According to UCSB labor historian Nelson Lichtenstein, judgment day may be fast approaching for revolutionary retail giant Wal-Mart.
Roughly 20 people attended Lichtenstein’s lecture to hear the source of the professor’s fascination with Wal-Mart’s achievements and his explanation for why the major retailer will face trouble in the future. Lichtenstein said his work over the last 20 years researching and writing about auto companies caused him to take interest in large business conglomerates — and led to the topic of his latest book, The Retail Revolution: How Wal-Mart Created a Brave New World of Business. One key feature that really piqued his interest, Lichtenstein said, is the sheer number of people that the company employs.
“It dawned on me in the 1990s that there is a company that employs more than General Motors,” Liechtenstein said.
Moreover, Lichtenstein said he included the word ‘revolution’ in his book title because Fortune 500 lists didn’t use to recognize retail businesses until Wal-Mart came into existence.
“[It was not until] 1994 when Wal-Mart [ranked number four on the list],” Lichtenstein said.
Lichtenstein then described how Sam Walton — Wal-Mart’s founder — was able to lead the business to success in the 1960s and ’70s by taking advantage of the social, technological, political and cultural changes in the state of Arkansas.
“He sort of had an insight that if you cut the margin of a product, you would make a lot of money [and the volume will make up for it],” Lichtenstein said.
Sigurd Wathne, president of local electronics company Sikama International Inc., said he attended Lichtenstein’s lecture in order to discover the retail giant’s weaknesses as a company.
“If people think that Wal-Mart moves in and ‘mom-and-pop’ stores [move out] … they are misled by people with their own agenda,” Wathne said. “I [have been] a businessman [for 26 years]. … It is still possible to make it work and compete [with these companies].”
Lichtenstein also shared what he thought were factors that could potentially hurt Wal-Mart in the future. Although Wal-Mart provides products at a cheaper price than its competition and its model of low wages is copied by other retail stores, Lichtenstein said its wages will stagnate. According to Lichtenstein, political and environmental groups are becoming more and more resistant to the idea of Wal-Mart expanding to new locations in certain places.
“Wal-Mart is facing a day of reckoning,” Lichtenstein said.
The question-and-answer portion of the event discussed the difference between Wal-Mart and Sam’s Club — a membership-only warehouse chain similar to Costco that was started by Wal-Mart. Additionally, Lichtenstein said he would have greater respect for the corporation if its bylaws, for instance, were in accordance with Santa Barbara’s employment regulations.
“If Wal-Mart met the conditions of the city or community [like the city laws on wage], I would welcome a Wal-Mart,” Lichtenstein said.
Lichtenstein’s lecture on the major retail company is the first of the UCSB History Associates’ scheduled events for the year. For more information on this and future events, visit www.history.ucsb.edu.