Thursday, August 07, 2008

Wal-Mart and Food Prices

Wal-Mart and Food prices.

I was working for Wal-Mart, lo so many years ago, when the company really started to move into the Wal-Mart Superstore that contained both groceries (including produce and meats) as well as their previous staples as a "dry goods" store. I thought then, as I do now, that it was a brilliant idea.

Wal-Mart's success, as has been discussed hundreds of times, is that it offers its products at a price far below their local competitors. they do through the purchasing in economies of scale and by forcing their vendors to squeeze every extra dime of savings out that they can.

But, contrary to popular belief, Wal-Mart isn't in the business of trying to put their vendors out of business, they know better. There comes a point for every supplier where they simply can't squeeze any more savings out of their processes. Wal-Mart understands market forces, both micro and macro, that most people simply don't.

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