Walmart Fights in the court of Consumer Opinion

I have long sustained that business models based on the cheapest price are failed models. Walmart has long touted this model although it was not part of the original model. Walmart was created with a model based on offering local products at a reasonable price. Their differentiating factor was that they would eliminate the middleman and allow local producers and farmers to sell their products directly in the store without having to share their earnings with distributors and wholesalers. This model allowed the producer and Walmart to have greater margins. Somewhere along the path to becoming the largest retailer in the world, most likely when Wall Street became involved, Walmart modified its business model and went for low prices at any cost.

Walmart began expanding and decided that its business was to offer the lowest price. They forgot the premise of their success, quality products at a reasonable price by eliminating middleman and transportation costs. They embraced the traditional distribution and wholesale model and decided that the low price was their model. This was the beginning of the end of Walmart. As soon as Walmart started down this road they became the Kmart, Sears, and so many other low cost retailer who first grow and then die.

Since Walmart now had the same cost structure as other retailers they had to cut costs from other areas. They went in two directions. They massacred their employee compensation and started buying products produced in other parts of the world. The result was the complete abandonment of the original successful business model. Since quality and price at the point of production are relatively stable the only way to compensate for higher distribution and transportation costs was to reduce quality. Today, over 70% of products in Walmart come from Chinese producers. The shipping costs now account for almost 30% of the price of anything found on the shelves. Walmart sales are now stagnating. Since they no longer are quality products at a reasonable price they have no loyalty from their customers, just like what happened in Kmart with the blue light special.

Walmart realizes they have a problem. In the last year, under vicious attacks from employees and labor advocates, they began paying their employees better. In fact the typical employee, in any geographical area, makes 10% more money than a Target employee. They have eliminated their slogan about low prices at all costs. They have also begun an institutional advertising campaign to tell the US market how they are involved in giving their employees health insurance. These are not things a company does because they have had a prophetic vision. They have finally realized the fallacy of the low cost model. They have seen the light; there is always someone else who can find a way to sell your product at a lower price.

Walmart attempted to go after the high end market but failed. It is almost impossible for the crappy low price leader to sell into the quality conscious segment. They have no credibility. If Walmart wants to survive it needs to go back to the original model. Eliminate shipping costs, pay their employees a reasonable amount and sell a quality product at a reasonable price. This is the only model that will be successful. It should not be difficult for Walmart to do this; it is part of their DNA. They will have to go against the grain but their future depends on it. If they do not there will always be an Eddie Lambert out there looking to pick up retail locations.

Tags: Walmart Politics Recession Corporate America Economy Reaganomics

Read the Full Story...

Corporate Greed Endangers US Children – The Never Ending Story

Another recall, another story of US corporations putting US citizens at risk to make a few bucks. Target just announced the recall of hundreds of thousands of gardening toys. Obviously these products were made in China. I think we see a pattern. US corporations knowingly commissioning the production of products, in places where US style regulations do not exist or are unenforceable, destined for the US market. Children’s toys are the current products. Tires that fly apart while driving down the expressway, dog food that poisons dogs, and foods for human consumption laced with poisonous hormones and fertilizers.

Surely we will see a remorseful CEO tell of how he did not know. He will go on national television and tell that his company found the illegal toys due to Target’s commitment to quality and service. We will believe him. Just like we believed Disney and Mattel. These products have been on the market for years. They have been poisoning our kids ever since they figured out that they could produce goods in places where labor was cheap and people are more concerned about survival than health or safety hazards. We had this attitude in the US well into WWII. Just think of how many men died building the Empire State Building and the Hoover Dam. Perhaps the falling testing scores of our youth should be researched in level of the lead in their blood and the residual brain damage and not in the scholastic system.

Some of you are old enough to remember what Made in Japan, Made in Taiwan and Made in Singapore meant. Made in China is the same thing. Poor Quality, faulty controls and illegal production processes are synonyms of Made in China. As our politicians have so aptly stated, “Buyer Beware, Purchase at your own Peril!”

Tags: Government Politics Recession Corporate America Finance Illegal Immigration Economy Reaganomics

Read the Full Story...

China’s Ambassador – America’s stink about Food and Toy Product Quality is Ridiculous!

I am always surprised when smart people say really stupid things. I guess globalization is not just about producing goods and services around the world. In a speech to explain why the US needed illegal immigration, the US Labor Secretary, Elaine Chao, indicated her disdain for US workers. I guess it must be an Asian thing because Mr. Zhou Wenzhong, Chinese Ambassador to the US, in an interview with Maria Bartiromo of CNBC, said, [paraphrased] American’s obsession with product and food safety is ridiculous.

China has no concerns for the health and welfare of its own citizens. I am not amazed that they have no concern for our concepts of product safety. I am amazed that he said it. This reminds me of the Japanese Minister talking about how bad Americans were back in the 80s just before Americans stopped buying Japanese products and Japan’s economy went into a 30 years period of stagnation.

I guess this is why we praise the CEO of Mattel for coming to congress and telling politicians how they had no clue and would do a better job in the future.

To take this to some positive action we can peel off the spin. US corporations have knowingly moved production facilities to places where they can produce goods and services without US regulation. Current legislation also isolates them from litigation since they have become no more than a marketing arm. If a US citizen is harmed they must sue in a foreign country. In reality the company that puts the product into the US should be held accountable. This means Mattel, Disney and others.

I do not know if there are any US toy makers left but purchasing products produced in third world countries without US style regulations places you and your family at risk. Even the simplest of things seem to have problems. There are people who suffer unexplainable rashes with socks while tires fly apart while you are driving down the expressway. Pet food is poisoned and toothpaste is laced with antifreeze.

Tags: Government Politics Recession Corporate America Finance Illegal Immigration Economy Reaganomics

Read the Full Story...

Unemployment at record levels – More Proof in Actions

As if we did not need additional facts to support the argument that the government spins (lies about) the economic data to show that everything is hunky dory so that Microsoft, JP Morgan, Walmart, Target and the rest of corporate America can promote their open border policy to get additional slave labor, today we had a great example. Circuit City announced that it was firing its longer term employees. After 10 weeks off the job the company would then allow the employees to reapply at a lower wage. People this says one thing. Circuit City is convinced that it will be able to substitute every single worker it has. This means that there is excess labor available. I thought that unemployment was somewhere between 8-12% as the government watchdog agencies suggest but this type of action indicates that it is most likely much higher.

You do not think this is important to you? Think again. Open your eyes. Reaganomics has destroyed the underlying fabric of our country!

Read the Full Story...

ICE executes illegal immigrant raids in 6 states

It is sad when we have to applaud when people are just doing their job. This week ICE, the federal agency responsible for enforcing immigration laws, rounded up over 13 hundred illegal immigrants working in six plants of one company. While I do applaud the government’s decision to actually enforce a federal immigration laws I have several questions.

Why did they have to act indicating Identity Theft? Is it not enough that these individuals have broken numerous laws coming into the country the way they did? My goodness, if normal citizens do not pay their taxes they have real serious problems. How about we all just stop paying taxes. We could then demonstrate in the streets with slogans of,

“We need tax reform!”
“We pay the taxes no one else wants to pay!”
“We are not criminal we are just undocumented taxpayers!”
“No one is illegal!”

Since we are the largest voting block today, not tomorrow, the politicians could support us indicating, “It is impossible to think that we could round up 300 million undocumented taxpayers, our economy would collapse!”

Is this just a token operation? I have been seeing about the swift corporation employing illegal immigrant workers on the local news station for over a year. The news reports would then interview the illegal immigrant to explain that these were dirty jobs that no American would ever do. We know that illegal immigrants are part of the workforce. I know of 12 just in the local Target, they only hire illegal immigrants for the night shift refusing anyone who speaks English. Walmart was convicted of setting up false corporations using Illegal immigrants for their cleaning operations, hiding behind the façade of, “It is a separate company, we have no control over whom they hire.” The company works only for Walmart, one contract, one client.

Please governmental enforcement arm of immigration policy, PROVE ME WRONG! Execute your job description.

To date the company has not been charged with any wrongdoing. Why not? Come on people, this is obvious. Until we take the employers to jail, including the CEO with his $35 million salary, we will not fix the problem. Where is the Eliot Spitzer of Illegal Immigration? Is there no prosecutor willing to enforce our laws? Take on Walmart, Target, Home Depot, Time Warner and all of these companies blatantly violating our immigration laws. No settlements, send those bad boys to jail. If we take on the CEOs we will not have to spend hundreds of millions of dollars, rounding up and shipping home 23 million illegal immigrants. They will leave.

Their slogan will change from, “Today we work, tomorrow we vote!” to “Today no work, tomorrow we go home!”

Tags: Politics Corporate America Corrupt Politicians Government Data War on the Middle Class Border Security Port Security Stop Pork Spending Illegal Immigration

Read the Full Story...

Corporate America vs. Joe Worker - Education, Customer Service and Respect

A recent customer survey indicates that 70% of clients are willing to pay a higher price to have good customer service and 60% of clients will not return to a store where they feel they have been treated poorly. The National Association of Retail Stores immediately published their recommendations for their members on how to avoid devastating effects of poor customer service. These recommendations are:

The employee comes first. The employee must feel that he/she is an important part of the organization to be able to treat the client appropriately.
No fixed phrases. Employees must have empathy to be able to give good customer service.
Empathy starts at the top.
Employees must have the freedom to resolve the customer’s needs.

You mean the person interacting with the Customer is qualified to do something? They are not just warm bodies repeating senseless phrases over and over again. That earlier morning meeting, “Go super Target, go!” cheerleading meeting is less important than understanding customer’s needs? How can this be?

Well I guess Target and Walmart can shut their doors tomorrow morning, they are already dead they just have not realized it yet. In a sector where Joe Worker is the equivalent of slave labor and executive management feels that the employee working with the client is not even worthy of earning in one year what the CEO makes in one hour, it is hardly possible that these companies have a future. I have long sustained that business models that play on the lowest cost / lowest quality model are failed businesses, like Target and Walmart. To make their profits they keep squeezing the employee until there is no more to give. The end result is always that the employee, who is the heart and soul of any business, just does not care.

Corporate America’s solution to the problem is to source foreign labor willing to work for slave wages. Walmart has already been convicted of using illegal immigrant labor and Target will soon be just another example of corporate shortsightedness as their practices to actively recruit illegal immigrants in Texas will become public knowledge.

Since there is a ray of hope that our government may actually enforce immigration and labor laws the corporations now have a new motto. Americans are stupid. We need more L1 visas because Americans did not study in school and are completely unprepared to do their jobs. With University Tuition up over 5,000 % in the last 20 years I would think just the opposite. The retailers are also supporting the North American Alliance, Amnesty and guest worker programs. Just think, if labor costs were to increase the executive management may have to reduce their average $4.1 million annual salary to say a pittance of $1 million. Poor executive management and think of the poor investors who may see earnings per share drop 1% while they are at the highest levels ever reached. You mean they will have to be content with just a reasonable return on capital. This is socialism, class warfare against those poor souls who made money, Sacrilege!

C’mon Corporate America, wake up and smell the roses. If your clients have little or no disposable income after they pay for rent, it is hard to spend money on all the things you sell. Perhaps it is true that our Universities have not prepared our MBAs. If they cannot understand this simple rule, perhaps they should be doing something else.

Tags: Politics Corporate America Corrupt Politicians War on the Middle Class Border Security Port Security Illegal Immigration

Read the Full Story...

Low Food Security – Food Insecurity

The government has just presented a new report about the health of the US economy. It turns out we are poorer than I imagined. The FDA says that there are two new problems with our country. They are those with Low Food Security and those of Food Insecurity. Translated it means these people cannot put enough food on the table to meet minimum FDA suggested requirements. In other words they are HUNGRY!

You think, “there have always been poor people, goodness get a job.”

Well, the report indicates that these are working families, not homeless. What is more important is that there are 35 million Americans, 12% of our population, who cannot buy enough food to meet minimum caloric requirements. Which means that there are more than 25% that are on the brink. If you think about government data like I do, that is they manipulate the data for their own political purposes, the situation is much worse.

While the Democratic Party is thinking that they were elected to impeach Bush or to hold hearings our country is going, day by day, down the tubes. I do not know how to accomplish this but we need to tell our Politicians, WE ARE POOR. We must accept this so that we can fix the problem. Americans are great because of our capability to take on tough problems, sacrifice and find solutions, but to take on the problem we must recognize it and come to grips that our nation’s equity has been squandered by 30 years of political collusion and self-interest. The United States cannot continue on this path. We need to shore up our economy, reduce our national debt and regain our liberty before we can think about helping anyone else.

Ok, stop, breathe.

With obesity on the rise, some politicians and corporate executives will say this is a good thing. It is a natural diet. I can hear the talk in the after dinner parlors, “Is there a way we can expand this Food Insecurity?” Perhaps Hunger and Obesity are two faces of the same problem. We no longer have local farms. Everything we consume travels through immense distribution centers, picked before it is ripe, salt and flavor added so that it does not taste like sawdust and sold at incredibly high prices. Why are the prices higher? It is simple, in our world of specialization every company must have a return on investment. That increases the price by 40%, for the investor class, for each step along the way. They farmers are squeezed and the consumer raped. It is reverse redistribution of income, from the working class to the investor class.

Others will say, “There is nothing we can do, it is the natural expression of global markets. You do not want us to be protectionists, do you?” Free Trade requires that all costs associated with products or services are part of the base cost of that product or service. Without this primary characteristic, there is no Free Trade, there is simply one side getting a raw deal. At a certain point, if the damaged party does not intervene the damaged party will go bankrupt.

WE THE PEOPLE must do what our politicians are unable to do. We must come together, stand unified, and force our government to take on the problems that are important. Forget the infighting, corrupt politicians and do your job!

Tags: Politics Corporate America Corrupt Politicians Minimum Wage War on the Middle Class Food InSecurity Hunger Poor

Read the Full Story...