Wal-Mart (WMT) gets a pretty bad rap, and much of it is well earned. The retail juggernaut is the source of progressive ire for a variety of reasons, including but not limited to a lack of wages/benefits for its army of part-time associates, a negative environmental impact, competitive practices that drive smaller businesses in the same locality out of business, and anti-union tactics. And that’s just the stuff the company owns up to, not stuff like the bribery scandal in Mexico or the practice of locking late-night employees in stores that lasted right up until it became public.
No, Wal-Mart certainly deserves criticism. However, the efforts to paint them as a mustache-twirling cartoon villain, hell bent on destroying all that was once grand about America? I’m not so sure.
All told, the way that major corporations interact with the broader economy is generally a lot more complicated than typically gets talked about. Sure, there are plenty of observable negative consequences to the single-minded pursuit of profit that took Wal-Mart from a single location in Arkansas to the mega-retailer it is today. But there are also plenty of benefits, too.
In the end, the role Wal-Mart plays in this country’s economy is a lot more complicated than the caricature one often gets from cruising through the click-baity posts on articles featured on liberal websites. So, here’s a look at all the things Wal-Mart does that perhaps deserve as much celebration as the scorn heaped on elsewhere.
FULL DISCLOSURE: Before I continue, I should mention that I own a very small amount of Wal-Mart stock. The relative guilt that I felt about this as a liberal is actually why I set out to write this piece. I know that for some, this admission simply makes me a self-serving hack trying to boost Wal-Mart’s stock for my own gain. To that I would say: “I wish!” If I had the power to move markets with my mere words, I would be an astonishingly wealthy man.
Wal-Mart Makes Money for a Lot of People
Wal-Mart is a publicly-traded company. What does that mean, really? A lot of things, but the important one is that just about anyone can own stock in the company, provided that have $80ish (depending on the day) to spend. Digging really deeply into the nature of stock ownership would take more time than we have here, but owning a share of Wal-Mart means you quite literally own one-3.22 billionth of the company.
Part of that means there are probably millions of shareholders out there benefiting from Wal-Mart profiting. When the company makes money, so do they (in a sort of round-about fashion). When Wal-Mart makes decisions about their actions, they have to consider how it affects those shareholders first and foremost.
And, while more than half the shares are owned by the Walton Family, and still more by other billionaires and fat cats, there’s still a huge chunk owned by pension funds or in retirement accounts across the world. Plenty of average Americans own a stake in Wal-Mart through their 401k or their mutual funds.
Like it or Not, Wal-Mart Revolutionized Retail and Brought Low Prices for Everyone
Wal-Mart rose to the top of the food chain in a couple decades through a complete commitment to bringing goods to market at the lowest price possible. This involved an obsession with margins and efficiency that is pretty impressive.
Sure, part of that meant cutting costs by hiring part time workers at or near minimum wage and without health benefits, but it also meant a variety of innovations in supply-chain management that resulted in certain goods being available at lower prices than ever before. By weeding out inefficiency in the way stores communicate with suppliers or move goods from warehouses to the front lines, Wal-Mart revolutionized the process for retailers everywhere. Most major box stores set out to mimic the practices that Wal-Mart pioneered.
The result? Well, a lot of goods that might previously have been out of reach for a lot of working families weren’t anymore. Everyone in the country can now expect lower prices for everything because of a more efficient process, giving us all more money to spend elsewhere. And, sure, if you work at Wal-Mart, you might be more concerned about your everyday low, low wages than their everyday low, low prices. But if you work a minimum-wage job pretty much anywhere else, making ends meet is a lot easier because of Wal-Mart’s fervent dedication to keeping costs low.
Wal-Mart Has a Better Environmental Track Record Than People Think
A venn diagram of environmentalists and fans of Wal-Mart will rarely overlap. There’s a slew of issues ranging from the company’s policies on dumping hazardous waste, the long-term effects of its massive stores and parking lots taking up green space, encouraging waste by selling cheap goods, and its truck fleet’s carbon footprint. Also, Wal-Mart just feels like it should be a major polluter. However, once again, the picture is a bit more complicated than that.
For starters, Wal-Mart itself has a fairly comprehensive effort to improve its environmental impact. Now, one should always gauge voluntary efforts by major corporations to improve themselves with the perspective of just how many empty PR campaigns have made efforts to recast public image without real change from the company. However, Wal-Mart actually has some very real economic incentives that might make their campaign more than a load of hooey. Once again, Wal-Mart’s obsession with efficiency raises its (not-so) ugly head. Saving money on energy costs and reducing their carbon footprint are actually considerations that work in tandem.
Did you know that Wal-Mart has already signed a deal with SolarCity (SCTY) to install solar panels on 75% of its California locations? Or that the company has bought electric equipment for its warehouses from Plug Power (PLUG) ? On top of that, did you further know that the Walton family is the largest investor in First Solar (FSLR) ? That is, by the way, the largest solar company in the world. These things don’t just improve Wal-Mart’s carbon footprint, but provide huge amounts of revenue to growing companies in the renewable energy industry that can help them grow and improve.
Wal-Mart is Pretty Transparent About its Business
For all the nasty things you can say about Wal-Mart, misleading certainly isn’t one of them. The company’s committed to low prices at the register. That’s what it’s there for. That’s the goal.
Why mention this? Well, because perception matters. There are plenty of companies out there that have carefully cultivated a public image that might result in it garnering less progressive internet outrage, but don’t actually mean they’re operating in a more ethical fashion.
For instance, just how many articles about Wal-Mart’s appalling labor practices were posted to Facebook (FB) using iPhones manufactured for Apple (AAPL) in Foxconn (HNHPF) factories with all their horrifying treatment of workers, do you think? Do we collectively overlook Apple’s labor issues because of its chic, high-tech image with the public while damning Wal-Mart just because it hasn’t branded itself as well?
At the end of the day, a lot of why we opt to criticize a certain corporation and not another can often be rooted in perception rather than reality.
Is Wal-Mart Really the Cause? Or the Effect?
So this isn’t a benefit, per se, but one more thing I think needs to be considered prior to joining the He-Man Wal-Mart Haters Club. Namely, are issues with Wal-Mart’s lack of benefits and low wages really issues with Wal-Mart, or our economy?
I’m thinking back to when I was working in minimum wage jobs in the late 1990s. At that point, with the economy booming, the vast majority of the people working at places like McDonalds (MCD) or L&L Food Centers (there was not a Wal-Mart in Okemos, MI at that point) were teenagers. These were considered entry-level positions for people who were likely getting their first job. They were the jobs you had to work part-time while you were in school so that you would be in a better position to secure a better job in years to come.
Now, though, times are different. The Great Recession means a lot more people are working at Wal-Marts and trying to raise a family or care for aging relatives than ever before – and it’s cast Wal-Mart’s labor practices in a new light.
So is Wal-Mart just catching flak for casting a light on much bigger issues within our economy? Wal-Mart didn’t drive good manufacturing jobs overseas for the last 40 years, nor did they didn’t crash the housing market. Would most of the issues we have with Wal-Mart be as important in the event of a strong recovery for the job market?
All told, Wal-Mart might be an easy target for anger about a lack of good jobs, but that’s a much bigger issue than any one retailer.
Wal-Mart is Neither Good Nor Bad. It Just Is.
At the end of the day, putting pressure on corporations to change certain practices is probably a good thing. The right PR campaign can make a big difference in the long run. However, when people start really believing that a corporation represents a purely malevolent force, I feel like they’re missing the point.
In the end, Wal-Mart’s both an important force of progress and the source of many social problems. It’s a big piece of a very complicated economic system that both benefits and hurts a lot of different people in a lot of different ways. And as such, keeping some perspective and a sense of the nuance attached to this issue could be pretty important.
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer