June 29, 2005
Wednesday

Small towns and cities across America were the backbone of the country's virile economy of goods and services. In my own hometown of 12,000 when I was growing up, thriving businesses included local and chain department stores, men's and women's shops, a dozen drug stores, supermarkets and grocery stores and a wide variety of others from auto and hardware to furniture stores.

Now these things still can be bought in my town and hundreds of others like it across the land, but only from one place - Wal-Mart.

Not since the government decided that Standard Oil controlled too much of the petroleum market - or that the cross ownership of Dupont and General Motors posed a similar threat to free enterprise - has the idea of healthy competition been as challenged as it is by the Arkansas-based retail behemoth "that is simultaneously the most admired and the most reviled in the world."

At least that's the premise of John Dicker's "United States of Wal-Mart" (Tarcher/Penquin, $13.95), which examines as never before the inside of one of the most profitable companies in history. With annual sales revenue of nearly $288 billion, Wal-Mart would be among the world's top 20 economies if it were a country.

This giant variety store with its seductive pricing has brought a new dimension to the age-old argument over the impact of "big" in the business firmament. With more than 4,900 stores in the United States and eight foreign countries, the scope of this incredible growing monster is breathtaking.

Here are some of the alarming statistics cited by Dicker in this fascinating study of corporate success that blows away most previous models:

- Wal-Mart boasts the largest private satellite and computer systems in the world. A new system in development will track the location of every item in the inventory, whether in the warehouse or on store shelves.

- The company receives tax and other concessions from federal, state and local governments worth $4 billion a year.

- Wal-Mart pressures vendors to lower their prices so drastically they are often forced to move manufacturing offshore to keep costs low.

- As a template industry, Wal-Mart forces practices on other companies striving to compete. Large grocery chains in California demanded major concessions from their unions as a means of staying even with non-union Wal-Mart.

- By 2007, Wal-Mart will control 35 percent of all domestic food and drug sales. It currently controls 10 percent of music sales. It is the largest jeweler in the world and is moving to control the sale of toys and a dozen other items.

"Criticize Wal-Mart and you're guilty of a host of socio-ideological sins ranging from special interest pandering to downright anti-Americanism," Dicker writes. "Point out its low ages and meager benefits and you're the butt boy of organized labor. Say that it's bad for independent business and you're a hopelessly sentimental alarmist or worse still: an enemy of competition and thus capitalism itself."

Dicker compares Wal-Mart to a sovereign government with the ability to set wage standards and rezone cities. It employs one of every 115 American workers and despite its huge profits holds the average wage to less than $18,000 a year, well below the current poverty line for a family of four. The average Wal-Mart worker must spend 45 percent of his or her salary to meet health care premiums. In fact, Dicker contends that a single Wal-Mart costs taxpayers half a million dollars a year in public assistance funds used by its employees who can't afford the company's health care plan.

Dicker, a Colorado freelance writer, says people are fighting back albeit in a small way. From site fights in places like Chicago and other communities that oppose another Wal-Mart to class action lawsuits and referendums, there is evidence that the company's low prices may just be costing too much. Still, he notes that 20 million people walk into a Wal-Mart each day. When the company moves into a depressed community offering jobs and cheap goods, "worries over the socio-political implications of yet another Wal-Mart yield to worries about getting dinner on the table."

This is a well done, quick read expose that plays more like a novel about the fight for the soul of American retailing. Big may not be bad as long as it isn't too big, then it becomes something else. Every visit back home brings longing for the days before the interstate highway system and the United States of Wal-Mart.

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