The Wal-Mart Effect

Fishman, a business journalist, investigated what Wal-Mart's scale actually does to the companies that supply it, to the communities where it operates, and to prices across the economy.

The supplier material is the most original. Fishman documents the relationship from the supplier's side: the annual price reduction expectation, the requirement to open cost structures to Wal-Mart's buyers, the volume that makes a supplier dependent and then makes the terms non-negotiable, and the consequences that follow. He reports cases where suppliers moved production offshore because the price required could not be met domestically, where suppliers redesigned products to lower cost in ways that reduced quality, and where suppliers grew rapidly and then failed when they became too dependent. The Vlasic pickle case, where a gallon jar sold at a price that damaged the entire category's economics, became the standard illustration.

The economic material covers the estimates of consumer savings, which are large, and the studies on local wage and employment effects, which Fishman reports as contested rather than settled. He notes that the price savings and the wage effects are both real and are not measured against each other in any public accounting.

He also covers the difficulty of researching the company, which does not disclose the data that would allow independent assessment, and the effects on fisheries and on production in supplier countries.

The book is reporting rather than economic analysis, and Fishman is careful not to overstate the causal claims. It is from 2006 and the retail environment has changed substantially with Amazon's growth, though the supplier dynamics it describes now apply to platform marketplaces in similar form.