Boycott of Wal-Mart Makes No Economic Sense

Monday, September 19, 2005 | Right now, the American Federation of Teachers is urging its 1.3 million members to boycott Wal-Mart.

“Buy back-to-school supplies somewhere other than Wal-Mart,” their petition urges.

The American Federation of Teachers campaign does not suggest what teachers should do when they spend more for pencils, but their choices seem obvious. Maybe they give the kids fewer pencils. Or perhaps the teachers should spend some of their own money to buy pencils from more politically correct outlets. But if 19 million grade school kids each use a pencil a month and our teachers must now pay a nickel more per pencil we’re talking about $8,550,000 in added classroom costs. Every year. And before you say that’s nothing, remember, we haven’t even gotten to the crayons, backpacks and notebooks.

Wal-Mart’s problem is this irrational, noisy minority of deep-feeling and shallow-thinking folks. Few have stepped inside a Wal-Mart to see the looks on the faces, the prices and the crowds that depend on Wal-Mart for their daily needs.

Here are the snippets I hear:

A friend of mine retired in Webster City, Iowa, population 8,000. He just bought a set of tires. Instead of patronizing either of his two local tire dealers, he drove 34 miles to Ames, population 51,000. Why? “My local guys wanted twice what Wal-Mart charged me in Ames for the same four tires.”

In La Jolla, I met a village friend at Starbucks. “Wal-Mart is abandoning buildings across our country,” she said, “and those empty sites are turning into criminal breeding grounds.” She’s a friend. I gently asked how a company that’s growing so fast ended up abandoning buildings, especially since her group was campaigning against more Wal-Marts going up. That puzzled her. I asked if she had photos or some case histories and she didn’t but heard this from “reliable sources.” (Please, will you comment below if you have a shred of evidence on this tale?) This otherwise intelligent woman designs boutique retail shops, among other businesses, and is unlikely to frequent any discounter.

Two travelers were sitting on a bar stool near my table in the Seattle airport. Neither knew each other, but both came from small towns. “How’s living there?” he asked. “We got a Wal-Mart,” she replied. “Wish we did,” he said.

Those comments tell me a lot. I admit my first visit to a Wal-Mart came last Saturday when I did the “pencil price check.” I was startled to see a folding chair with carrying case displayed for $18.87. They were a bit brighter colored than the folding chairs I purchased a few months ago for $89 at REI, but, the construction looked the same. Maybe I should not be so snotty and get over to Wal-Mart more often.

Customers clearly love Wal-Mart. Numbers don’t lie. City officials love the increased taxes Wal-Mart stores generate, helping them pay for schools and roads. In some communities. In others, the local lobbies block the stores, protecting the existing higher prices. So far, economics wins over politics, but not always.

This is all recurring history. Decades ago, before K-Mart passed it by, Sears was viewed as the evil giant. Then it was horror stories of the vendors they ruined. Seventy-five years ago, the first supermarket opened in Queens, N.Y. and was an instant hit. Prices plummeted. Neighborhood groceries died. And as the Cold War started to thaw, Communist visitors to the United States marveled, jaws dropping, at our phenomena: the supermarket. They could not imagine the choices and prices.

And also note that the American Federation of Teachers won’t discourage members from buying at Costco. Costco is union. The AFT is a union. So now we understand, although, Kinko’s, Sav-On and Staples are not union, and could pick up business in the improbable case that the AFT actually convinces members to buy less while paying more by avoiding Wal-Mart.

Hurricane Katrina, however, diverted the AFT’s Wal-Mart boycott attempt during the back-to-school week. The AFT did many things to help victims. They set up toll-free numbers for victims displaced by the storm. The people answering will refer victims to the appropriate agencies. They also put up Web sites for displaced teachers. And the AFT is assessing school damage. The union is also trying to help displaced teachers get waivers so they can get work in schools accepting transferred students.

Good stuff. But notice how the AFT describes their efforts. “Set up toll-free numbers,” “refer,” “put up Web sites,” “assessing” and “trying.”

Wal-Mart acted more specifically. In the first week Wal-Mart gave $15 million in cash to the Bush-Clinton Katrina Fund, gave an extra $1 million to the Salvation Army and the Red Cross, gave three weeks pay to any Wal-Mart worker displaced by the flood, tax-free, and guaranteed them replacement jobs at any store in the country. Wal-Mart shipped more than 100 truckloads of merchandise to evacuation centers and offered residents in affected areas a seven-day emergency supply of drugs, free. A dozen Wal-Mart buildings are being used as shelters and food banks.

Wal-Mart delivered relief supplies days before FEMA arrived.

Great stuff. Real. Measurable.

So why worry about Wal-Mart when it delivers more value to the masses? My book, “Corporate Canaries,” tells part of Wal-Mart’s success secret, yet I now admit to having paid my first store visit last weekend. But Chapter 5 of “Corporate Canaries” deals with fundamental market shifts, and Wal-Mart may be facing one in America.

Here’s why. Wal-Mart doesn’t advertise in the New York Times. That rag runs features about the poverty in Africa next to advertisements for $5,000 Tiffany watches. The NY Times wails about the underclass while its society page shows the privileged trading air kisses, draped in dresses that cost enough to feed most ghettos for a week. And schizoid as it is, the Wal-Mart tirades in the paper do fuel an ongoing hatred. Just as limousine liberals despise Winnebagos and Disney World, or any rare pleasure the working class enjoys, they are disgusted by the economics Wal-Mart delivers.

Remember what part of our voting public believes today. Thirty million watch professional wrestling weekly. Twelve told us that O. J. Simpson is innocent. And Dr. Phil, an overweight man with no last name, who wears dark suits and is smart enough to take off his jacket rarely; then only when the camera angles are right, authored our country’s current best-selling diet book.

This is the problem. Less thinking.

You might also check the rants at “Walmartwatch.com.” Shrill. Unidentified producer, but, if you dig further, you’ll discover that this site is sponsored by the United Food & Commercial Workers Union. Hiding who they are shows intelligence. If these folks tried to picket a Wal-Mart, they might find a few customers are inclined to crease the picketers’ hairlines using their signs. These unions are trying to pick their pockets.

Abusing workers? How do they hire them, at gunpoint? Could it be the unions want to abuse the public?

So, why worry, right? Wal-Mart isn’t as experienced at buying political influence as the unions are. My bet is, because Wal-Mart has no choice, they’ll learn to. And in 2030 A.D., should Wal-Mart management decide to raise prices, having squished all competition, somebody new will start opening stores just a block away from each of theirs, undercut Wal-Mart, the public will love this new outfit for it, and just like Montgomery Ward and JC Penney and Woolworths and A&P and Sears and K-Mart faded fast into history, so will Wal-Mart. That’s how this free enterprise thing works.

Now, I hate to say it, but Wal-Mart, you’ve got to suck up to some of those elitists in Washington, D.C. Or get buried by ignorant attacks.

Gary Sutton is a retired CEO who sits on nine corporate boards. His book, “Corporate Canaries … Avoid Business Disasters with a Coalminer’s Secrets,” ships to stores this October.