The Retail Revolution: How Wal-Mart Created a Brave New World of Business

by Nelson Lichtenstein

Book Overview

Wal-Mart is the world's largest company and it sets the standard--both social and commercial--for a huge swath of the global economy. In this probing investigation, historian Nelson Lichtenstein shows... This description may be from another edition of this product.

• Format: Hardcover
• Language: English
• ISBN: 0805079661
• ISBN13: 9780805079661
• Release Date: July 2009
• Publisher: Metropolitan Books
• Length: 311 Pages
• Weight: 1.17 lbs.
• Dimensions: 1.1" x 6.5" x 9.6"

Customer Reviews

An outstanding guide

The Retail Revolution: How Wal Mart Created a Brave New World of Business tells the history of how Wal Mart changed the way business was done. Other books survey the company's structure and evolution but this guide from historian Nelson Lichtenstein links Wal-Mart's rise to the cultural and religious values of Bible Belt America and political influences, considering his the company success has changed American politics itself. An outstanding guide, this covers more social angles than most and any business or social sciences library will welcome it.

A decent Wal-Mart compendium

Lichtenstein's book is both a compendium of Wal-Mart's various sins on our work force, tax system, and local economies, as well as a polemic. People who have followed Wal-Mart's genius in logistics and their squeezing of employees and suppliers will find little that is new, but will appreciate how Lichtenstein has pulled together a useful history of the company, which highlights some of its lesser known successes, like reducing inefficiencies and costs in the supply chain. As a polemic, the book runs out of gas at the end and he could have done a better job of discussing Wal-Mart's possible futures and what may happen to retail labor. The main subtext here is that Wal-Mart has always done its best to undermine labor rights and to avoid compliance with labor law. They occasionally have improved the wages of some of their hourly employees, such as truckers, but generally they have led the race to the bottom, in terms of retail wages. An important point in the book that deserved more space than it was given involved the paltry amount of profit margin that it would take to raise Wal-Mart wages and benefits to those of more generous competitors. Similarly, it's evident that the public subsidizes Wal-Mart's prices through social welfare benefits to underpaid employees and tax breaks for the construction of new stores. Also is evident is Wal-Mart's willingness to lose enormous amounts of money in unsuccessful foreign ventures and to spend money on public relations ventures such as recent efforts to "go green". The chain seems willing to do anything to appear progressive except recognize unions or, until recently, make any meaningful strides in the areas of wages or benefits. Lichtenstein notes that the deflation of wages by Wal-Mart has finally reached the point where it has become a threat to the chain's long-term volume and profit growth. Lichtenstein's main interest is labor, but he fails to tie together the challenges facing Wal-Mart, beyond some bland consideration of how the chain's business model has hit a wall and that upward mobility for managers was slowing. He is probably correct that the chain risks the fate of Sears, which has limped along for years, but doesn't go much further than this. Unlike Sears, Wal-Mart has managed to create enemies among main street merchants, organized labor, citizen's groups, politicians, and many potential suppliers. It's a business that talks loyalty but tramples the loyalty of workers and suppliers and probably has alienated potential employees in places where it is a dominant part of the local economy. The remaining markets without Wal-Marts are more expensive places in which to operate and to enter. The need of Sam Walton's heirs and Wall Street to increase yields over time is likely to undermine some of the current model and perhaps lead tinkering with its success. Already, Wall Street has prodded the chain to builder smaller stores. It seems likely that unsuccessful ventures like Sam's Club or the stores

The Deflationary Cycle

One of the oft forgotten realities of 20th century economics was how Keynesianism was created to answer the problem of chronic unemployment, regular recessions and potential deflation in market economies. Keynes argued, correctly, that in times of economic downturn, the government could, by deficit spending and cutting taxes, add consumer stimulus to the economy, thereby mollifying or eliminating a downturn with its accompanying rising unemployment and deflation. Instead, the economy could continue to grow through Keynesian policies. With that bit of historical perspective, we can see how Nelson Lichtenstein sheds light the effect that WalMart has had on wages, prices, the income of its suppliers and the overall US economy. WalMart has had a deflationary effect, through its outsourcing of jobs to China, its anti-wage and anti-union policies, and its poor benefit packages it pays its associates. WalMart may grow and profit, but its effect on the overall economy has been deflationary, placing its suppliers and associates in the economically untenable position, respectively, of dealing with lower prices and lower wages

The WalMartization of Retailing -

Bentonville and Rogers, Arkansas are home to 750+ branch offices of Wal-Mart's largest vendors; P & G alone has a staff of more than 250 there. Another nerve center of its global supply network is Guangdong Province on the southern coast of China. There you'll find more than 15 million migrant workers and tens of thousands of export-oriented factories. GDP in the region leaped from $8 billion in 1980 to $351 billion in 2006, while the population jumped 20X. Ten percent of its output goes to Wal-Mart. Besides low costs, China's attractiveness includes a stable currency, fast customs-clearance and loading (half the time as L.A.), and supportive government. Lichtenstein begins with Walton's early retailing experiences, including the frustrations at higher-ups that would not support his push for self-service and discount retailing. Confident in his thinking, and after observing early moves in that direction (eg. E.J. Korvette, etc.) Walton struck out on his own and opened his first store in 1962 using money from his wife's parents. Other early innovations included phasing out jobbers, mandating use of bar-codes (faster checkouts, easier inventory tracking), satellite communications (faster communications with Bentonville, faster credit-card approvals), strict prohibitions against accepting gifts from vendors, going to electronic ordering. Walton liked to recruit managers internally (76%), from the military, churches, college graduates who were members of "Free Enterprise" groups on campus. Demands were harsh - constant improvement, and even in the booming 1980s, 10-155 of all managers were demoted each year. (The goal was to increase staff by less than the increase in sales - not as hard as it might seem, given inflation.) Assistant managers earned about $40,000, worked 48-80 hours/week (highest during Xmas season). Few layers meant few opportunities for meaningful promotion. Overtime was banned, and dodged via numerous corporate shells that fell under sales-limit exemptions. Turnover in 1999 reached 70% in urban areas. Unionization efforts were met with a flood of Wal-Mart specialists, grievance corrections, management re-education or firings, false propaganda, and threats. Wal-Mart has also refused to buy unionized locations when making acquisitions, and once quickly closed a freshly unionized store in Canada. The average large corporation gives away over twice that of Wal-Mart, based on earnings. On the other hand, it provided excellent community support after Katrina. Berkeley researchers found Wal-Mart wages about 31% less than the average for large retail establishments, resulting in Wal-Mart employees drawing considerable aid from public safety nets. Other firms have emulated Wal-Mart's tactics (eg. Target), and others have stiffened resistance against their unions as a result (eg. Southern California grocers) - thus, there is a significant "Wal-Mart effect." Wal-Mart claims its profits/associate were $6,400 in 2007 - hence, raising pay

The first and last word on Wal-Mart!

This is a most amazing history and insightful study of this retail giant. But the author goes beyond the focus on Wal-Mart in his analysis of the past, present, and obvious future of economic developments in the U.S. and throughout the world. Very enlightening, and also most frightening. Very highly recommended!!!!