Here's a statement to reckon with:
"Our company is based on low prices. Even in books, we kept going until we were the low-priced leader. And with will do that in every category if we need to."
Raul Vazquez, president and chief executive of Walmart.com. (This mornings Bulletin.)
"...WE KEPT GOING..."
"...IN EVERY CATEGORY..."
"...UNTIL WE WERE THE LOW-PRICED LEADER..."
Talk about laying down the gauntlet.
I should remind myself of this statement every time I complain about comics being such a small industry. Yes, comics are a small industry and as such only provides about 60% of the revenues I need, but it is the base of my business. All the other 7 or 8 product lines are 'sidelines' and provide the other 40%. It would be difficult to make it on only sidelines. As it turns out, it's fortunate comics are also relatively difficult to sell, taking up space and energy and organization for very little return. To a very small audience. So far, the big boys haven't quite figured out a way to do it. So far.
Yet, I think that may be the future of a store like mine. Assembling together enough unique product that Walmart can't quite take it all. Hard work, that.
"...we kept going...until we were the low-priced leader...in every category..."
Does anyone think through the logic of such a statement? Where do those cost-cutting savings come from? Material? Labor? Transportation?
Because it has to come from somewhere. Either the cost cutting comes from the suppliers, or their own operations, or from the material in the product itself.
I had a 'customer' in yesterday, who occasionally buys the supplies for sports cards he can't get anywhere else, but never....never, ever...actually buys anything worthwhile from me. (Supplies are a courtesy, not a profit center.) He was complaining about the card sleeves he had bought from Walmart.
"They're rejects," he said. "Really low quantity."
"Well, you know," I ventured, into dangerous territory. "You're not quite getting the deals you think you are on anything else, either." I proceeded to inform him of the "Home Team Advantage" program that Topps has for hobby stores, guaranteeing a higher rate of autographs, etc. etc. etc.
I lost him right away. He had the example of crappy sleeves right in front of him, but wasn't ready to extrapolate from that. It still hadn't quite entered his thinking that maybe, just maybe, he was getting lower quality on everything else he was buying from Walmart.
Next book I'm going to read is CHEAP, THE HIGH COST OF DISCOUNTS. Even though I suspect it may be disheartening reading.
I believe the publishing industry, which is already in trouble, is being forced into very dangerous territory.
What's the most likely result of Stephen King's latest book being sold for $9.00 at Amazon, Walmart and Target?
That these stores become an even bigger slice of the publishing pie.
And what are they likely to do with that clout?
Well, we already know what Walmart is going to do. They've told us. They'll drive the prices of books down. And down. Until they are the "low-priced leader."
And the publishing industry will have to agree. Because it's more than possible that Borders won't survive this; or any number of independent bookstores; and I wouldn't think Barnes and Nobles is going to do so well, either.
I won't be buying wholesale copies of Under the Dome for 24.00 from my distributer, which extended to every other independent retailer can't be helping them much. And so on, up and down the line.
How many best-sellers can I ignore before I become irrelevant? So do I buy and lose money? Do I buy, and explain to my customers that they have to pay 4 times as much from me, but, gee, I'm such a nice guy?
It all seems so self-destructive to me. To our culture. To our economy.
But, hey. What do I know?
4 days ago