Lively Debate

I went shopping at Wal-Mart today. I live in a small, rural town, population 2,000. Until last January, there were only two grocery stores in town: Glenn's and Brian's Meat Market. Glenn's is a traditional grocery store and Brian's carries only meat and produce. Generally, Brian's produce was both cheaper and better quality than Glenn's, with some occasional fantastically good and cheap bulk seasonal produce. Since one store was across the street from the other, we generally bought our produce at one and then the rest of our goods at the other.

Six months ago Wal-Mart came to town. This was a pretty big event around here. Almost everyone from the area talked about it endlessly. On the first few opening days, the isles were clogged with people standing around chatting. (everyone knows everyone here). Gangs of high school kids roamed the store. This was the social event of the season. Almost everyone went to see the new store. The parking lots of Glenn's and Brian's were ghost towns.

Then a few weeks later, I started hearing people talk about how they liked the new store, but that the checkout lines were slow. They started to talk about how their prices on some goods wasn't really any lower than the other two stores. After the opening, Wal-Mart started adjusting its prices upward to match the other local stores. The parking lots of the other stores started to fill up again. The parking lot of Wal-Mart started to dwindle on weekdays. Wal-Mart missed their opportunity to fully capture the market in the area mostly because they didn't staff their checkout lines.

Now, six months later, there is another side effect of the Wal-Mart invasion: reduced quality. Wal-Mart has very low grocery prices on a lot of goods. However, if you look at the ingredients on their cheaper store brands you will find that these are often inferior quality goods. They are highly processed and loaded with high fructose corn syrup and partially hydrogenated vegetable oils. I bought chip dip there that was as awful as it was cheap. It contained mostly water and partially hydrogenated vegetable oil, with enough food science magic to make it look like they weren't selling watered down white margarine and calling it chip dip. The produce at our Wal-Mart store is shameful beyond normal grocery store tasteless produce shame (R.I.P. tomato). I've seen mold on their lemons and grapes in the store.

Unfortunately, the reduced quality is not limited to Wal-Mart. The buzz around town is about how the other two stores, Glenn's and Brian's have lowered the cost and the quality of their goods to compete. I used to like to buy the french bread loaves from the Glenn's bakery, but since Wal-Mart, they have switched suppliers and the new loaves are inedible, but cost half as much. I won't buy the new loaves at all. Glenn's has stopped selling Stonyfield yoghurt, the only brand they sold that does not contain high fructose corn syrup. They still sell Breyers, which has less HFCS than others for .65 a container. Wal-Mart sells the same thing for .50 per container. Neither store sells a non-HFCS yoghurt, so why would I buy yoghurt at glenns? The Wal-Mart brand of yoghurt sells for .33 per container, but contains more HFCS than fruit. Today I heard that others have been complaining about Brian's produce quality going downhill.

Fast Company has a fascinating article on Wal-Mart and its relationship with suppliers. Apparently, they require their suppliers to reduce their prices every year on the same goods. For many suppliers, Wal-mart may sell 25% or more of all of their goods. They can successfully pressure suppliers to lower and lower prices. For some suppliers the demands force them to improve their operations and improve their business. For others, it forces them to simply cheapen their goods.

Based on my perception, the Wal-Mart juggernaught is not unstoppable. I would not want to compete with them in the area of price on brand name products, nor on price for store brand products. Their achilles heal is quality. It is not far from being known for carrying cheap products (low prices are good) to being known for carrying cheap goods (low quality is bad). Ask K-mart what its like to get a reputation for selling junk.

One last thing. I couldn't help but notice how many of the shoppers at Wal-Mart were, well, fat. I don't it is a coincidence that the seriously obese shop at the store with the cheapest most abundant highly processed foods and the worst produce.