Friday, April 16, 2004

The Wal-Mart effect

From “How big can it grow?” in this week’s Economist:

One of the guiding principles of Sam Walton, the company's late founder, is to pass on savings won from suppliers to consumers, which encourages more of them to shop at the company's stores and to buy more things. Wal-Mart then profits from higher sales, instead of simply putting the savings directly into its coffers. The company is skilled at obtaining products cheaply, and the emergence of China as a centre of low-cost production is playing to its strengths. Wal-Mart already buys $7.5 billion-worth of goods directly from China each year and another $7.5 billion via its suppliers, with scope for more in future. Shoppers make such big savings that economists credit Wal-Mart with driving down America's inflation rate.

No wonder the Democrats hate Wal-Mart.

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