Wal-Mart sees the key to their success being that they offer people quality goods at a low price. The same can be said for Target, Lowes, Home Depot, Best Buy any of the big box retailers. This was especially true back in the early days of Wal-Mart. I can remember going to our local Wal-Mart with my dad who was going to buy a case of Charmin toilet paper or Clorox bleach which they would have on sale for some unbelievably low price. They would literally have cases of it stacked up with no limits, so there was never an issue as to whether they would have the product on sale. Of course after we were there dad would wander around and shop for other things and soon Wal-Mart became his store of choice for almost anything.
Another thing that Wal-Mart brought to retail like no one before was number crunching. They were one of the first retailers to start crunching numbers at all of their stores to determine best prices, which times of year certain items sold more, etc. This helped them with keeping good inventory and knowing when were good times to put certain items on sale. This number crunching is also one of the keys to the effect Wal-Mart has had on our market system so remember it for later on.
Wal-Mart was growing and sitting well ahead of all other retailers in 2002, but something happened that year that would spark a dramatic change in the way Wal-Mart did business. Their numbers were lagging one quarter when they decided to bring in a lot of cheap products from China. The idea was to mark these up say 40% instead of the usual 20% on products made in the United States and help their numbers out. The plan worked to perfection, and from that point on Wal-Mart turned their focus to how much they could mark up a product and still keep a low cost for the consumer.
Since they were the largest retailer way ahead of anyone they carried a certain level of power that they started using in earnest. They began to tell companies what they would be willing to pay for a product in order for that product to be sold in Wal-Mart stores. If the manufacturer couldn't meet their price that company wouldn't sell their product in Wal-Mart.
This all goes back to the number crunching that Wal-Mart was doing. Through their numbers they knew what customers were willing to pay for certain products. They could then take this number, calculate in a 40% mark up and tell the manufacturer this is what they were willing to pay. Because Wal-Mart was so big it was hard for manufacturers to turn them down and once other big box retailers caught onto this, they began to follow suit.
The big box mentality is that this allows them to provide products to their customers at a very low price and still make solid profits for their stockholders. In essence everyone is happy. The U.S. customers get a higher standard of living because it doesn't cost as much to buy things like large screen televisions, clothing, kitchenwares, etc.
Wal-Mart and the other big box retailers would argue that in essence they are good for the United States because they are helping us all reach a standard of living that we could have never achieved without their help.
