Villagers With Pitchforks

The flaming torches were delayed in transit, sorry.

Monday, June 19, 2006

The Great Bentonville Arkansas Money-Sucking Pig

Excellent review in the London Journal of Books of The Wal-Mart Effect: How an Out-of-Town Superstore Became a Superpower by Charles Fishman.

Charles Fishman, in his punchy and valuable book The Wal-Mart Effect, cites the example of Vlasic pickles, the most popular brand in the US. Wal-Mart talked Vlasic into pricing the pickles so that a gallon jar was on sale for $2.97. That is a bizarre, surreal price for a gallon of pickled cucumbers; no one had ever seen such a jar outside a deli, and no one had any real use for it, since even if you’re a pickleholic you’ll only manage to eat about a quarter of a gallon before the remaining pickles go mouldy. It had never occurred to anybody that there was such a thing as a market for a gallon jar of pickles. Even so, priced at $2.97, there was something so magnetising about this Brobdignagian vat of pickles – something so alluring about the way it embodied the Platonic ideal of cheapness, in and for itself – that Wal-Mart was soon selling 200,000 gallons of pickles a week. The ‘scary part of the Vlasic story’, as Fishman points out, is that:

The market didn’t create the $2.97 gallon of pickles, nor did waning customer demand or a wild abundance of cucumbers. Wal-Mart created the $2.97 gallon jar of pickles. The price – a number that is a critical piece of information to buyers, sellers and competitors about the state of the pickle market – the price was a lie. It was unrelated to either the supply of cucumbers or the demand for pickles. The price was a fiction imposed on the pickle market in Bentonville. Consumers saw a bargain; Vlasic saw no way out. Both were responding not to real market forces, but to a pickle price gimmick imposed by Wal-Mart as a way of making a statement.

I've quit shopping at Wal-Mart. The review tells you why in much better terms than I can.