Wal-Mart Shows The Way

Wal-Mart doesn’t have enough bodies to restock the shelves (Bloomberg)

While the article is about the loss of business by Wal-Mart to other cost conscious retailers, that fragment caught my attention.  Further, Wal-Mart says the problem is not stock:

Our in stock levels are up significantly in the last few years, so the premise of this story, which is based on the comments of a handful of people, is inaccurate and not representative of what is happening in our stores across the country

So, if the stock is there, why is it not on the shelf? Especially with the unemployment rate at 7.7% (est), roughly 4.8 million people are looking for work. But Wal-Mart cannot find enough people to get stock on the shelves? I find this baffling. But only slightly.

Clearly there are a couple of factors at work, but I cannot exactly come to any conclusion which one is having the most impact. It could also be a combination of factors. Here are my thoughts. First, those looking for work are not looking for a minimum wage job.  They are professionals, with mortgages, student loans, and credit cards to pay off, much less be able to feed and clothe their families. Second, I am willing to be that if Wal-Mart is paying minimum wage, it is only just paying it. In those areas of the country without a stated minimum wage, they are paying much less.  Which makes it hard even for those willing to accept those jobs to make ends meet.  Third, they cannot find skilled workers. I have said this before, but there are a large percentage of the population that simply are not able to function in our modern society.  Either because of illiteracy, and in this case I mean being unable to either read, write, do basic math, or use basic tools like scanners and registers, or because of work status. Not all immigrants are illegal, but most human resource departments do not have the proper training for evaluating the documents that are needed to get a job, and thus they are turned down, rather than put the company at risk.

And yet the companies, including Wal-Mart, will not invest.  As stated further down in the article:

Adding five full-time employees to Wal-Mart’s (WMT) U.S. supercenters and discount stores would add about a half- percentage point to selling, general and administrative expenses…about $448 million a year.

Half a percentage point, which would be passed onto consumers who are barely able to pay the prices of these goods in the first place. Which really is the bottom line. If they raise their prices, people will not shop there, further increasing the flight. Or so the business logic goes. I do not buy it though.  I believe that most people would rather pay a little more for good quality goods, and good service, rather than the lowest price. I would argue that the chickens are coming home to roost.

Wal-Mart is discovering that lowest price is not the be all and end all of retail success. Sadly, this comes at a point when they have almost entirely crushed out of existence all of the potential alternatives. Leaving the shopping public with few, if any, alternatives.

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