wal-mart

Still getting Nickel and Dimed

Countries: United States

Barbara Ehrenreich, author of the New York Times best-seller Nickel and Dimed, recently visited a few of the families she profiled in her book to check in on how the recession was affecting their lives.

"In good times and grim ones, the misery at the bottom just keeps piling up, like a bad debt that will eventually come due."

The economic crisis hasn't changed the situation for many of the poor families Ehrenreich profiled because things were already pretty bad before the economy started tanking. They still face the same daily struggles of low wages, little job security, and limited safety nets like savings and family members to fall back on.

These families aren't coping with the economic crisis by canceling vacations and shopping at the Dollar Tree instead of Pier One Imports, for them the impacts of a poor economy are less obvious. Maybe this is why their story isn't often covered by ABC's the View and the local evening news.

Even after the recession ends and the economy begins to rebuild, many Americans will still be living paycheck to paycheck. The Wal-Mart clerk. Your corner grocery owner. Your office-building janitor. In her recent Op-Ed for the New York Times Ehrenreich again gives a voice to today's overlooked citizens.

Good Business Despite Bad Times

Countries: United States
"Recesson commuter special." Photo: <a href="http://www.flickr.com/photos/yourdon/3105800902/">Ed Yourdon (flickr)</a>
"Recesson commuter special." Photo: Ed Yourdon (flickr)

Despite the gloom-and-doom media coverage of the recession, certain industries are still doing well or even thriving. For example, discount retail stores like the Dollar Tree and Family Dollar have significantly benefited from the economic downturn, doing strong business with bargain-hunting shoppers feeling the pressure from these cash-strapped times. Dollar Tree has recently seen a 60-percent gain in its shares — an impressive 6.8 percent gain from last year’s — with its fourth quarter earnings reaching $1.39 billion.

Other lower-priced retailers are finding similar success: Wal-Mart is doing extraordinarily well, particularly with rising sales of frozen food and food storage items. In comparison, higher-end stores like Macy's, Abercrombie & Fitch and JC Penney continue to suffer big drops in retail spending by consumers. Wal-Mart's success is a good example of how people's lifestyle changes are influencing their purchases, as more people choose to stay at home rather than go out to eat at restaurants — with the notable exception of McDonald's — and limit their shopping to what they need rather than what they want.

Small-scale businesses and entrepreneurs are also doing well. The New York Times reports that certain niche manufacturers are still doing good business, as the demand for specialized products, such as body armor for soldiers in Iraq or high-end audio speakers, is still strong.

The New York Times also reports that some small-business entrepreneurs are going strong, particularly in the health care industry. MEDILINQ, a company that negotiates discounted medical care for its low-income clients, reports great business this year. As one staffer remarked: “We’re looking at having a big year this year. Economic hard times are good opportunities for us.”

Other seemingly recession-proof industries include video games and condoms, all inexpensive ways to stay entertained at home. And, despite a move away from pricier restaurants and high-dollar date nights, dive bars and movie theaters are still going strong.

As the recession continues and new unemployment claims continue to rise, it should be interesting to see which industries continue to thrive with a growing population of increasingly-selective consumers.

The Odd Couple

In most progressive political circles, Wal-Mart is more reviled than revered. So it can come as a shock to hear the massive American retailer has teamed up with Global Envision's parent, Mercy Corps — a humanitarian agency known for its leanness and innovative approaches to poverty — on a project that benefits small indigenous farmers in impoverished Guatemala.

Wal-Mart reputation is far from spotless. It is sued between two and five times every weekday in federal court, according to a group that tracks Wal-Mart litigation and supports lawyers for plaintiffs fighting the retail giant. It's also been cited for child-labor law violations in three states, accused of aggressively fighting employee efforts to unionize, and criticized for squeezing suppliers and threatening the health of local retail.

Among the questions the partnership raises: Is Mercy Corps being used as public relations window dressing? How do Wal-Mart's business motives align with Mercy Corps' charitable ones? And most importantly, would training farmers to be Wal-Mart suppliers eventually lead to their exploitation?

The deal between Mercy Corps and Wal-Mart also involves the U.S. Agency for International Development, which is keen to see humanitarian groups team up with U.S. corporate interests to put a dent in developing-world poverty. The so-called "Inclusive Market Alliance" is backed by financial commitments of $1.1 million from USAID, $600,000 from Wal-Mart, and $500,000 from Mercy Corps.

Here's why the agreement made sense from Mercy Corps' perspective. Rural Guatemala remains stubbornly poor. In 2000, 75 percent of Guatemala's 6.4 million poor resided in rural areas. Until now, the agency's programs in Guatemala have focused on helping indigenous groups to gain ownership of land, and to farm that land productively.

Most small Guatemalan farmers sell to market middlemen, who have earned the pejorative nickname "coyotes" — they're the ones who profit from the transactions, rather than the farmers. Farmers could earn a higher return selling high-value products to large-scale buyers, i.e. supermarkets.

Wal-Mart controls a large share of Guatemala's supermarket industry. They have an interest in finding good, reliable suppliers, and in cutting out those same coyotes that are despised by farmers. They're willing to invest money in training and equipping farmers with the knowledge and tools they need to grow quality produce that supermarket shoppers want to buy.

As part of the program, farmers participate in trainings on processing and post-harvest techniques to meet national and international agricultural standards, and critical pricing and negotiation skills.

"Due to a great variety of buyers," explains Douglas Ovalle, who manages the project for Mercy Corps, "there is no danger of Wal-Mart owning the market 100 percent. What this project helps to do is expand options for the farmers."

And those expanded options, he says, will lead to greater income for small-farm families — many of whom lack even electricity and running water.

To many Americans, Wal-Mart is a wanna-be monopolist. To Mercy Corps and the struggling Guatemalan farmers it's trying to help, Ovalle says, Wal-Mart is "just another buyer."

The Ugly Side of Micro-Lending

Topics: Microfinance
Countries: Mexico

Business Week's "The Ugly Side of Microlending” presents a seemingly untold story regarding microfinance. Many (if not all) in the aid and development sector laud the triumphs of micro-credit for the world's poor; and, in truth it has been a driving force for positive change in a number of people's lives. However, when there is a profit to be made a variety of more unsavory business practices arise.

Keith Epstein and Geri Smith do a great job of investigating the variety of for-profit banks that operate within Mexico, painting a bleak picture for unsophisticated and largely uneducated borrowers. Drawn by lack of regulations and a government bogged down by corruption Mexican banks are charging anyway from 50% to 120% annual interest on loans.

So, what does that mean exactly? After a 104 week payment plan of $23 a month, an average borrower will end up paying more than double for a $1,100 Whirlpool refrigerator. What's more-- large corporations such as Wal-Mart are moving onto the scene, having obtained their Mexican banking license last year.

The flip side of microfinance is one that should receive more attention. With the advent of micro-credit to the world's radar screen one cannot blithely assume that all lending institutions are created equal. So what's the answer? More regulation? Increased education? I suppose one cannot discount that America has similar institutions-- the Pay Day cash lending services that frequently appear in strip malls often invite sharp criticism domestically. Either way—it seems clear that for profit banking institutions charging astronomical interest rates seem to be perpetuating the very poverty they are supposedly attempting to alleviate.

From the Archives

Made in China - Wal-Mart Unions

Topics: Trade, Corporations
Countries: China
Previously filed under: Asia, Global Economy
Chinese unions have successfully taken on Wal-Mart. Their success could have implications for other foreign companies in China and Wal-Mart stores elsewhere in the world.

From the Archives

Forget the World Bank, Try Wal-Mart

Topics: Corporations
Countries: China
Previously filed under: Asia, Success Stories
Wal-Mart might be single-handedly responsible for bringing about 38,000 people out of poverty in China each month, about 460,000 per year.

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India Should Combine Tough Climate Stand With Green Policy

Yale Global Online - Wed, 07/01/2009 - 21:00
Facing a serious global warming threat, India has to focus on mitigation and green economy

Counterfeit Goods Stifling Industries in Ghana

All Africa - Thu, 07/02/2009 - 08:35
The proliferation of illicit and counterfeit goods on the Ghanaian market has once again come up for discussion as a major obstacle to trade development and the major cause of the collapse of many industries.

Helping Small Farmers Feed Africa

IRIN News - Thu, 07/02/2009 - 16:44
As an African Union summit on agricultural investments opens in Libya, donors and non-profits are calling participants' attention to the role smallholder farmers mostly women can have in feeding their communities.

Malaria is the Next Menace for Sri Lankan Refugees

OneWorld Daily Headlines - Wed, 07/01/2009 - 13:55
The coming four months of monsoon rains could increase the risk of waterborne diseases for displaced people in northern Sri Lanka.

Floating 'Labor Hostels' are Brave New World of British Workers

Christian Science Monitor - Tue, 06/30/2009 - 23:00
Some immigrant workers are being housed on barges, prompting questions and resentment from locals, many of whom are out of work.

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