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Interview

Charles Fishman, author of The Wal-Mart Effect, answers our questions.

What sparked your interest in 'the Wal-Mart effect'?
The book actually grew out of a not-very-good idea for a magazine story from one of my editors at Fast Company, the U.S. business magazine where I work.  My editor wanted me to go to the tiny town of Bentonville, Arkansas, population about 24,000, which is where Wal-Mart is headquartered, of course, and he wanted me to write about all the people who had been transferred from big U.S. cities to this little tiny town to work on behalf of Wal-Mart.  Bentonville is in the northwest corner of Arkansas, which is in the middle of America, hours from the nearest large city.  And thousands of people have in fact been transferred there by big companies, to take care of the Wal-Mart business.  Well, we at Fast Company had never written a significant story about Wal-Mart, and I didn’t think we should start with a story about what it’s like to live in small-town America.  That didn’t seem very interesting or important.  My wife — who is also a journalist — asked, What’s it like to be a Wal-Mart supplier?  Not, what’s it like to live in Bentonville, but what’s it like to service a company that requires you to move people to Bentonville.  That was a simple but much more interesting question — and the answer turned out to be very revealing, and important.  A lot of Wal-Mart’s influence and power comes from its relationship to its supplier companies, and that hadn’t been very well written about in the press.  That story was the cover of Fast Company in December 2003, and became the foundation for trying to understand 'the Wal-Mart effect' in the book.  That story was the cover of Fast Company in December 2003, and became the foundation for trying to understand 'the Wal-Mart effect' in the book.

How would you describe 'the Wal-Mart effect'?
The Wal-Mart effect is all the ways that Wal-Mart shapes the world we live in and the world we work in, all the ways that Wal-Mart touches our lives — both the obvious ways, and the unexpected, surprising ones.  In the U.S., at least, I argue in 'The Wal-Mart Effect' that Wal-Mart touches the lives of every American every day.  First, of course, more than 130 million people worldwide shop at Wal-Mart every week.  And those people experience the most direct Wal-Mart effect — Wal-Mart’s impact on lowering prices.  But, because of the efficiencies it imposes on its suppliers, Wal-Mart has also allowed those companies to lower the prices of their products even when they are not sold at Wal-Mart.  And Wal-Mart’s competitors also keep their prices low in order to keep customers, to compete.  So even if you never shop at Wal-Mart — even, in fact, if you actively avoid Wal-Mart out of concern for their business practices — you actually pay less for consumer products than you otherwise would because of the Wal-Mart effect.  We all get Wal-Mart prices, even if we never shop there. 

But prices are really just one part of the Wal-Mart effect.  In the course of the book, I was able to identify more than 50 ways Wal-Mart shapes the world:
- Wal-Mart changes how products are packaged, and how they are displayed in stores.
- Wal-Mart changes how factories operate — and so changes the lives of factory workers around the world.
- Wal-Mart changes how products are shipped.
- Wal-Mart changes how very indirect competitors — grocery stores, optical shops, musical instrument shops, local toy stores — run their stores, how they present and price their merchandise, and how they pay their staffs, every day.
- Wal-Mart changes the shopping patterns in communities, and because of the size of its stores and the traffic they generate, Wal-Mart literally changes the shape of communities, the development patterns, the rhythm and the feel of whole towns.
- Wal-Mart changes how food is raised and sold.
- Wal-Mart even changes how business people and shoppers think — it gets inside our brains.

The goal of my book is to make clear that Wal-Mart is far more than a big store — that we need to understand the reach and the range of all of Wal-Mart’s effects before we can adequately take account of Wal-Mart.

Do you shop at Wal-Mart yourself?
I do shop at Wal-Mart, but at this point, it’s mostly for professional reasons.  I’ve spent the last three years trying to understand Wal-Mart and its impact, and also trying to understand its appeal for shoppers.  And now I’m often talking about Wal-Mart in the media, or at bookstore readings or other appearances.  I think it’s really important to understand what’s going on in the stores themselves, in order to speak knowledgeably, and also to keep up with what Wal-Mart is doing.  I think it would be unfair to be talking about Wal-Mart, without being in the stores on a regular basis.  The stores seem to a casual shopper to be the same as they were 10 years ago, but in fact, they are constantly changing and evolving, and so long as I’m talking about Wal-Mart and writing about Wal-Mart, I want to feel like I’ve been in the stores recently.  That’s just good journalism, really.  That said, we shop quite strategically at Wal-Mart.  We don’t buy any manufactured goods at Wal-Mart — things like small appliances or clothing — because I’m not all that comfortable with the conditions under which those goods are made.  Most of what we buy these days are things that are still made in the U.S., like health and beauty products and cleaning products. 

I have been in more than 100 Wal-Mart stores in 23 states in the U.S. and I very much look forward to seeing my first 'international' Wal-Mart operations when I get to visit some ASDA stores in the UK.

And I’m quite careful, in the book and also in talking about Wal-Mart, to be clear about something:  I think if you don’t like Wal-Mart’s behavior, you can send a very important signal to the company by shopping elsewhere.  But I’m not telling anyone not to shop at Wal-Mart, or ASDA.  Especially for people of limited means, Wal-Mart has been an important ally in making their paychecks go further.  I think how you spend your money is very important, and has great impact — that spending created Wal-Mart.  But I also think that’s a personal decision.

What would you like the effect of your book to be?
The conversation about Wal-Mart, and Wal-Mart’s impact, is stuck.  One group of people shouts, 'Wal-Mart is horrible! evil! hurtful!'  The other group of people shouts, 'Wal-Mart is great! brilliant! wonderful!'  That’s not a constructive shouting match.  No one is learning anything.  No new information is offered.  No one’s mind is changed.  It’s just people with strong opinions — and sometimes, opinions not too well grounded in facts — insisting they are right.  Wal-Mart is not going away.  In the world beyond the U.S., Wal-Mart’s influence and power are only likely to grow dramatically in the next 10 years. 

So the purpose of the book is really two-fold:
I wanted to gather and offer as much factual information as I could that helps explain Wal-Mart’s impact.  I wanted to give people real data on which to base their arguments and opinions, (the book has a very thorough index and source notes to help people pursue further research), and I wanted to push the conversation to the next level, beyond the shouting match.  Since Wal-Mart is healthy, strong, growing, and popular (despite the opposition), we need to learn how to manage it more effectively in our countries.  We need to understand the positive impact that Wal-Mart has, so we can preserve it.  And just as important, we need to understand all the negative impacts that Wal-Mart has, so we can find ways to encourage Wal-Mart to modify those negative effects, or insist through legislation that they be modified.

One good comparison, in fact, is the car.  The car is both a boon and a bane.  It’s a great source of transportation, of freedom, of independence, of fun.  It’s also a source of traffic jams, pollution, even death.  So we manage the car — we insist on airbags, seatbelts, fuel economy standards, and pollution controls.  We can do the same thing with mega-corporations, of which Wal-Mart is certainly the most obvious.  We can acknowledge the benefits they bring — remarkable selection, global access to goods, low prices, convenience — while insisting on finding ways to reduce their negative impact on everything from communities to wages and factory working-conditions.

More

The Wal-Mart Effect:  Charles Fishman explores the real cost of Wal-Mart in America and ponders what it means for the world.

Here’s a taster of his findings:

Poverty:  Wal-Mart causes poverty.  The presence of a Wal-Mart store in a community systematically raises poverty rates, and over the course of a decade, as many as 20,000 U.S. families have ended up in poverty because of the presence of Wal-Mart stores in their communities.

Jobs:  Wal-Mart claims that the growth of its business creates jobs, and Wal-Mart CEO Lee Scott has said often this year that the company is creating 100,000 new jobs in 2005.  But most of those 100,000 'new' jobs aren’t new at all - they come at the expense of existing jobs.  For every 300 new jobs created when a Wal-Mart store opens in the US, 270 jobs are ultimately destroyed in the surrounding community, for a net gain not of 300 jobs, but just 30.

Treatment of employees:  Employees are sometimes made to sit on boxes or lawn furniture provided as samples, because Wal-Mart 'doesn’t want to waste money' buying office furniture - even for their world headquarters in Bentonville.  Others have been locked in U.S. stores overnight, to ensure they work faster and longer – this is often work on top of their normal hours, for which they are not paid. 

Suppliers:  Some CEOs of companies that supply Wal-Mart are so terrified of retaliation that they will not speak about the impact Wal-Mart has on their business. Wal-Mart can now dictate where companies work:  a consumer products company has moved virtually all of its production to China under specific instructions from Wal-Mart to stop making products in the U.S. and make them in China to lower the cost — or lose its Wal-Mart business.

And remember:  Even if you never shop at Wal-Mart, the prices you pay for many everyday purchases are lower because of Wal-Mart.  We are all Wal-Mart shoppers, even if we never enter the stores.
 
(for more on Poverty see the chapter 'Wal-Mart and the Decent Society'; on Jobs, 'What do we actually know about Wal-Mart'; on treatment of employees, ‘Makin Bacon, A Wal-Mart Fairy Tale’; on Suppliers, ‘The Squeeze’ and ‘The Man Who Said No To Wal-Mart’).

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