The Retail Revolution
How Wal-Mart Created a
Brave New World of Business
Metropolitan Books: 312 pp., $25
Bentonville, Ark., may be unknown to most Americans, but it is the center of the world for some 750 corporations that manufacture consumer goods -- because Bentonville is the legendary home office of Wal-Mart, and those corporations want to sell their products to the world's largest retailer. It's also the largest private employer in the nation, operator of 4,200 stores.
Bentonville is a key to understanding the success of Wal-Mart, historian Nelson Lichtenstein argues in his terrific book, "The Retail Revolution: How Wal-Mart Created a Brave New World of Business." Legendary founder Sam Walton didn't start in Bentonville, in the Ozarks in northwestern Arkansas. The first store he ran in the late 1940s was in Newport, Ark., in the Black Belt along the Mississippi where chain stores like Woolworth's soon became the target of sit-ins and business boycotts organized by the nascent civil rights movement.
But when Walton lost his lease on his first store in 1950 in the Delta he decided to relocate to the Ozarks, far from the social conflicts of the midcentury South. He was able to develop his business in a remote, isolated area. "The Ozarks were not just rural and poor," Lichtenstein writes. "They have long been uniquely homogeneous, among the most exclusively white regions in the nation."
One of Lichtenstein's most original contributions is his argument that Wal-Mart created its own corporate subculture rooted in this region. Sam Walton said Wal-Mart workers were "a family," and Lichtenstein writes that the company would create "a self-contained corporate culture, an ideology of family, faith, and folk communalism that to this day co-exists in a strange harmony with a Dickensian world of low wages, job insecurity, and pervasive corporate surveillance" -- a culture where the female workforce was, in Lichtenstein's words, "cheap and grateful."
If Wal-Mart's success depended first on this Bentonville subculture, it was also based on the creation of an advanced global system for manufacturing cheap goods and a pioneering bar-code-based computerized shipping network that got the goods to the stores in record time.
Lichtenstein's sympathies lie with the workers Walton called "associates." They are recruited by the hundreds of thousands from the ranks of the retired, those willing to work part-time, and people who want a second job. Their wages are so low that a startling proportion of Wal-Mart associates are also welfare recipients. According to a 2004 UC Berkeley study, "Wal-Mart wages -- about 31 percent below those in large retail establishments as a whole -- made it necessary for tens of thousands of company employees to rely on public 'safety net' programs, such as food stamps, Medicare . . . and subsidized housing, to make ends meet." Managers, Lichtenstein adds, "even pointed struggling associates to the appropriate government agency where they could apply" for assistance.
And because Wal-Mart runs 24 hours a day, lots of people have to work in the middle of the night or suffer through chaotic shift schedules. An associate's work life can often revolve around trying to get a decent schedule, one with steady daytime hours.
The low wages and scheduling problems create massive turnover. But Wal-Mart, Lichtenstein reports, has concluded that hiring and training a steady stream of new associates is cheaper than keeping the ones they have by paying decent wages and opening careers to promotion and advancement. As Lichtenstein writes: "Michael Bergdahl, who worked in the home office as head of the Wal-Mart People Division during the last years of Sam Walton's life, let the cat out of the bag in his 2004 memoir-advice book 'What I Learned From Sam Walton.' 'It's hard to believe, but turnover drops millions of dollars to the bottom line in cost savings for the company. When an experienced associate leaves the company he or she is replaced by an entry-level associate at a lower wage. Turnover of associates, for this reason, actually appears, from an expense standpoint, to be a competitive advantage.' "
Wal-Mart managers, Lichtenstein writes, know their success "depended on keeping trade unions at bay." The home office in Bentonville goes wild when workers anywhere get interested in a union. One of Lichtenstein's most striking stories centers on nine meat cutters in small-town Texas who voted to join a union. The company responded by ceasing all meat-cutting at its supercenters in a number of states and selling only prepackaged meat.