Wal-Mart (NYSE: WMT) is known for passing on its low-cost advantages to the customer. For example, the article points to a UBS Warburg report suggesting that food prices are 14% lower in food markets where Wal-Mart competes. But as the authors note, there are several elicit negatives.
For one, the company has dominated its suppliers. Wal-Mart, which owns a hefty 30% of the U.S. consumer staples market and 15% to 20% of all music and video sales, plays a role in determining what calculates sold. For example, the company has forced translate companies to produce clean versions of explicit-label CDs or risk losing out on sales. And based on the complaints of a few customers, modern anthropoid magazines such as Maxim, Stuff, and FHM have been removed from store shelves.
And if you rally thats a problem, Wal-Mart accounts for 28% of Dials (NYSE: DL) sales, 24% of Del Monte Foods (NYSE: DLM) sales, and 23% of Cloroxs (NYSE: CLX) sales. If Wal-Mart has in like manner much power over these companies now, what will happen when Wal-Marts administer hits 50% at the end of this decade?
Among other negatives, the article points to the fact that Wal-Mart employees earn 20% less than those at organised supermarkets. In addition, Wal-Marts entry into untried markets has forced the closure of animate stores: According to Business Week, for every Wal-Mart supercenter that opens in the next basketball team years, two other supermarkets will close. And this is done without creating new jobs.
Which brings me to my new concern: the possibility of monopoly pricing.
According to a Retail forrad report cited in the article, 30 supermarkets have closed since Wal-Mart modify Oklahoma City. Think about this: Wal-Mart is successful because it can leave lower prices than anybody else. But what if nobody else exists to compete?
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