Story of Wal-Mart is the history and future of America

BOOK REVIEW

The Retail Revolution

How Wal-Mart Created a Brave New World of Business

By Nelson Lichtenstein

Metropolitan Books/Henry Holt and Co, $25

Does the world need another book about Wal-Mart? The biggest re­tailer on the planet has inspired volumes from both breathless admirers and bitter critics, charting its rise to dominance in the US and beyond since Sam Walton opened a discount store in north-west Arkansas in 1962.

Fans love the retailer’s hyper-efficiency and low prices; foes bewail its low-wage model and see it as the apotheosis of the woes of modern American consumerism.

With The Retail Revolution, therefore, Nelson Lichtenstein faces the classic retail challenge of differentiating one’s product on a crowded shelf. In this case, the special ingredient is the author’s expertise as a labour historian – Lichtenstein teaches at the University of California, Santa Barbara – which allows him to deliver some timely historical perspective and new thoughts on the ever-topical great Wal-Mart debate.

The question of whether Wal-Mart is good or bad for America was put to Hillary Clinton during the 2008 Democratic presidential primaries – and she wisely replied both yes and no.

But, for Lichtenstein, the question is like asking whether America is good for America, and recalls the criticism of the railroad companies in the late 19th century, or the praise of Ford Motors for paying an above market wage to its factory workers. In America, he writes, “harsh denunciation or extravagant praise for a particular privately owned corporation has often been a substitute for more general debate about the business system itself”.

Wal-Mart, this book argues, is America in so far as its growth reflects the wider economic and political conditions prevailing in the country and the world at the end of the 20th century.

Technological innovations such as barcodes and satellite communications gave the retailer the tools it needed to construct a retail empire. The shift to a more laissez-faire regulatory and trade environment since the 1980s created the conditions to expand. The emergence of China as the world’s manufacturer provided more opportunities for growth and Wal-Mart’s buying power gave it the ability to exploit the emerging opportunities.

The book inevitably covers some well-trodden ground as it traces Wal-Mart’s growth from small rural chain in a poor area to global behemoth. Most interesting is its timely focus on the company’s labour relations and anti-union culture – timely because of current efforts by the Democrats in Congress to shift the balance of power in labour relations back towards the union movement and away from employers.

Lichtenstein relates how John Tate, a vehemently anti-union executive, first helped Walton fight an organising drive by the retail clerks union at his stores in Missouri in the early 1970s.

Tate was a master of the “union-avoidance” techniques that have become part of the arsenal of employers across the US. He was also extremely successful, and proudly told Wal-Mart workers in 2004, at the age of 86, that he was part of the reason unions represented only 9 per cent of the private workforce in the US, down from more than a third in the 1950s.

But that was five years ago. At that time, the UFCW grocery union had given up trying to organise Wal-Mart stores in the US, and was pursuing a broader political campaign that focused public debate on the low-wage business model. Now, after the election of Barack Obama as president, the union says it has sent organisers out once more, after a surge of renewed interest from store employees.

That the UFCW could organise at Wal-Mart successfully still seems an unlikely outcome, and Wal-Mart and other retail companies are lobbying hard to ensure it remains so. Meanwhile, the business seems more invincible than ever. The recession has seen Wal-Mart outperform all its leading competitors in terms of sales growth as budget-conscious Americans flock to its giant stores.

But Lichtenstein argues that these are short-term gains. The new world being shaped by the great crash of 2008 will be different from the conditions in which Wal-Mart first thrived. Its customers, he argues, are increasingly seeking a return to regulation and social responsibility.

The book underplays the significance of the efforts Wal-Mart has made in the past three years to improve its record on environmental and social issues. But Lichtenstein correctly predicts that the retailer will continue to adapt to changing social and political circumstances.

This summer, for instance, Wal-Mart shocked the retail industry by uniting with the SEIU service workers union to endorse the idea that US employers should be legally obliged to offer some form of health insurance.

Such thinking is anathema to most of its competitors. It is also a world away from the thinking of Sam Walton and John Tate.