Wal-Mart Hits Pay-Dirt in B.C.


National Post Comment August 04



Wal-Mart. Try mentioning the word at a polite dinner party and you're in for a treat. No subject marks the cultural divide more sharply, no other single word can trigger such an avalanche of debate. Wal-Mart's hot button is so hot, it sizzles. "The epicenter of Retailing's Evil Empire," so dubbed by Business Week, which ought to know better, has the most impressive collection of enemies since the Czar of Russia.

And the fight has arrived in Canada. In the 10 years since Wal-Mart absorbed the discounter, Woolco, it has established 213 stores across this county. It wants more, many more. They want in on the vast, profitable grocery business in Ontario, and when they enter it, if history proves out, prices will drop 15%. They want Super Wal-Marts in the 'burbs, which at more than 200,00 square feet, sell absolutely everything your little heart would desire, and they want Super Wal-Marts in big cities. Strangely enough, given their dastardly reputation, Wal-Marts are wanted. One hundred Canadian communities across the country lobbied Wal-Mart to locate near their town in 2002. The applications often fail. A competing behemoth works to stop them. It is a brand-new coalition consisting of women's groups, students' groups, environmental groups, international union organizers, local union organizers and, in the States, plaintiffs' attorneys. Together they work to defeat the company's re-zoning applications in location after location. They often win, more often than not, by marshalling local press and sentiment against the company. Wal-Mart is a bonanza for the legal profession. In the States, looking at 2002 alone, every 90 minutes, someone launched a lawsuit against Wal-Mart. Right now it is embroiled in the biggest pay equity lawsuit in the history of the universe, that might involve up to one million past and present female employees and cost the company billions.

This month, however, in Canada, Wal-Mart hit pay dirt. Two native bands in B.C. agreed to host a Wal-Mart on their traditional lands. On reserve land, there are no unions, pay equity provisions or environmental regulations. Native law prevails. On native land, rezoning applications are unnecessary. The mayor of Duncan, B.C., the town that borders on one of the native reserves, was asked to the Wal-Mart/Cowichan band negotiating table as a courtesy. Environmental groups did not turn out, since they have such a special relationship with aboriginal people, they couldn't pick that fight. One can only give props to Wal-Mart's genius. The native bands too, hit pay dirt. Property that sat fallow and profitless (except for its spiritual significance) for yay these many millennia, could suddenly turn up to be worth a million or so a year.

One can hardly imagine why people want to shop at such ghastly places, but one hundred million people do, every week, 80% of the American public in fact. It has to do with one thing: prices. Gross operating profits in the Mom and Pop shops that Wal-Mart killed, and the heritage left mourns with ever-so-big crocodile tears, ran about 44%. At Wal-Mart, gross operating profits run around 22%. The company passes on the difference to the customer. What an astonishing concept! It is a funny thing too that people want to work there, given Wal-Mart's foul reputation as employers. But 1.4 million do. Happily. The company has little trouble recruiting because the pay differential between union and Wal-Mart's non-union pay is small. And because the company is so large, the possibility of advancement is enormous. Two-thirds of Wal-Mart management began stocking shelves. Try and talk to a Wal-Mart employee. For many it's a starter job, a leg up on their way to someplace "better," but the lifers are so pumped about the store, it's like they're on helium. That is because the company constantly innovates, and the best ideas often come from the people on the store floors. For which they are rewarded, in one of the first profit-sharing programs invented.

Low prices, like low taxes, are, for some strange reason, considered suspicious. But consider the following. The august McKinsey Consulting Group in their report , The Wal-Mart Effect, estimates that the retailer's focus on low prices and its constant stream of money-saving innovations accounted for up to 25% of the U.S. economy's productivity gains during the '90s. Warren Buffet believes that Wal-Mart contributes more to the health of the U.S. economy than Microsoft. The Manhattan Institute's Steve Malanga reports that a study sponsored by Wal-Mart but conducted by the Los Angeles Country Economic Development Corporation estimates that "Wal-Mart's entry into the local market would save county shoppers about US$1.78-billion annually, and southern California shoppers US$3.76-billion annually or nearly US$600 per household. Those savings, redirected to other spending would create up to 36,000 jobs, compared with the maximum of 5,000 jobs lost among competitors."

So, an astonishing engine of growth. But more, founder Sam Walton's anti-union philosophy of success points to a necessary 21st century paradigm. Unions, he argued, depend on driving a wedge between workers and management, causing divisiveness and diminishing communication and innovation. It would be both appropriate and ironic if Canada's native communities would lead us through that dead angry space to a more vigourous future.