mad anthony

Rants, politics, and thoughts on politics, technology, life,
and stuff from a generally politically conservative Baltimoron.

Thursday, January 13, 2005

Do people really shop based on employee pay?

Via The Corner comes a Bloomberg article Wal-Mart responding to the chronic anti-Walmart complaints. The second half of the article talks about it's slow Christmas sales, and includes this quote:

Consumers may also have turned to other retailers after reading criticism of Wal-Mart's labor issues, said David Keuler, who helps manage about $60 billion at Mason Street Advisors including Wal-Mart shares. `People aren't overlooking the image that Wal-Mart has just to get a bargain,'' with the economy getting stronger

I tend to doubt this. I have no real proof, but then again, neither does David (is it OK if I call him Dave?). I know very few people who shop at Wal-Mart, but I don't think any of them don't shop their because of it's wage structure.

Here is how I usually decide what stores to shop at:

1. Price - my paramount concern
2. Selection - do they have what I want?
3. Location - are they near me? Or are they near somewhere I frequently am (work, other places I run errands, on the way home, ect)
4. Previous experiences - if I've had really good service at a store, I'll make a point to go back there. If I've had a really bad experience, I'll try to avoid them.
5. Shopping experience - if the item is around the same price, I would rather shop at a clean well lit store with lots of parking than one that lacks those things.

When it comes to discounter shopping, I usually shop at Target - not because I have anything against the business policies of Wal-Mart, but there are 2 Targets in between my apartment and the nearest Wal-Mart, and because I've gotten some very good clearance deals at Target, some of which I've resold for a profit. Based on the few times I've gone to Wal-Mart, Target seems to be more pleasant (faster checkout, wider isles, even cuter female employees, although that's not a criteria I use in picking a store).

Dave at Mason Street feels that the reason people may have avoided Wal-Mart at Christmas is because they have more money as the economy picks up, so they have the luxury of picking a store based on the perceived treatment of their employees. This seems very roundabout compared to the more obvious conclusion - they have more money, so they can buy nicer/more expensive stuff than they would buy at Wal-Mart. I would guess they are picking Amazon or Target over Wal-Mart not because they think they treat their employees better, but because they have a more pleasant shopping experience and better quality items.

I think part of the slow Black Friday sales at Wal-Mart is because Wal-Mart doesn't really play the Black Friday game the way some other retailers (especially specialty and electronic retailers like Best Buy, Officemax, and Circuit City) do. As some of you may know, I'm a pretty hard core Black Friday shopper. This year I spent around $500 on Black Friday, most of which I will get back eventually as rebates. Most of this is the early-morning, doorbuster, free-after-rebate, limited quantity, get-to-the-store-an-hour-before-they-open deals. Wal-Mart doesn't do this. Since Black Friday shoppers can only hit a limited number of stores, they are going to hit the stores with the crazy-cheap deals, and that usually isn't WallyWorld. But it's debatable if stores make much money off these below-cost promos, so it might not be in Walmart's best interest to join the fray.

The other question is if Wal-Mart really treats their employees any worse than other comparable retailers. Does Target and Kohls pay all their employees $30 an hour with full benefits? I doubt it. So it seems unlikely that customers are going to pass up Walmart to shop at Target for moral reasons. I think the impact that Wal-Mart felt is a reaction against Wal-Mart's quality and shopping experience, not against their employee benefits, and that people like Dave at Mason Street are just engaging in wishful thinking.


At 4:36 AM, Anonymous Anonymous said...

This comment has been removed by a blog administrator.

At 9:57 PM, Anonymous Anonymous said...

I have worked at Kohls for 5 years. I am floor lead and still make less then a first year Walmart cashier. Just thought people should know.


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