Wal-Mart Trilogy

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The Bully of Bentonville: How the High Cost of Wal-Mart’s Everyday Low Prices Is Hurting America

The Wal-Mart Effect: How the World’s Most Powerful Company Really Works – and How It’s Transforming the American Economy

Company: A Novel

The past few months have been inordinately heady for anyone who salivates whenever a headline features the words “Wal-Mart” and some incriminating verb in close proximity. Since the year began, the following headlines have appeared in daily newspapers across the country: “Wal-Mart Defends its Bid to Enter Banking”; “U.S. Lawmakers: Wal-Mart Threatens U.S. Payment System”; “Maryland Sets a Health Cost for Wal-Mart”; “Wal-Mart’s Attempt to Stop ‘Wal-ocaust’ T-shirt Production Leads to Lawsuit”; and “Wal-Mart Accused of Cheating on Pay in Salt Lake City,” a February 14th article in The Salt Lake Tribune about one of 40 proposed or ongoing class-action lawsuits waged against the company by current and former employees alleging unfair labor practices at the country’s largest private employer. 

Then there are the upbeat articles, but lately they have been harder and harder to find. In mid-March, for example, civil rights leader Andrew Young signed on to chair the national steering committee of Working Families for Wal-Mart, saying that although Wal-Mart engages in “hard-nosed capitalism that’s very rough around the edges,” hard-nosed capitalism is “what it takes to produce a quality lifestyle for poor people.” However, with the almost simultaneous release of two books about Wal-Mart by longtime business journalists—BusinessWeek senior writer Anthony Bianco, who is basically fed up with the company, and Fast Company senior editor Charles Fishman, who is both “amazed” and “appalled”—we have one of those cultural windows it which it seems uniquely possible to delve beyond the schematic Wal-Mart-is-good, Wal-Mart-is-bad reactions that the retailer tends to engender.

It’s no shocker that the subtitles to both books begin with the word “how.” Both authors are up against a company that is notoriously, fastidiously invested in the maintenance of its secrets, and explaining how the company functions—and how it affects the world—is crucial for anyone investigating Wal-Mart. (In The Bully of Bentonville, Bianco takes several pages to talk about the heirs of Sam Walton, Wal-Mart’s founder, and notes the family’s “reflexive secrecy,” a pitch-perfect phrase that applies as aptly to the company the family founded as to the family itself.)

The extent of Wal-Mart’s secrecy (the company even forbids its suppliers from talking to the media about Wal-Mart) would seem to put both authors at a narrative disadvantage, having to use page after page to explain how the company actually works. Both authors use Wal-Mart’s secrecy well, however. Bianco spends several chapters on Walton’s early days as a businessman, and it’s fascinating, revealing stuff, partly because, in a book that takes the company to task, Bianco uncovers elements of Walton’s personality that are nothing but admirable. Walton was well known for making “manic” and unannounced visits to his various stores by flying himself around the country in a small plane. Although he apparently had a short temper, initially preferred uneducated workers, and always employed an “obsessive frugality,” Walton encouraged transparency and access within the company: “His door really was open and so was his mind—his implacable opposition to collective bargaining aside,” Bianco writes. “He would not hesitate to rebuke or fire a manager who disrespected a worker.” Wal-Mart has long put store managers “under enormous pressure from headquarters to continually reduce labor costs as a percentage of sales—to increase productivity, in other words,” Bianco writes, but now that Wal-Mart is known for once having locked night-shift workers inside its stores and for also refusing workers breaks, Walton’s finely honed regard for his workers seems to be a long-ago ideal.

It is telling that Walton introduced the company cheer to Wal-Mart workers after he took a trip in 1975 to South Korea, where he observed factory workers “doing morning calisthenics punctuated by mass chanting of their employer’s name.” The Wal-Mart cheers were once heard at the beginning of each shift and are not as easy to dismiss as hokey and enforced as you might think—”Walton softened the Orwellian edge of all this mandatory good cheer by also sanctioning goofiness,” Bianco writes (Walton once traipsed down Wall Street in a hula skirt, so the goofiness came from the top). The cheers seem genuinely meaningful and inspiring to the Wal-Mart workers who used to participate in them; of course, the flip side is that people who are paid poorly have to be inspired by something in exchange for the money they’re not earning.

Charles Fishman also references Walton’s philosophy—he calls Walton’s optimistic values “Ben Franklin-esque”—but focuses instead on the economically unnatural behemoth that Wal-Mart has become. (In short, the eager student of Wal-Mart can read Bianco for insight into the company’s culture and its transgressions and Fishman for an understanding of how Wal-Mart is changing the nature of business and our culture.) Fishman doesn’t pretend to have trademarked the phrase “the Wal-Mart effect”—he acknowledges that it already has traction in the culture—but he does examine it more fully than any other nonacademic book yet published on the subject (Nelson Lichtenstein’s Wal-Mart: The Face of Twenty-First-Century Capitalism is an insightful collection of essays from a 2004 academic conference on Wal-Mart). The Wal-Mart effect, Fishman stipulates, is neither positive or negative. “It takes its coloration from its context,” he writes, but it means the following things: Wal-Mart’s competitors have to lower prices once Wal-Mart enters a particular market; Wal-Mart “drains the viability of traditional local shopping areas”; Wal-Mart has ushered in the “relentless scrutiny of unnecessary costs” in manufacturing a product; and Wal-Mart has lowered wages at stores that try to compete with it.

Chief among those effects are the low prices Wal-Mart heralds in its ads—a good thing for the consumer, but not so good for companies trying to get Wal-Mart to stock their wares. Most relationships between retailers and manufacturers are lubricated by rounds of golf or liquor. Not so at Wal-Mart, whose buyers meet their vendors in nondescript cubicles at company headquarters in Bentonville, Arkansas, where one of Wal-Mart’s buyers met with Vlasic, the pickle company, in the late ’90s. There’s a good reason Fishman titles a chapter on Wal-Mart’s relationship with Vlasic “The Squeeze.” Vlasic’s bulging gallon jar of pickles intrigued Wal-Mart’s buyer; Vlasic, which created the product for small businesses, wanted to sell it for over $3. But then Wal-Mart’s pickle buyer had a brainstorm, Fishman writes. How about selling the gallon jar of pickles nationwide for less than $3, $2.97 to be exact?

The gallons of pickles sold extremely well, 80 jars a week in every store, but because Wal-Mart had imposed such a low profit margin on the product, Vlasic was undergoing what Fishman refers to as a “devastating success”: People were buying their pickles, but Vlasic wasn’t making nearly enough money. “The price was a fiction imposed on the pickle market in Bentonville,” Fishman writes. “Consumers saw a bargain; Vlasic saw no way out. Both were responding not to real market forces, but to a pickle price gimmick imposed by Wal-Mart as a way of making a statement.” That perky smiley face that bops around in Wal-Mart commercials dropping the prices of familiar products would have us believe that low prices are somehow attained by a jaunty, magical process, but when Wal-Mart marks a product down, there are repercussions that many consumers seem only dimly aware of, like child labor. By the time that the unforgettable Kathie Lee Gifford child-labor scandal erupted in 1996, Wal-Mart had already stopped using the factory where Gifford’s clothing line for the retailer was manufactured, but the damage had been done. Multinational corporations like Wal-Mart “don’t want to have to explain dramatic, unsettling revelations about how the familiar products they sell manage to have such low prices,” Fishman writes.

About halfway through Max Barry’s ingenious comedy Company, a hardened, take-no-prisoners executive lectures her young, idealistic protege about the harsh friction between profit and ethics that are central to Fishman and Bianco’s investigations of Wal-Mart. “[Y]ou’re in the real world now, and soon enough you’ll realize that sometimes you have to choose between morals and results,” she intones. ” [C]ompanies do it every day, even the ones you thought were good—and it’s the managers who choose results who get the promotions. You’ll fret about this for a few days or months or maybe even years until finally, one day, you’ll decide you need to make the tough decisions because this is business, and that’s what everyone else is doing.”

Stephen Jones, the initially innocent graduate who’s being dressed down here, refuses to believe that a company has to make its employees suffer to maximize profits. Jones, as everyone calls him, joined Seattle’s Zephyr Holdings unaware of what the company actually produces, which isn’t really his fault: No one in the company can explain to him what Zephyr makes. As a lowly assistant in the Training Sales Department, Jones thinks that his colleagues’ gallows humor about Zephyr—no one has actually seen the CEO, much less talked to him, and it takes a suspiciously long time to travel between floors 12 and 14 in the elevator—is nothing more than the typical paranoid, conspiratorial humor employees lob at their demanding superiors.

Then he learns that the training packages his department hawks are sold only to other Zephyr departments, and his frustration with the general malaise of deep dissatisfaction within the company compels him to hunt down the CEO and demand answers. The fact that the CEO masquerades as the janitor and observes his employees far more frequently than the average CEO is just one indication that Zephyr Holdings isn’t normal. I don’t think it’s giving away too much to say that Zephyr employees’ concerns about the company’s lack of tangible product turn out to be well founded: Zephyr Holdings is actually a laboratory that studies its “employees” by conducting exacting social experiments on them (like, oh, mass departmental consolidations) and then sells the results to other companies.

Company is the kind of novel that’s in short supply today: a satire. It’s a memorably sharp one at that, despite its occasional hollow, Dilbert-ish jibes. Barry, a young Australian writer who used to work at Hewlett-Packard, has created something that is a total delight to read despite the fact that the darker elements of his tale aren’t so far from reality. Fishman and Bianco’s books provide an insight into Wal-Mart that company probably would prefer you not to have, but fiction cuts to the bone. At the end of Company, Jones and his one-time mentor who lectured him about the nature of business are arguing about the legality of using employees as test subjects. “Look, [we] did nothing illegal,” she explains. “I kept trying to tell you that. The only thing we were guilty of was giving those people jobs.”

Jones reminds her that the jobs were fake, to which she replies, “There’s no requirement that jobs be meaningful, Jones. If there was, half the country would be unemployed.”

Clay Smith is the literary director of the Texas Book Festival.