Category Killers -- an Analysis

Category Killers -- an Analysis of Wal-Mart

The retailer chosen for this analysis is Wal-Mart, as their presence globally has led to significant financial and social change in the communities they compete in. Their effect economically is to bring greater variation in economic strata within a community based on their low wages and preference for hiring part-time workers to alleviate having to pay for health insurance (Fishman, 6). The social effects follow the economic ones, with a greater division between economic classes based on purchase parity and wages acting as determinants of social class in many communities (Fishman, 6). Wal-Mart's exceptionally broad assortment and low prices are designed to provide a one-stop shopping experience for the middle-income shopper at the expense of uniqueness and variety, which would be found in smaller mom and pop boutiques for example. This in effect drives the boutique and mom and pop stores into lower sales as consumers trade off uniqueness for price. Wal-Mart has then triggered a decision to shop more for price over quality, as the versatility of their selection is so much greater. Critics of Wal-Mart contend this is the beginning of the Wal-Mart Effect of lower wages driving lower standards of living throughout communities they are present in (Fishman, 6).

Wal-Mart continues to invest heavily in sustainability and green initiatives, and is today considered one of the leading retailers in Corporate Social Responsibility (CSR) programs and environmentally designed products (van Hoek, Johnson, 148). The senior management teams at Wal-Mart consider the cost implications of reducing the plastics used in laundry detergent containers as both a contribution to the environment and a contribution to the profitability of the company (van Hoek, Johnson, 148). Wal-Mart also continues to push their suppliers to deliver "green" or eco-friendly products that are also low cost. Given the dominance they have over their suppliers, Wal-Mart can define and execute quickly entirely new production runs of private-label products they produce and gain significant sustainability and cost benefits as a result (van Hoek, Johnson, 148).

Peer Discussion #1

Wal-Mart is demonized for controlling entire supply chains and forcing the reduction in quality of life by pushing for lower wages, yet if you look at their initiatives around hydrocarbon omissions, they have done more for the env9ronment than many other retailers combined. Wal-Mart gets it; they know that effective sustainability can lead to greater levels of profits as well. By increasing the green or biodegradable and recyclable components of products, they have found a way to reduce costs. This has helped them to continue to drive down costs for consumers.