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Book Review
The devil disguised as a discount retailer
Jonathan Birchall

          In the winter of 1912, the merchants of Cedar Falls, Iowa, paraded with a marching band through the city streets, beneath a banner saying: "We thought we were buying cheaper, but we know better now." In the town square, they stacked a bonfire with mail-order catalogues, in protest at the pernicious influence of the new giants of American retail, Sears, Roebuck and Montgomery Ward.
Almost a century later, the incident adds perspective to the bitter passions stirred in the US over the social and economic impact of Wal-Mart, the giant retailer from Arkansas. The debate goes far beyond the kind of single-issue campaigns traditionally faced by other corporations: Wal-Mart faces criticism for everything from conditions in its suppliers' factories in Asia and the trade deficit with China, to the low wages and poor healthcare of its retail workers and its impact on domestic manufacturing and the decline of small-town America.
Over the past year, the mood has grown more febrile. The UFCW and SEIU food and service workers unions launched new campaigns against the retailer, most recently funding radio commercials that suggested Jesus would have preferred not to shop at Wal-Mart.
The retailer has struck back by setting up a rapid-response crisis public relations team, which marked the release of a new anti-Wal-Mart film in November by sending reporters a critique with selected negative reviews of the filmmaker's previous work.
Along the way, Wal-Mart has become a litmus test for personal politics, on a par with the war in Iraq or abortion; good northern Democrats shop at Target and Costco rather than Wal-Mart, even though Hillary Clinton is a former Wal-Mart board member.
But as the Cedar Falls protest reminds us, none of this is new. In one of the essays in Wal-Mart: The Face of Twenty-First-Century Capitalism, historian Susan Stasser shows how Wal-Mart and the discounters represent only the latest wave of revolution in the US retail sector, each opposed by those it displaced.
After the mail-order houses came the self-service supermarkets, led by A&P. They were accused of driving their competitors and suppliers out of business with unfairly low prices, leading to federal legislation to control prices that lasted until 1975. Next came the discounters, with Wal-Mart only the most successful of a range of rivals with the same business model.
The essays are edited by Nelson Lichtenstein, a labour historian at the University of California, who argues that Wal-Mart has replaced General Motors as the representative of the modern American economy. The book joins a growing body of Wal-Mart literature, mostly negative, starting in 2000 with the unabashedly partisan How Wal-Mart is Destroying America (and The World) and What You Can Do About It, now in its third edition.
The essays vary in quality and are largely by left-leaning academics, with a concluding essay by a union organiser that spells out the philosophy behind the current union efforts to build a broad anti-Wal-Mart coalition. But the scholars also deliver broad observations and detail that would add to even the most enthusiastic Wal-Mart supporter's understanding of the company and its context within the retail industry.
In considering Wal-Mart's anti-union stance, for instance, Thomas Jessens Adams provides interesting comparisons with Kmart's monitoring of union activity in the 1960s and 1970s. He also notes how Sam Walton, Wal-Mart's founder, at first opened, stores under different family members' names in an unsuccessful attempt to avoid Arkansas's already moderate minimum wage laws. But, he writes, "it is important to understand that Wal-Mart's difference from the discount retail industry ... is not a difference of kind, but of degree."
This is more than can be found in this year's pro-Wal-Mart book, the anodyne Wal-Mart Way, by retired vice-chairman Don Soderquist, which is a paean to "one of the greatest business stories ever told". Then there is The Wal-Mart Effect, a balanced account by Charles Fishman, a business journalist, which talks in excessive detail to the giant's suppliers and manufacturers. Lisa Featherstone's Selling Women Short provides a partisan but comprehensive summary of the reams of evidence presented by the plaintiffs in the big sex discrimination class-action lawsuit facing the retailer. And The United States of Wal-Mart by John Dicker provides another polemical account of the rise of the retailer and the campaign against it.
There is room for another Wal-Mart book -- one that could recount its recent corporate history from the inside. There is plenty of material. Lee Scott, chief executive officer, has talked to its critics in a way that would have been unthinkable under the old Wal-Mart mindset and acknowledges that the company's scale brings additional responsibilities. Wal-Mart is trying to move away from the old "stack 'em high and sell 'em cheap" philosophy that is the essence of the discount model, and shifting from its old centralised structure.
For added drama, its top ranks have been rocked by the scandal surrounding its former vice-chairman, Tom Coughlin, who is under investigation by federal prosecutors after being accused by the company of embezzling tens of thousands of dollars.
Under syndication arrangement with FE


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