Darwin meets Corleone

Because it's healthy to post a critique of Wal-Mart at least every six months or so. . .

Via Simply Appalling comes this Fast Company article, "The Wal-Mart You Don't Know" that describes Wal-Mart's pressure on its suppliers. Levi-Strauss is a good case in point:

Getting ready for Wal-Mart has been like putting Levi on the Atkins diet. It has helped everything--customer focus, inventory management, speed to market. It has even helped other retailers that buy Levis, because Wal-Mart has forced the company to replenish stores within two days instead of Levi's previous five-day cycle.

And so, Wal-Mart might rescue Levi Strauss. Except for one thing.

Levi didn't actually have any clothes it could sell at Wal-Mart. Everything was too expensive. It had to develop a fresh line for mass retailers: the Levi Strauss Signature brand, featuring Levi Strauss's name on the back of the jeans.

Since signing on with Wal-Mart, Levi Strauss announced the closing of its last two American plants and the layoff of 2500 workers.

So Wal-Mart seemingly helps "everything" except product quality and worker satisfaction. But other than that, it's great. Who needs nice things and good jobs when you can buy pickles at $3 a gallon?

The article describes Wal-Mart's Godfather-esque approach to stocking its shelves. ("Someday, I may ask a favor of you...") As the largest company in the world (over $244.5 billion in sales last year, more than Target, Sears, Kmart, J.C. Penney, Safeway, and Kroger put together), Wal-Mart can pretty much call the shots, which are, in fact, heard round the world:

For many suppliers, though, the only thing worse than doing business with Wal-Mart may be not doing business with Wal-Mart. Last year, 7.5 cents of every dollar spent in any store in the United States (other than auto-parts stores) went to the retailer. . . .

Many companies and their executives frankly admit that supplying Wal-Mart is like getting into the company version of basic training with an implacable Army drill sergeant. The process may be unpleasant. But there can be some positive results.

"Everyone from the forklift driver on up to me, the CEO, knew we had to deliver [to Wal-Mart] on time. Not 10 minutes late. And not 45 minutes early, either," says Robin Prever, who was CEO of Saratoga Beverage Group from 1992 to 2000, and made private-label water sold at Wal-Mart. "The message came through clearly: You have this 30-second delivery window. Either you're there, or you're out. With a customer like that, it changes your organization. For the better. It wakes everybody up. And all our customers benefited. We changed our whole approach to doing business."

But you won't hear evenhanded stories like that from Wal-Mart, or from its current suppliers. Despite being a publicly traded company, Wal-Mart is intensely private. It declined to talk in detail about its relationships with its suppliers for this story. More strikingly, dozens of companies contacted declined to talk about even the basics of their business with Wal-Mart.

Here, for example, is an executive at Dial: "We are one of Wal-Mart's biggest suppliers, and they are our biggest customer by far. We have a great relationship. That's all I can say. Are we done now?" Goaded a bit, the executive responds with an almost hysterical edge: "Are you meshuga? Why in the world would we talk about Wal-Mart? Ask me about anything else, we'll talk. But not Wal-Mart."

No one wants to end up in what is known among Wal-Mart vendors as the "penalty box"--punished, or even excluded from the store shelves, for saying something that makes Wal-Mart unhappy. (The penalty box is normally reserved for vendors who don't meet performance benchmarks, not for those who talk to the press.)

"You won't hear anything negative from most people," says Paul Kelly, founder of Silvermine Consulting Group, a company that helps businesses work more effectively with retailers. "It would be committing suicide. If Wal-Mart takes something the wrong way, it's like Saddam Hussein. You just don't want to piss them off."

Why is that the further we get into the "information age," the less information there seems to be?

In sum, to state the obvious, Wal-Mart is really evil and you shouldn't shop there. Don't do it.

P.S. Go read Yelladog for more on retail choice, freedom, and the problems with Capitalism.