The Wal-Mart EffectThe Wal-Mart EffectChapter 6Chapter 6

Brian DorwardBrian Dorward

What information did Emek Basker What information did Emek Basker need in order to analyze the impact need in order to analyze the impact

of Wal-Mart stores?of Wal-Mart stores?

A list of stores, by numbers, and A list of stores, by numbers, and the date they opened.the date they opened.

In order to confirm that Wal-Mart In order to confirm that Wal-Mart does lower prices, Basker collected does lower prices, Basker collected

data on specific products. Name data on specific products. Name two of those products. two of those products.

Bayer aspirin, Winston cigarettes, Bayer aspirin, Winston cigarettes, Cascade dishwasher powder, Cascade dishwasher powder,

Kleenex, Johnson’s baby shampoo, Kleenex, Johnson’s baby shampoo, Alberto V05, Coke, Fruit of the Alberto V05, Coke, Fruit of the

Loom briefsLoom briefs

According to Basker, Wal-Mart’s According to Basker, Wal-Mart’s impact on prices is greater where? impact on prices is greater where?

In smaller cities.In smaller cities.

Taking collateral damage into Taking collateral damage into account, how many new jobs does account, how many new jobs does

a regular Wal-Mart create after a regular Wal-Mart create after being in business for five years?being in business for five years?

3030

The Consumer Price Index (CPI) The Consumer Price Index (CPI) can be overstated by what can be overstated by what

percentage each year?percentage each year?

15%15%

Why do the people at the Bureau of Why do the people at the Bureau of Labor Statistics (BLS) ignore Wal-Labor Statistics (BLS) ignore Wal-Mart in calculating the Consumer Mart in calculating the Consumer

Price Index (CPI)? Price Index (CPI)?

They assume that any difference in They assume that any difference in the cost of an item is owed to a the cost of an item is owed to a

lesser-quality shopping and service lesser-quality shopping and service experience at Wal-Mart.experience at Wal-Mart.

What were Ken Stone’s two “rules What were Ken Stone’s two “rules of thumb” about the winner and of thumb” about the winner and

losers when Wal-Mart arrives in a losers when Wal-Mart arrives in a town? town?

Rule 1: Merchants selling goods or Rule 1: Merchants selling goods or services different from what Wal-Mart services different from what Wal-Mart sells become natural beneficiaries.sells become natural beneficiaries.

Rule 2: Merchants selling the same Rule 2: Merchants selling the same goods as Wal-Mart are in jeopardy.goods as Wal-Mart are in jeopardy.

How did Vishal P. Singh and his How did Vishal P. Singh and his colleagues study the effects of Wal-colleagues study the effects of Wal-

Mart on supermarkets?Mart on supermarkets?

They collected data gathered from They collected data gathered from “loyalty” cards issued to “loyalty” cards issued to supermarket customers.supermarket customers.

The majority of loses experienced The majority of loses experienced by supermarkets result from what by supermarkets result from what

cause?cause?

Fewer store visits (this had little Fewer store visits (this had little impact on basket size).impact on basket size).

What is Wal-Mart’s effect on its What is Wal-Mart’s effect on its suppliers according to Gib Carey’s suppliers according to Gib Carey’s

studies? studies?

As Wal-Mart consumes a greater As Wal-Mart consumes a greater chunk of a company’s sales, it chunk of a company’s sales, it simultaneously offers a smaller simultaneously offers a smaller

slice of profitability.slice of profitability.

THE ENDTHE END