Wal-Mart: Low Prices Come at a Cost

One of a consumer’s highest priorities when buying a product is affordability. In the economic demand curve, the lower the price, the higher the demand. Wal-Mart realized that if it could offer significantly lower prices for staple products, it would become successful. To a certain degree, Wal-Mart has become very successful. As of 2010, Wal-Mart had over 11,000 stores under 55 different names and is located in 27 different countries. It also produced $405 billion in revenue for the 2010 fiscal year. Wal-Mart offers all types of products, such as jewelry, cleaning supplies, food, and computers for a significantly lower price than any other store. The store has taken over as the capital of low prices, and that is what keeps the customers coming, but even Wal-Mart’s low prices come at a cost – a cost that many costumers do not realize when buying from them.

Wal-Mart has a history of filed complaints of mistreatment of their employees. In addition to minimum level wages, its workers have protested the pay caps and lack of benefits. There was a class action lawsuit filed in Missouri against Wal-Mart in 2005  that claimed around 160,000 to 200,000 workers could not take lunch breaks, were denied overtime pay or were forced to work when it was not their shift.

In addition, Wal-Mart stores are often understaffed and employees are tirelessly overworked. A direct indication of this are the aisles of empty shelves due to the lack of workers to keep them stocked. In first-hand accounts found on the Consumerist, an employee recounted her experience working at Wal-Mart. She shared that often they would be short-staffed due to people leaving or getting fired. The managers would wait until they absolutely needed to hire more people, then they would get a rash of new people. In the meantime, understaffed workers had to keep the business running and were told to “work faster and harder.”

Wal-Mart seems to also directly affect communities in which they set foot. When Wal-Mart is planning to inhabit a new city, activists often attempt to stop them and accuse them of bringing bad public relations, environmental problems and alleged predatory pricing. Companies in the past have tried to sue Wal-Mart for allegations of predatory pricing because they believed that their low prices were driving out opportunity for other businesses. Wisconsin’s Department of Agriculture, Trade and Consumer Protection accused Wal-Mart in 2000 of selling staple products such as milk at a low cost with the intent of diverting business from other local shops.

However, Wal-Mart is not solely responsible for its misdemeanors. Some consumers who buy from Wal-Mart are financially strained, and need to save money in every area that they can. To them, Wal-Mart provides the products that they need  but that they can not afford to purchase anywhere else. Thus, by filling the demand for lower prices, Wal-Mart  exists because people keep buying from them. Consumers do not usually think about the practices they are supporting by buying from Wal-Mart; most just know that they need to conserve money, and Wal-Mart is the place that gives them relief from financial stress. Consumers enjoy Wal-Mart’s low prices and good deals, which may benefit them, but often comes at a cost to others.

Opinion by Joyce Chu

Sources:

The Consumerist
Winston-Salem Journal
USA Today