Tuesday, November 15, 2005

Every Day Low Prices - No Matter Where You Shop!

Wal-Mart Stores's supply-chain management innovations have driven an overall productivity increase in the U.S. economy, according to a new study by the Global Insight research company.

The findings of Global Insight's "The Economic Impact of Wal-Mart" were revealed last week. Among them: that Wal-Mart's direct and indirect effects on the rest of the retail industry led to a 3.1-percent decline in overall consumer prices between 1985 and 2004.

In 2004, consumers spent $263 billion less than they would have if Wal-Mart were not around, the study said. That translates to $895 per person, or $2,329 per household (that means there are 2.6 people in your house).

Global Insight said there were several aspects of Wal-Mart's business that contributed to the decline in consumer prices, but the largest single one was its efficient use of capital and labor in its distribution and inventory system.

The study also noted that Wal-Mart is more capital-intensive than other retailers. Wal-Mart's size also allows it to leverage its costs for foreign imports. Global Insight also found that Wal-Mart does not appear to pay below-market wages to employees.

"Accounting for the above three forces does not allow us to fully explain the cost savings we have observed," the report says. "Therefore, the only way that these cost savings could have been generated is through a Wal-Mart induced increase in the economy's total factor productivity (TFP) of about 0.75 percent." TFP is an economic measure that combines the use of capital and labor.

Well, that explains it then...

Hmmmmmm...I'm not so sure these savings trickled-down to our house hold. The last time I checked, Jimmy Choo, Coach, Chanel, Polo RLX, etc are still pricing in a "Wal-Martless void." So much for those per household savings...by the way, I think our house has 5.4 people (if you account for our three kids, a dog and a cat).

Was this post reminiscent of Andy Rooney? God, please say no!


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