Let me repeat the title of this entry: I am not an economist. I’m just making sure no one is confused that I might have some expertise as a I ponder the plight of Wal-Mart.
To call Wal-Mart the world’s largest retailer is to underplay their significance in our economy and the economy of the rest of the world. They are the 500 pound gorilla. It’s not tough to look past them – it’s impossible.
Don’t let Wal-Mart’s country bumpkin beginnings fool you. This is one sophisticated retailer. Everything that’s sold in any Wal-Mart store is accounted for within a few minutes on massive computers at their Bentonville, Arkansas headquarters. Wal-Mart distribution system is second to none. Stores are restocked, items are re-ordered with minimal human intervention.
With all this going in Wal-Mart’s favor the revelation that their Christmas season sales lag the rest of the retail sector is stunning¹. What’s going on?
Is it possible that Wal-Mart has become a victim of the recent spate of bad publicity surrounding the retailer’s practices? Within the last year there has been labor unrest in Southern California where other stores blamed their problems on Wal-Mart’s wage and insurance policies. Then CNBC and Frontline (PBS) both did long form documentaries on Wal-Mart – not all positive. Then there’s the objections raised in many communities when Wal-Mart came to town.
A backlash – even a small backlash would be enough to account for what’s going on. Meanwhile we still have 3 weeks until Christmas and it’s possible that Wal-Mart can make up what they’ve lost.
It will be interesting to watch.
¹ – It should be noted that early season data is very sparse but some credit card numbers have shown an exceptional growth in sales.