Wal-Mart functions as the consumer's advocate and purchasing agent, badgering suppliers to get the best deal. Economists say low Wal-Mart prices help keep inflation in check, and its efficiencies have been pushed down the supply chain, further improving productivity. Last week, we wrote about efforts by Procter & Gamble Co. to employ disciplined procurement practices; no surprise that Wal-Mart's biggest customer helps lead the way in effective marketing procurement.
Wal-Mart plays fair with suppliers, demanding low prices but rejecting costly inefficient trade promotions. It seeks innovative products from suppliers big and small; it presses suppliers to advertise to build demand but doesn't charge slotting fees to get on the shelf. Efficiency leads to fair prices for consumers and fair profits for Wal-Mart-and suppliers. It's no surprise that Berkshire Hathaway's Warren Buffett became a big supplier by buying two apparel marketers, Garan (87% of sales to Wal-Mart) and Fruit of the Loom (more than 10%), as well as a Wal-Mart-owned distribution business.
The company is not perfect. We took issue earlier this year with its decision to remove several mainstream magazines. On the communications front, Wal-Mart could do a better job of showing why it's a force for good-for consumers, the economy, communities. Wal-Mart, fighting a lawsuit over promotion of women, surely can do something more convincing than TV ads featuring the women of Wal-Mart. Overall, though, Wal-Mart deserves credit for creating a game where merchant, supplier and consumer all can win. Generally speaking, what's good for Wal-Mart is good for the nation.