Hard to Ignore: Walmart in Bad Trouble

Little Rock   Ok, Walmart is a huge business behemoth with millions of workers and billions of dollars in revenue, but the deafening roar of bad news is hard to paint a smiley face over and pretend everything is coming up roses in Bentonville.

The emperor’s nakedness in India, where the India FDI Watch Campaign and ACORN International are still working to force real regulations and requirements on foreign multi-brand retailers before foreign investment restrictions are relaxed, is increasingly impossible to gloss over.  Despite a fawning business press in India, recent reports noted that the company was only able to open 5 new stores rather than the 15 or so they had projected for 2012, and there are no signs that the numbers will speed up more for 2013.  Walmart can blame the problems of regulations and logistics, but the truth is that the Walmart business model is predicated on domination through control of logistics, so if this isn’t working for them, nothing in India will produce the profits they need.  On the regulations end, ongoing investigations of their corporate culture of bribery are slowing down their ability now to, how can I say, “grease those wheels.”

Michele Obama’s office and her fresh food initiative was forced to put out a release from the White House that Walmart was a “good partner,” after industry reports about the declining freshness of their produce, based on customer surveys, called into question all of their claims of a fresher, healthier set of offerings in their grocery departments.  I hope the White House had more to say than that, because the industry observers were clear that the real reason they are having trouble on freshness is that they have drastically reduced staffing by 15% or more at their superstores, and the stocking crew simply cannot keep up with the square footage and the requirements of constant, timely refrigeration required by fresh food items.   When the nation’s largest private sector employer cuts 15% of its workforce that translates into hundreds of thousands of jobs squeezed out of the economy.  In Walmart’s case, that also means reduced hours for those that are left minding the store.

Oh, and, please, let’s not forget the whole corporate culture of corruption and bribery, first exposed in Mexico and then India and China.  With efforts announced by the new leadership in China that corruption at the top has to stop or the Party is in trouble, Walmart under the gun may not be able to pull the trigger as quickly to implement future expansion.   More than 55% of the company revenues come from overseas operations, so cutting down the growth engine in places like India and China also spells real trouble for their business model.

Banks may be “too big to fail,” but Walmart needs to start learning that retail and grocery chains are failing all of the time.  A look around the malls at Sears, JC Penney, K-Mart, Krogers, and scores of others should be enough to encourage some humility, but that also has never been part of the Walmart corporate culture.

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