The Walmart Effect – Competition is NOT Just Cost

Exclamation MarkAfghanistan and the fraudulent President Biden have had me thinking about the Walmart effect over the last three days or so, and I cannot help but think there are some lessons to be discussed.  More to the point, the lines of congruence between the Walmart effect and the current political situation possess the potential for correcting course and saving America.  Not just America, but representative governments worldwide.  The Walmart effect is a global pandemic more powerful and pernicious than COVID ever will be, and we need to at least recognize this truth.

What is the Walmart Effect?

Working DollarWalmart has always competed on price.  As if there was nothing else to compete upon.  Lowest prices, regardless of the junk sold, price mattered more.  Hammer the price to nothing in every aspect of the supply chain.  Hammer the costs of doing business to lower costs to consumers.  Cheapen and eliminate packaging, “helping the environment,” and reduce costs.  Force suppliers and vendors to absorb traditional costs stores assumed, lowers costs, and increase profit margins.  Everything in the Walmart model is about lowering consumer costs, and Walmart has been very successful at twisting arms and breaking heads to reduce costs.

But, what has been the result of focusing just on costs the consumer sees?  First, lots of hidden fees have become observed.  Some of which was a good thing, most of which have become more obscure, and this is not such a good thing.  Worse, think of the fuel fees and delivery charges you now pay for having a pizza delivered.  Once a fee is begun to be charged, it is very difficult to stop charging the fee.  The Walmart effect passes costs onto consumers and shows the consumer why they are paying a higher fee, then the consumer accepts the fee as the cost of doing business and does not complain.  Have you ever stopped to ask yourself why there are so many fuel fees and why they became apparent almost overnight; I promise the cost of fuel was not the reason, the Walmart effect was the reason, and making money is the purpose.

Pigeon RevengeSecond, quality and service have disappeared in competition.  Safeway, as a grocery store, has excellent service; but they cannot compete on service and quality because the Walmart effect has changed these two adjectives to be synonymous with higher consumer costs.  Believe it or not, the grocery store model has not changed in the last 200 years. Walmart changed society to believe everything was about competing on consumer costs, and the rest of the competition has played along.  Want to know a secret, you as a consumer are being deceived into believing that Walmart has the best prices, but when quality is added to the picture, Walmart is selling you junk.

Third, all big-box retailers employ science to lure you into their stores.  Bright lights, color schemes, smells, all carefully crafted to keep you in the stores.  Musical shelves where products move from day to day in the store to lengthen your time walking the aisles.  Everything is carefully planned and organized to influence you to spend more money.  Now, back to Walmart and the claim about junk.  Some of the items in Walmart are end runs of name-brand products.  Some of the items are cheap knock-offs.  Some of the fruit and vegetables are almost spoiled or completely raw.  Yet, Walmart pushes those products for sale anyway.  Purchasers for Walmart are under strict order to find products for sale at the lowest costs.  After working with a manufacturer supplying big-box retailers, I can tell you that many manufacturers hate dealing with Walmart because of the Walmart costs of doing business.Lemmings 3

Fourth, all big-box retailers represent a plethora of manufacturers trying to get their products in front of customers in the easiest way possible.  This is a truth, and a problem, for the manufacturers, are always competing, think Kraft and General Mills, Post, and other brand names.  These manufacturers compete for every dime you spend; they compete for shelf space; they compete for advertising space; they compete for every second you spend in the store, and dealing with these manufacturers is like herding long-tailed cats in a room full of rocking chairs.  A loose conglomeration controlled by access to the customer portal, Walmart manages an extensive customer portal, Safeway, Home Depot, Lowes, etc. All control certain customer portals and commit to selling XX amount of goods for the manufacturers.  But, this is not “friendly” competition by any stretch of the imagination.  One manufacturer scores a benefit that improves their access to customers over another manufacturer; you can bet another manufacturer will be competing to repeat the performance.  All of which increases costs to the consumer in hidden fees, generally through rebate scams, BOGO “deals,” or my favorite “Rollback prices.”

Interestingly, the political situation in all representative governments is similar to America’s current situation.  A phenomenon I find both alarming and intriguing, but one with enormous potential to be taken advantage of to correct and save representative governments.  The one thing cost-focused competition cannot do is compete with service.  When customer service is truly the focus, cost competitors melt away.  Therein lay the answer, but we must first describe the lines of congruence before we can discuss solutions.Lemmings 5

Consider point one of the Walmart effect, competing on price both hides and reveals costs.  Every representative government worldwide has an entire industry working 24/7, working tirelessly to plasticize words where taxes are concerned to make progress bad and regression good.  Regressive taxes are considered good, even though they kill jobs, ruin lives, cost more, and eventually lead to the ruination of liberty and freedom.  Progressive taxes are hailed as bad, even though they cut government costs, increase liberty and freedom, allow people to keep more of their hard-earned money, and force the government to live on a budget.  While the tax language has been around longer than Walmart, the truth is, the Walmart effect has improved the tax language to the point that representative government can rob you blind, and you never know.  Just like that fuel surcharge on pizza receipts, after the cost of ingredients for the pizza skyrocketed.

Point two of the Walmart effect; where has customer service gone in government?  Since I was a kid, citizens’ accessibility to elected officials has dropped like a sack of lead.  Worse, we have seen active animosity from the elected officials towards the citizenry.  Mayors allow terrorist mobs to destroy public and private property without regard, mobs and gangs to rule, entire sections of cities lost to civilization, and elected officials do not care until they utter empty words in an election campaign.  Enter a government office for a permit, license, get a question answered, etc., and you are treated like scum, and the bureaucrat is doing you a tremendous favor by granting you an audience.  Now, how do you honestly feel when you walk into Walmart and ask an associate a question, provided you can lasso an associate to ask?

Gravy Train 3On the third point in the Walmart effect, politicians spend enormous amounts of effort to use marketing science to play upon emotions to get and keep an audience.  The same marketing science employed to keep you in a retailer making purchases keeps you “connected” to your political party.  Worse, because there are familial traditions in being one political party or another, there remain tighter ties to a political party.  These strings are played to the fullest to bind you ever tighter, so you do not use conscious thinking when voting the party line.

Finally, we come to the fourth Walmart effect, the one with the most pertinence to current political dogma, the bundling of obscure groups into a ruling party.  I have never been shy about admitting that two-party political rule is terrible for America.  I am all for having 10-15 separate major political parties; in the confusion generated by the many voices, better governance occurs, mostly.  I respect the Israelis for their political system with their separate and ungainly political parties because of the need to gain coalitions and be very connected with and responsible to the people in those coalitions and the citizens they represent.  Recognizing that the political system does not always work, a robust system of codified laws is mandatory to keep the government in check and accountable to the people.

Bobblehead DollFrankly, I do not care what side of the political spectrum you come down upon.  What matters to me is how your representative governs.  Once an elected official of a representative government gains office, they cannot simply think they only represent that political party while in office.  Thinking this way is the epitome of the Walmart effect and stems from competing on cost alone.  Worse, thinking that the representative only represents those who placed them in power places that elected representative into a position to abuse their office.

Using others is what Walmart has done because they control such a vast portal to customers, and the manufacturers have been paying a steep price in more than dollars and cents ever since.  Unfortunately, so have the customers.  The harm to the manufacturers is delivered to the end consumer, and Walmart does not care as they are just a portal through which a manufacturer sells goods.  The same thing for the politician, all of society is harmed when a politician can be purchased and influenced; when harm comes to one person because of their political leanings, everyone suffers.

Knowledge Check!Therein lay the other answer to the Walmart effect, recognizing that we must join together, or fall individually, an unpitied sacrifice in a contemptible struggle since we are all interconnected.  Service and joining together are the only paths forward.  We must not allow divisive political agendas, carefully crafted scientifically marketed political pogroms, and slick groomed politicians to sway us from the important points of freedom, liberty, and a pursuit of happiness.  We cannot afford the governments that have ballooned and festered over the last 60-years.  We cannot afford the Walmart effect; the cost is just too great!

© 2021 M. Dave Salisbury
All Rights Reserved
The images used herein were obtained in the public domain; this author holds no copyright to the images displayed.

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msalis1

Dual service military veteran. Possess an MBA in Global Management and a Masters degree in Adult Education and Training. Pursuing a PhD in Industrial and Organizational Psychology. Business professional with depth of experience in logistics, supply chain management, and call centers.

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