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Let’s get one thing straight right from the beginning. I despise Walmart (NYSE:WMT). I despise Walmart as a reluctant customer, I despise Walmart as a Chamber of Commerce president, and I despise Walmart as a former supplier. What’s more I despise Walmart as an American businessman.
Sam Walton Was Not a Saint, but He Was a Great Entrepreneur
Let me preface this remark by saying that when it came to front line employees and suppliers he really was a saint. To his management team, it was “management by blowtorch.” Sam’s business model for those front line employees was to pay them in stock options. While literally hundreds of those former employees, now “Walmart millionaires,” populate the Bentonville-Rogers-Fayetteville-Bella Vista area of Arkansas, the stock option program was more for Sam’s benefit that theirs. It allowed him to build his company without increasing his wage scale.
As for vendors and suppliers, Sam’s loyalty may be a standard that will never be seen again. He literally saved jobs and made other businessmen wealthy because of his loyalty to them. He knew he could not survive without them.
It’s Never Been the Same Since Sam.
I believe the cracks in the foundation of Walmart are a result of that singular “management by blowtorch” methodology. Sam’s “boys,” as his staff was known, picked up on the management style, but nearly to a man, they lacked his heart. The next generations of Walmart management have demonstrated arrogance and indifference to those front line people and, especially, to the company’s American suppliers.
Walmart Has Destroyed Much of the American Retail Sector.
Walmart’s tactics in locating and establishing their stores are legend. Their reputation caught up with them years ago, so that now they use shell corporations and subterfuge to enter a new community. Fortunately, their tactics are failing more and more often as community leaders realize that Walmart actually wreaks havoc with the municipal tax base as it gains exemptions based on move-in whilst driving small business out. Often, but not always, once the WM tax breaks are gone, they relocate their stores because they can no longer make a profit in those locations.
I live within 10 miles of three Walmart superstores. If it were not for the grocery and pharmacy departments, those stores would not be profitable. In other words, the Walmart of today is not the one that Sam built.
Ethics No Longer Matter at Walmart.
I have personally watch supplier after supplier close their doors because, by doing business with Walmart, Walmart literally controlled the of their businesses. Countless suppliers over the past 20 years have dropped liked hot rocks because they could not continually shave their costs by another 10% or another dime. Those suppliers suddenly lose so much of their revenue stream that they must layoff employees, adding to the unemployment situation. Plus, many, if not most, of those suppliers fail to be able to sustain themselves on the remnant of business they have left.
Walmart has a long record of deceiving and misleading suppliers while they are planning to move their business to an offshore country. Thinking they are highly favored by Walmart, many businessmen have awakened one day to find that the relationship is over, effective immediately.
I could go on, but at 700 words my computer turns into a pumpkin.
The point of this column today is that Walmart is now launching a “Made in USA” campaign (deja vu?) as they see the end coming in their dealings with similarly unscrupulous companies in China. The problem now is that Walmart is being hoisted on its own petard. They have destroyed so many US suppliers that hardly any exist to manufacture the products that Walmart demands.
CEO, Mel Redman, is now trying to help reverse engineer products that were reversed engineered in China from original US products. But the original companies are gone. Redman and his predecessors have always been clearly ignorant about manufacturing. I’ve know that for years. Now, even he admits, “We didn’t know much about manufacturing. We didn’t know anything about it, really.”
At last, here is my point to you, our readers. Be careful. Be very careful. I believe that Walmart is in deep trouble and that they are beginning to reap what they have sown over the years. Those who sow to the wind shall reap a whirlwind.
