Maintaining Optimism in the Face of Reality. Occasional observations on the state of the world, society, business and politics. Usually anchored by facts, always augmented by opinion.

Walmart's Scale  | e-mail post

I had a couple of my friends since college visit this weekend. It was good seeing them. We discussed a variety of things, but on Sunday morning, the conversation for some reason turned to Walmart. My friend from L.A. was particularly surprised that I, a business owner and typically pro-business Republican, am actually very much in favor of municipalities using zoning to prevent Walmarts from moving into cities. As he says, he is used to reflexive support among his friends in L.A., but was surprised I would be on board.

I said it was a matter of scale. Walmart is too big, but because of the fragmentation of the market in which they operate, they are a long way from causing antitrust concerns. And believe me, by the time they are big enough to meet antitrust criteria, we're in trouble. thus, the only option for regulation under our current legal regime is this sort of local zoning control.

I thought I would take a moment to help people understand just how large Walmart is, because I think it is easy to lose perspective on something like this. I mean, everyone knows they're big. But how big?

Employees: Walmart employs 1,700,000 people, according to the most recent figure on Yahoo Finance. If it were a state, it would be the 39th largest state in the nation, just behind Nebraska. Clearly, "fewer people than Nebraska" doesn't make it sound so large. Let me put it another way. Consider the following small businesses:
These companies, combined, employ about 1.7 million people. (Again, figures from Yahoo Finance's company profiles).

Put a third way, about half of the U.S. population is "working age" right now (25-64). That means that about 1.1% of the U.S. labor pool is employed directly by Walmart. This doesn't include the largely contract (and in some cases illegal, judging from occasional news reports) labor used to clean their stores, and other effectively direct employees.

Market Scale: Walmart's trailing 12 month revenue is about 2.91 billion. According to federal statistics, total U.S. retail sales for 2004, excluding automotive, was 2.63 trillion dollars. Again, about 1.1% of all retail spending goes to Walmart. Comparatively, the following eight rather large store chains combined had about 2.87 billion in revenue over the same period:
I could go on, but hopefully this gives some food for thought about just how large Walmart is.

Now, I have obviously skipped discussing any of the reasons I am troubled by Walmart, since scale alone is not necessarily a negative. I will likely return to these issues another time. To summarize to the point of near vacuity, but as a hint of my feelings it comes from their corporate practices in dealing with labor and vendors, the macoeconomic impact they have on our trade deficit (not to say Walmart is solely to blame for our trade imbalance, of course), the manner in which they encourage a race to the bottom in product quality in the name of reducing price, and their simply unpleasant merchandising and aesthetics, as long as I'm on a rant.

More to come on these things another time. Enjoy your Memorial Day.
e-mail post | Link Cosmos | [Permalink]  | (19) comments |  | Monday, May 30, 2005

Kinda Makes You Wonder  | e-mail post

Last year, the then-head of the Minnesota Lottery, George Anderson, committed suicide shortly before a probe of the lottery's finances and operations was the be released. At the time, I thought this was pretty unusual. It's one thing for there to be some kind of misfeasance or malfeasance, and entirely another when a public official kills themselves before the report's release.

Well, it seems the lottery has taken another life, or, more accurately, another individual under scrutiny took his own life. The Business Journal reported last Friday on Michael Priesnitz being found dead from a self-inflicted gunshot wound. Priesnitz was the founder of Media Rare, a St. Paul advertising-ish

While there is some discussion of poor health in this Star Tribune report, it seems unlikely to me that the suicide would be driven by a person in their mid-50s having a heart attack. Conventional wisdom might suggest that such an event might be more likely to give someone more of a zest for life. It seems more probable that the timing of the suicide could be a result of the lottery investigation getting turned over to Ramsey County attorneys, and, potentially, the impact Priesnitz might have felt from the current owners of Media Rare, who seem to have purchased MR in some sort of earnout arrangement. Given that the lottery was MR's biggest client (and seems to have had the late commissioner Anderson intervene on their behalf regularly), Priesnitz may have felt he wasn't up to the task of explaining things, paying back ill-gotten gains or maybe even spending some time in the clink (which seems unlikely).

All I can say is that I am curious to see the final report of the lottery probe.

Star-Tribune - "A Second Death Among Lottery Probe Subjects"
e-mail post | Link Cosmos | [Permalink]  | (1) comments |  | Monday, May 02, 2005

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