Lichtenstein's book is both a compendium of Wal-Mart's various sins on our work force, tax system, and local economies, as well as a polemic. People who have followed Wal-Mart's genius in logistics and their squeezing of employees and suppliers will find little that is new, but will appreciate how Lichtenstein has pulled together a useful history of the company, which highlights some of its lesser known successes, like reducing inefficiencies and costs in the supply chain. As a polemic, the book runs out of gas at the end and he could have done a better job of discussing Wal-Mart's possible futures and what may happen to retail labor. The main subtext here is that Wal-Mart has always done its best to undermine labor rights and to avoid compliance with labor law. They occasionally have improved the wages of some of their hourly employees, such as truckers, but generally they have led the race to the bottom, in terms of retail wages. An important point in the book that deserved more space than it was given involved the paltry amount of profit margin that it would take to raise Wal-Mart wages and benefits to those of more generous competitors. Similarly, it's evident that the public subsidizes Wal-Mart's prices through social welfare benefits to underpaid employees and tax breaks for the construction of new stores. Also is evident is Wal-Mart's willingness to lose enormous amounts of money in unsuccessful foreign ventures and to spend money on public relations ventures such as recent efforts to "go green". The chain seems willing to do anything to appear progressive except recognize unions or, until recently, make any meaningful strides in the areas of wages or benefits. Lichtenstein notes that the deflation of wages by Wal-Mart has finally reached the point where it has become a threat to the chain's long-term volume and profit growth.
Lichtenstein's main interest is labor, but he fails to tie together the challenges facing Wal-Mart, beyond some bland consideration of how the chain's business model has hit a wall and that upward mobility for managers was slowing. He is probably correct that the chain risks the fate of Sears, which has limped along for years, but doesn't go much further than this. Unlike Sears, Wal-Mart has managed to create enemies among main street merchants, organized labor, citizen's groups, politicians, and many potential suppliers. It's a business that talks loyalty but tramples the loyalty of workers and suppliers and probably has alienated potential employees in places where it is a dominant part of the local economy. The remaining markets without Wal-Marts are more expensive places in which to operate and to enter. The need of Sam Walton's heirs and Wall Street to increase yields over time is likely to undermine some of the current model and perhaps lead tinkering with its success. Already, Wall Street has prodded the chain to builder smaller stores. It seems likely that unsuccessful ventures like Sam's Club or the stores in Japan may be sold at some point. The chain also may need to grant more autonomy to store managers and show more flexibility in supplying stores. The chain also may need to rethink its low margin, non-growth areas that have been used to drive store traffic: CDs/DVDs, books, toys, and food. besides being low profit sources of revenue, they also represent the only areas where Wal-Mart still changes less than competitors on a wide range of items. Over time, the chain has focused on volume building items to underprice the competition, while many general merchandise lines cost the same as at other chains. Wal-Mart is reaching a point where ambitious early management employees who reaped the greatest benefit from bonus plans are ready to retire. It's clear from Lichtenstein's book that innovation has come from outside the company and the loss of ambitious early risk takers may weaken management further. Moreover, managers represent perhaps the one workforce where Wal-Mart could cut costs in the future, such as through reductions in bonuses and other compensation. Wal-Mart will be around for a long time, but it may be in a more or less debilitated state, with more or less influence on labor practices and store-supplier relationships. The current recession has proven to be a boon to Wal-Mart, but it's unclear how long that will last. As for labor, it's unclear whether it will ever be successful in organizing Wal-Mart or forcing long-term changes in the way that it's employees are treated and compensated. The neo-feudal Southern cultural roots of the chain (well documented in this book) may be too difficult to change beyond some token non-opposition to minimum wage laws.
Lichtenstein's history of retailing has a number of misconceptions. There had been efforts at mixing food and general merchandise going back to the 1950s and involving chains as diverse as DC's Giant, Grand Union, Meijer, and even laggard National Tea. In addition, supermarkets had grown continuously from the 1950s to the 1970s, when even less aggressive chains typically built new stores in excess of 20,000 square feet, and often had stores of over 30,000 square feet. Finally, SS Kresge had been particularly aggressive in entering post-WWII suburban shopping centers, although these stores were the first to go when that chain began its waves of store closures in the 1960s. Kresge had favorable long-term leases on its urban and small town downtown stores and these locations were unlikely to face direct competition from K-Marts. The weak history of retail and the lackluster analysis at the end knocked off a star, but I think this is still worthwhile reading even for people already familiar with Wal-Mart's effect on retailing and beyond.
