Michael Mordarski: Always low prices

Wednesday, July 26, 2017 - 12:27pm

The small towns of northern Michigan that dot the coast of the Great Lakes offer some escape from the chaotic and hyperconnected world we live in. The majority of Michiganders who grew up in the more-populated southern part of the state understand the peaceful and nostalgic nature of what “up north” is. Every small, coastal community has its own personality; brief visits to towns like Petoskey, Traverse City, Alpena and Harbor Springs offer their own unique experiences.

And part of those experiences are the stores and markets that seem almost extinct to people from cities — such as small family-owned furniture stores, hardware outlets and supermarkets. Nearly a decade ago, this region of the state was almost completely free from the intrusions of the massive chain stores that are so much a part of suburban life. The local economy was dominated by these small businesses where employees worked in more enjoyable environments, specialists knew all about their products and uniqueness to every town and city was seen in the proud storefront windows of downtown shops.

But eventually, the secluded and small-town atmospheres grew to large enough sizes that a specific retailing corporation took notice of possible new markets.

Wal-Mart — the supercenter retailer touting the lowest prices (no matter the cost). The retailing giant that claims both titles of largest private employer in the world and largest company by revenue.

The arrival of a new Wal-Mart induced a transformation of these small towns of northern Michigan — and over the past decade, these transformations have served as examples of the so-called “Wal-Mart effect” that has spread throughout the country. This term, established by journalist Julie Morris, was then expertly described in Charles Fishman’s book, “The Wal-Mart Effect.” He explains how the company drastically alters local economies with their stores. Wages become depressed, other retailers are forced to close and the shopping experience for a consumer is radically changed on all levels.

The effect begins with the construction of the massive warehouse that is often larger than 100,000 square feet. This monstrosity of a building is situated just a short drive from the heart of the city, being built remarkably fast and marketed to the local population the entire time. Upon completion, the draw of the entire institution that has led Wal-Mart to such incredible success begins siphoning consumers from other businesses — Wal-Mart’s “always low prices.”

Wal-Mart’s driving ideology since its founding by Sam Walton in 1962 has been to offer the lowest price to consumers. That ideology still holds today, and yet this simple, successful and almost innocent ideology has had serious consequences that are easily identifiable in the towns which these stores arrive.

For when a Wal-Mart arrives, it immediately begins driving local prices down, competing with other retailers. We as consumers are complicit in this act because Wal-Mart offers to us an opportunity we cannot pass over — saving money, getting a deal, paying less. Consumers are attracted to the remarkably low prices offered by Wal-Mart and cease to buy from other retailers. Why pay more for a piece of furniture from some local family store when Wal-Mart offers it for less? Why pay more for clothing or groceries or toys or nearly anything for that matter? Consumers cannot pass up the opportunity to pay less, and in the process local business slowly die off.

Pushing cost cutting measures to new heights, Wal-Mart's profit margin has always existed as remarkably lower than other competitors, yet in the end, the company succeeds because it drives competition out of business. In addition to the small local businesses, other department stores and retailers such as Sears, JCPenny and Kmart have been unable to compete with Wal-Mart’s almost ruthless corporate mission. “The lowest price” may seem like an innocent and simple ideology for a company — yet when that company makes $485 billion dollars a year in revenue, the effects are astounding.

As Charles Fishman writes in “The Wal-Mart Effect,” the company “is increasingly beyond the control of market forces that capitalism relies on to enforce fair play. Wal-Mart isn't subject to the market forces because it is creating them.” Shaping the retail market around it in its never-ending mission to cut costs, Wal-Mart also nearly dictates the business of its own suppliers. The company is often the majority of sales for many of its manufacturers, grocers and other suppliers and therefore enforces its ideologies within the walls of businesses not their own. From pushing facilities and staff to altering products to make them cheaper and eventually forcing companies to move manufacturing to cheaper, less regulated overseas locations — Wal-Mart operates outside of the natural market forces.

And what this all culminates in is a radically different economy. Wal-Mart, truthfully, is not a pleasant store to shop in. It is often crowded, a bit chaotic and sparse on both space and decoration. But again, it offers the lowest prices. Wal-Mart plays directly into our American consumer psychology, tempting us with the opportunity to save money.

We save money and, in the process, empty the vibrant and unique storefronts of downtowns interlaced with family-run restaurants and markets and instead build warehouse-sized shopping emporiums on acres of blacktop parking lots with tacky chain restaurants where the starved and bland masses can consume thousand-calorie meals.

We further destroy the manufacturing jobs of this country. We allow businesses to be outsourced overseas. We buy products with no care for source and urging — only price. And whether or not you personally even shop at Wal-Mart, this $485 billion-a-year company dominates the retail economy we are all a part of.

But Wal-Mart is not evil, it did not set out to destroy local economies or alter consumer buying habits. It has just capitalized on our obsession with money. 

Michael Mordarski can be reached at mmordars@umich.edu