walmart customers go there in order not to rack up a lot of debt, or to rack up less of it than they would if they had to pay higher prices.

I try not to shop at Wal-Mart often although I certainly have been inside them several times. There's quite likely a relationship between my experience and shopping behavior.

As for brand names, that's something a lot of people are concerned with.

It's very common for brand names to compromise their quality because of pressure to meet a retailer's cost targets. Much of this is hidden to the average consumer. There's a reason that same bottle of fruit juice costs 1/2 as much as the local grocery store, or that gas grill that used to be 500 dollars is now magically 250...and it's not just because of buying power. I work with these manufactures every day and see what goes on first hand...

Now obviously, a company is making a business decision to potentially tarnish their reputation in exchange for access to more consumers. But as retail is consolidated into bigger stores, there really is less freedom to do so. Yes, it's all the mechanics of the market, but back to what I'm hearing...do they see lower quality, lower wages and a proliferation of offshore manufacturing? or do people believe they're better off with convenient access to lower price products?

If the growth engine of the US economy is in small business, I'd think the market share of large corporations in retail would be an issue for discussion. To do so isn't a de facto endorsement for extreme government control, but reality is that the government does regulate commerce and quite often manages imports/exports for strategic gain.

-spence