A presentation I designed for a business class in my BA. It describes the fallout on American society from Wal-Mart\'s unchecked predatory business practices.
2. What is Predatory Pricing?
According to Boatright, predatory pricing
is “reducing prices to unreasonably low
or unprofitable levels in order to drive
competitors out of business.”
The monopoly created in the absence of
competition allows the surviving business
to raise prices and make up for
previously lost revenue.
3. Allowable Predatory Pricing
Low-cost businesses may be able to
endure limited profits as a routine
Clearance sales move inventory at a loss
that wouldn’t be sold at all
The need to introduce a new product or
service at a loss in order to gain entry
into the market (freeware or shareware)
4. Wal-Mart
As of 29 February 2008, Wal-Mart has in the
United States…
132 Neighborhood Markets
○ 42-55,000 sq. ft., 80-100 employees
○ Usually located to support Supercenters
971 Discount Stores
○ Average 102,000 sq. ft.
2,447 Supercenters
○ 100-220,000 sq. ft., 200-550 employees
○ Include full-service grocery stores
591 Sam’s Club Warehouse Stores
5. Predatory Pricing or “Everyday
Low Prices?”
Isn’t a low-cost business what healthy
competition is about?
By reducing its own costs, Wal-Mart can lower
consumer prices on a full range of goods
Customers spend less for goods they buy, thus
increasing availability of funds for other things…
…don’t they?
6. Wal-Mart’s Impact
In the ten years following the opening of Wal-
Mart’s first store in Iowa, rural communities lost
nearly half of their local retail sales to Wal-
Mart, devastating their impoverished economies
Wal-Mart Supercenters were estimated to depress
wages and benefits in the grocery industry in
southern California by $500 million - $1.4 billion
annually
Counties with a Wal-Mart store witness an average
0.2% increase in their poverty rates compared to
counties with no Wal-Mart, attributed by experts to
the displaced local employees working at Wal-Mart
for lower wages than previously earned
7. Wal-Mart’s Impact
46% of Wal-Mart employees’ children are
either on Medicaid or are uninsured – either
way increasing cost of health care to the
taxpaying community
Wal-Mart stores produce an annual net loss
in tax revenues of $468 per 1,000 square
feet due to the increased cost of
infrastructure and public works
8. Big Box Mart
Click to View JibJab.com’s Hilarious Video
9. Sources
Bernhardt, A., Chaddha, A., & McGrath, S. (2005, August). What do we know about Wal-
Mart?. Retrieved March 8, 2008, from
http://walmartwatch.com/img/documents/brennan_center.pdf
Boarnet, M., & Crane, R. (1999, September). The impact of big box grocers on
southern California. Retrieved March 8, 2008, from
http://walmart.3cdn.net/256e083c51be1d38d6_78m6ih0g7.pdf
Boatwright, J.R. (2007). Ethics and the conduct of business (5th ed.). Upper
Saddle River, NJ: Prentice-Hall.
Chambers, S. (2005, October 26). Reviewing and revising Wal-Mart's benefits
strategy: memorandum to board of directors. New York Times. Retrieved March 8,
2008, from
http://walmartwatch.com/img/sitestream/docs/Susan_Chambers_Memo_to_Wal-
Mart_Board.pdf
Stone, K. E. (1997). Impact of the Wal-Mart phenomenon on rural communities.
Retrieved March 8, 2008, from
http://walmartwatch.com/img/documents/iowa_farm_study.pdf
Wal-Mart (2008, February 29). Corporate Profile. Retrieved March 7, 2008, from
http://investor.walmartstores.com/phoenix.zhtml?c=112761&p=irol-irhome
Wal-Mart. (n.d.). Corporate facts: Wal-Mart by the numbers. Retrieved March 7,
2008, from http://www.walmartfacts.com/FactSheets/Corporate_Facts.pdf
Wal-Mart (n.d.). Divisions. Retrieved March 7, 2008, from
http://walmartstores.com/GlobalWMStoresWeb/navigate.do?catg=504&contId=44