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November 17, 2003

A bias in the wal-mart story 

Let's be absolutely clear: I hate the irresponsibility of any company that says every 90 days lets change to whatever is lowest cost. This misses at least 2 important issues:
1) bit wise low costing by snapshot periods doesnt achieve low-costing over time; retailers who have a long-term relationshopw ith a supplier shopuld be able to give them an advance steer if they feel theye are losing edge rather than no warning, and over the middle-run this is always better for the retailer brand too. Indeed the number 1 cause of retailers losing brand leadership is chopping suppliers indiscriminately

2) the mentality doesnt ask whether for a cent more one could have maintained a responsibile approach rather than sent something into a terrifying spin; it was rumored a while back that Wal-mart nearly made a category decision that could have bankrupted a country (or at least ruined it main export business) without even realising that was the cost of the last 1% saving for the consumer

However, most of this FastCompany article was extraordinary biassed because there was little evidence that Wal-mart was randomly commiting tese irresponsibilities. Moreover, it failed to point out that far huger waste in the US supermarket industry is caused by all the deal promotions which most other supermarket chains indulge but Wal-Mart largely put a stop to. In truth, most supermarket categories have climbed in cost to the consumer over the years with more and more marketing budgets for ads, and coupons and others specials - so much so that in spite of its larger market, a lot of American products that used to be cheaper in the US than the UK are now more expensive. Much of this reflects a sales culture where the idea is to offer a 50% off bargain once every 6 weeks we trade the product at 20% over its average price the rest of the time. This is always high costing, always wasting consumer time, and by and large Wal-Mart has stopped this extremely inefficient marketing from getting worse. Very wasteful and image-ridden marketing far from people realities by the manufacturer brand themselves is the number 1 cause of lost work in America, not Wal-Mart's particular stance. Get tuned to people responsibility-branding and then your product would not be substitutable anyway.
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