Does Wal-Mart really save you money?
Wal-Mart claims to save consumers cash -- even if they don't shop at one of its stores. Steve Henn reports on whether the company's claim is true.
A Wal-Mart in Panorama City, Calif. (Robyn Beck/AFP/Getty Images)
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TEXT OF STORY
Kai Ryssdal: We are, as of this Monday, just four short days away from Black Friday. That once-a-year, day-after-Thanksgiving spectacle where the American consumer really gets down to it. Only this year, though, like never before, retailers are fighting to position themselves as your allies in saving money.
Few national chains have been at that game longer than Wal-Mart has. And Marketplace's Steve Henn reports the world's biggest retailer is now claiming to save consumers cash, even if they don't shop there.
STEVE HENN: If you watch TV, you've probably seen this ad.
TV AD: The family budget. In today's economy nobody is more committed to helping family budgets go further than Wal-Mart. Wal-Mart saves the average family about $3,100 a year, no matter where they shop.
What?! OK, how can Wal-Mart save you money if you don't shop there? Well, they say, other stores cut their prices to compete.
CHRIS HOLLINGS: The overall level of consumer prices are lower essentially anywhere you shop.
Chris Hollings is at IHS Global Insight.
HOLLINGS: So you do not actually have to shop at Wal-Mart to get these savings.
Hollings led the research Wal-Mart uses in its ad. He says by tracking Wal-Mart's expansion, his team was able to isolate an economic Wal-Mart effect. Today he says prices for retail goods are 3.6 percent lower across the board because of the chain. But to save more than $3,000 a year a, quote, "average family" would have to spend more than $83,000 shopping.
CHARLES FISHMAN: This headline number is technically accurate but misleading.
Charles Fishman is author of the book, "The Wal-Mart Effect." He points out that the median household income is less than $51,000.
FISHMAN: A family earning $51,000 a year saves about $640 a year compared to what they would otherwise have had to spend.
That's a far cry from Wal-Mart's claim. But...
FISHMAN: Six-hundred-forty dollars for a typical family still adds up to a TV, a big-screen TV that you wouldn't otherwise get to buy, or two weeks at camp for a kid who wouldn't otherwise get to go to camp. And so that's not trivial. It's a question of keeping it in perspective.
On the other side, the study showed Wal-Mart's price cutting also held down wages.
In Washington, I'm Steve Henn for Marketplace.
Comments
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From Morgantown, IN, 11/28/2009
The lying nature of Renee Sapp, Jake Birota and the cowardly "local shopper" is appalling and at the root of the failure of the united states empire. These three people are the end results of the gov't education-mainstream media factory that is causing the downfall of the american culture and work ethic, once the beacon of the world.
Thank you, folks, for being the animals you are and I hope your gradual demise is painful and long.
From IL, 11/27/2009
How is Walmart hurting wages when from what I've read they pay slightly more than other retailers? People line up around the block to get jobs at a new walmart. They certainly pay way better than I once made in union retail, but that was 20 years ago. The real point is that these retail jobs don't pay much no matter if you work for walmart, target, a grocery chain, or even ma and pa hardware (which, in my area are teenagers). They are starter and supplemental income jobs.
The question that should be asked is why have the manufacturing jobs gone away? (and not replaced with making newer more complicated things) It's not because of walmart's low-low prices either. I shop for some things at Walmart because I can find made-in-USA stuff there easier and for less money than elsewhere.
The question to ask is what conditions have been created to cause manufacturing to be moved to places like China. Walmart doesn't have that kind of power, but the federal reserve and the US federal government does.
Walmart is a distribution system that is fast and cheap. (that's why it can respond to disasters better than any government agency) It doesn't set the monetary policies, the trade treaties, the regulations on manufacturers, and so on that together look like they were designed to de-industrialize the USA.
It's time to blame the people who caused the problems, not those who have been more successful in dealing with them.
11/27/2009
Rather than cutting wages, Wal-Mart gives employment opportunities to people who couldn't get jobs elsewhere. Have you seen the people that work at Wal-Mart? Those people aren't getting jobs at Target.
From Occidental, CA, 11/26/2009
How long will it take to realize there is always a cost to "cheap" products? Lost jobs, cheap breakable stuff that pollutes our environment, empty calories that promote obesity, low wages, local businesses and an empty main street. That does not sound cheap to me
From Armada, MI, 11/25/2009
Most of the money spent at Wall Mart leaves the community. That sucks the life out of the local area and kills American jobs. My motto: if you can't shake hands with the store owner, the store does not deserve your business. Sure things will be more expensive, but that's the price of keeping American jobs. Saving a few bucks at Wally world kills your community and destroys America.
11/23/2009
What's the corresponding effect on income, as they depress wages by driving competitors out of business, sending production overseas, etc.?
And what government subsidy do we all incur because their underpaid workers remain eligible for assistance such as AFDC, medicaid, etc.?
Net, do we really benefit?
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