Wednesday, July 18, 2007

The Wal-Mart Fallacy

In case the punchline of the cartoon at left is rather small, I will repeat it: "Pluggers know that quality equals quantity."

Well, Pluggers are wrong.

What do we really want? A cheap computer which crashes all the time, or a computer which works all the time? A bag of rags, or a pair of pants? A bunch of incompatible people to date, or finding the one who makes us happy?

I recently had a discussion with someone who did not believe me when I informed them that Wal-Mart sells different products from the name brands that can be gotten elsewhere. I explained that in order to meet Wal-Mart's price point, the companies have to downgrade their product's manufacture just for Wal-Mart.

The Lee jeans at Wal-Mart are not the Lee jeans at the Gap. That is why they are cheaper. Wal-Mart shoppers are not getting them cheaper.

You are, in fact, paying only what they are worth. This can be an advantage if you are buying products which you don't intend to use extensively, such as children's clothes which they will grow out of, a kitchen appliance for occasional use, or purely decorative items that don't get used.

But I think people are shopping at Wal-Mart because they want the same thing, only they think they are getting it cheaper. And that's The Wal-Mart Fallacy.

It reminds me of the old joke, "The food was terrible! And such small portions." The joke here is why anyone would want more bad food. Yet, in the age of Wal-Mart, that is what they are getting, but they don't know that.

They don't want to know that.

That is why my conversational companion fought me so hard. I pulled up articles by major manufacturers explaining why they sold to Wal-Mart, and what they did in order to accomplish that. And my conversational companion didn't want to believe.

Of course you don't want to believe that! That's your whole retail reason for existing. Somehow, people who shop at Wal-Mart want to believe they have beaten the system. That they have gotten something for less! Our every fiber of American DNA rebels against this thought. We are good consumers! We manage to get a bargain against every market indicator that lives and breathes against our doing that. We have beaten the system!

Only we have not.

We are paying what the merchandise is worth. No more, and certainly, no less. Yet, Wal-Mart is convincing people that they are getting a bargain. A coffee maker that lasts nine months, a pair of jeans that lasts little more. But we got it so cheaply!


There's the rub. Is all you can eat of stringy beef and watery mashed potatoes the same as a real grilled ribeye and mashed red skin potatoes? Is it?

Is it?

If you think it is the same; no, if you think you are better off, paying less... for less.

Congratulations. You are an American consumer. In other words...

You are a sucker.

Which is against the whole American mythos. You can't be a sucker, paying less for jeans or coffee makers which... dagnabbit, don't last as long. But it was a bargain!

So be happy. That you've made China richer, and yourself... poorer.



Manufacturers are understandably reluctant to make this point public, so here are some articles I found:

The Wal-Mart You Don't Know
Bodega Goat Cheese
Cheap Cuts Both Ways