I can't believe it, but the Republicans appear on the verge of picking the fat old corrupt pompous politician guy.
Wow.
I try not to be political on this blog, but this is a pretty interesting development.
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Try as I might, I just can't get interested in the Europe economic details -- no matter how much I know it will impact on us.
I'm about at the same level of knowledge I used to be about the American economy, but without the motivation to learn more. "Try as I might?" -- well, I'm not really trying.
Eyes blur, snooooooozzzzeeeeee.......
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Walmart heirs have a net worth more than the lowest 30% of the U.S. population.
Who are their best customers.
Instant karma.
They've never gotten a dime from me and they never will.
For some reason, it hasn't impacted my lifestyle one iota.
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A big baseball player caught using performance enhancing drugs. And I'm not familiar with him. Ryan Braun, MVP.
I thought I'd stay in touch with baseball better. Not proud of my ignorance (nor about the Euro crisis), just a little surprised by the depth of it.
I kind of like baseball, but I just don't seem to find the time for it.
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23 comments:
"They've never gotten a dime from me and they never will."
Ditto that.
I had never been inside a Wal-Mart before the one in Bend opened, and I went just to see what it was like.
I swear, it's the only store I've ever seen that looked dirty on its opening day.
I haven't been back, and won't be.
"I kind of like baseball, but I just don't seem to find the time for it."
It's incredibly slow-moving, and not well suited for TV. Much more fun to watch in person.
I guess if you can afford to shop elsewhere, you would never need go into a Wally-Mart. Nice for people on a tight budget, though.
Yes, but maybe if that 30% had been spread amongst a bunch of local businesses, those people would have more money to spend.
Local money gets spent locally, which then gets spent locally. Jobs, raises, greater prosperity.
Instead of a sinkwell of greed for 6 people with the last name of Walton.
"I guess if you can afford to shop elsewhere, you would never need go into a Wally-Mart. Nice for people on a tight budget, though."
I've had people in retail who monitor such things tell me that, overall, Walmart's prices are not significantly lower than other merchants'. But they've managed to create an image of being THE store to go to for the best bargains, an image promoted through advertising and the astute use of "loss leaders."
Also (and this is just a personal impression) I think lower-income people tend to think of Walmart as "their kind of place" and hesitate to shop in more "upscale" stores such as Target -- not to mention Macy's. So they have no real basis for comparison, and maybe assume prices in the other stores are higher than they really are.
Duncan,
your economic about sepnding locally is flawed. Unless the store buys all of its product locally. The majority of the cash flow out of the area is in the cost of goods sold. Now if Walmart has a lower cost of goods sold and I believe you once made the statement that they sell product for less then you pay for it, so I would expect that you would agree with that comment then most likely more money flows out of the area if it is spent in your store then in Walmart.
For example if you use a 40% profit margin.
For every dollar spent 71 cents goes to the supplier out side of the area. The remaining 29 cents goes into rent, expenses, salaries and profits which stay local.
Now if Walmart sells the same product for 20% less and you look at their breakdown. They use a margin of 35% according to filings with the SEC.
Their cost of sales was 74.7%, Their Operating, selling, general and administrative expenses
was 19.20% and Profit was 6%. Now Profit can be considered to go out of area. Most of the 19.2% is store costs, salaries, utilities, etc. Money that remains local.
So if someone buys the same items in Walmart for 20% less and Walmart has a markup of 35% then the same product that someone purchases for 80 cents in Walmart has 59 cents going to the out of area supplier. 4.8 cents leaves the area in profits. A total of 63.8 cents. Compared with the 71 cents that leaves the area if they buy from a small store that charges 20% higher.
So one could argue that the lower price is more adventagous to the consumer and leaves more money in the local area as well for each item purchased.
note that it is not for dollar spent but for the value of a specific item purchased.
HBM,
Pretty much the same numbers apply to other large stores such as Target. Their 10Q reflects similar breakdowns.
Those larger stores do have a very significant price advantage over small mom and pop stores.
Cost of goods in both examples, RDC.
The 30% is the leftover Profit. Which most would stay local. Not sure of your point.
THe point is that even if all of your other expenses and profit are local. The 71 cents you pay that goes outside of the area is greater then the 59 cents thay pay, plus the 6 cents profit and the 2-3 cents G&A (legal, adminstrative, etc.)
That is counter to your point that more money stays local if you buy from a local store.
Miller, the "people in retail" that you're listening to are just plain wrong. The savings to be found at Wal-Mart are quite real. I'll give you just one example(of literally hundreds).
I shop at Wal-Mart. I also shop at Safeway, Albertsons, Rays, Fred Meyers, and even Newport Mkt., on occasion. (Oh, and by the way Duncan, Newport is really the only somewhat local of the lot, and I'll bet that they buy most of their wares from outside the area, just like Wal-Mart).
Anyway, Seattle's Best French Roast ground coffee costs $6 for a 12 oz. bag at Wal-Mart. It cost $11-$12 dollars for the same bag at those other stores. I go through about a bag a week, for a savings of $260/year... conservatively... ON JUST ONE ITEM!
You will find dramatic examples like this with other items... all-day-long, at Wal-Mart.
HBM, I dare you to go do a weeks shopping, wherever you normally shop, then take the receipt to Wal-Mart and compare. Come back here with the results.
Because I'm frugal, and shop at places like Wal-Mart and Costco, I can afford to buy a house (built by a local), go out to dinner on occasion (at a restaurant owned by a local), and shop for some Christmas presents downtown (maybe even in your store).
And another thing, Duncan, how come in your eyes Sam Walton's kids are such scum, but you don't mention Joe Albertson's, or Fred Meyer's, or Ronny Safeway's, or Rudy Dory's? I'm guessing the shareholders of each of those corporations make a tidy little profit, too.
RDC: Your analysis ignores the effect on a local economy when Walmart and other big boxes put local retailers out of business -- which they have done, by the thousands.
Assume Walmart comes into a community and 10 family-owned local retailers go out of business. Assume the 10 families that owned those local retail businesses each cleared $100,000 a year. That's a million dollars a year that's going to Arkansas instead of being earned and (to a large extent) spent locally. Of course the owners of those businesses can (maybe) get jobs at Walmart -- but not $100,000-a-year jobs.
"I guess if you can afford to shop elsewhere, you would never need go into a Wally-Mart."
I just realized I shouldn't let the implications of this statement go unchallenged.
Believe you me, for most of my adult life, my income was such that any saving was welcome.
But, I didn't find that there were any real staples in life -- food, clothing, housewares, that couldn't be found at affordable prices.
My own theory is, that people leave Walmart thinking they saved money and blow twice that much on take-out that night. Or go to a party and get talked into buying a timeshare by their cousin.
Quality of life is not dictated by saving a buck on toothpaste.
In other words, it's not about buying "cheap." It's about buying wisely.
Everytime I see someone pass on something they obviously really like -- because it's too expensive, and buy something they don't really like -- because it's cheap, my soul cringes a little.
Sometimes the difference is almost negligible.
I think the short term, got to have it now cheap, that keeps people poor -- is the same short term, got to have it cheap, that is keeping our nation poor.
Lots of cheap goods is no substitute for a quality life.
HBM,
Not really. They still pay salaries. I suspect that the store manager and shift managers probably make as much as the small individual store owners would have made before and they are local. The store pays reant which is local. The store hires many other employees which is local (or are you trying to argue that Duncan pays his part time employees materially more than Walmart does).
More money stays locally for each item purchased because less goes out of the area to the provider of that good. That means for every dollar in out flow more goods are brought into the local area.
Now one can argue if one really needs those goods are not.
The impact is improved efficiency. That is the impact of competition.
Same exact goods, just less expensive... not "cheap." And let's just say that some people's idea of "affordable," might be different than yours.
And people can leave Wal-Mart having in fact saved money. If they "blow" the savings, so be it. At least they have some savings to blow. If they're like me, they blow some of the savings, and save the rest. All it takes is a modicum of discipline.
I'll let you in on a little financial advise that I got from the single smartest man I've ever known... and one hell of an investor, too. When it comes to building wealth, he told me three words, "Save your money."
"I suspect that the store manager and shift managers probably make as much as the small individual store owners would have made before and they are local."
The point of my hypothetical example was that Walmart puts 10 local retailers out of business. That's 10 good local incomes lost. The salaries paid to one store manager and a couple of shift managers don't make up for it.
"The store pays reant which is local."
I believe that in most cases Walmart owns its stores. Or if it leases a building, the lessor is as likely to be some corporation in Dallas or New York as somebody local.
"More money stays locally for each item purchased because less goes out of the area to the provider of that good."
I concede that point, but that's only part of the story.
HBM,
You indicated that you shop at other stores such as Target.
Doesn't Target do the exact same thing you say WalMart does. Drive local merchants out of business.
How do you logicially reconcile your arguement against one but ont the other?
"Quality of life is not dictated by saving a buck on toothpaste."
Nice aphorism.
HBC,
Per your comment
"Assume Walmart comes into a community and 10 family-owned local retailers go out of business. Assume the 10 families that owned those local retail businesses each cleared $100,000 a year. That's a million dollars a year that's going to Arkansas instead of being earned and (to a large extent) spent locally. Of course the owners of those businesses can (maybe) get jobs at Walmart -- but not $100,000-a-year jobs."
Lets say the local businesses cleared 100,000 each. By the way what kind of sales would they have made to make $100,000 in profit? What kind of money would they be charging the community?
Walmart runs about 6% profit margin. So if each of your hypothetical owners made Walmarts 6% in profit then they would need to do about 1.67 million in sales.
So that would mean that they shipped 1.18 million out of the area in their cost of goods, verse Walmarts 1.13 million, including Walmarts profit and Corporate overhead. Meaning that there is an additional $50,000 remaining in the community for the same amount of products purchased. So the only person negatively impacted in the owner of the small store because more money is remaining in the community.
Since you are making hypothetical financial assumptions about hypothetical owners. I will focus a bit more on reality.
If Walmart has purchased a building then the money for the purchase of the land is still local. The costs to construct are still local. The reality is that the impacts of the real estate trasnaction are mostly local no matter who holds the lease.
Your local merchant might be leasing his store from a remote land owner. He might be paying his mortgage to a remote bank.
So does that mean that a store is being leased from a remote owner it should be shunned after all that lease money does not stay local.
HBM,
Doesn't Target do the same thing.
You never did answer my question on how you can reconcile the support for Target and other stores yet the distaste for Walmart.
Target has pretty close to the exact same financials as Walmart when it comes to local impact.
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