Wal-Mart: The High Cost of Low Price

Please give a warm welcome to Lee Scott,

our President and Chief Executive Officer,

Wal-Mart Stores Incorporated.

Well...

I know.

Thank you. Thank you.

I know. Every...

All right, all right.

Every year...

Okay, okay.

It would be a pleasure for anybody to be the CEO of this company

because, you know, it doesn't matter if you're Sam Walton

or you're David Glass or you're Lee Scott.

When you come to this meeting, year after year,

you get to say, "We had record sales. We had record earnings.

We had record reinvestment back into our company."

I say all that, but let me tell you, my friends,

you better be ready to be better.

Because, today, for whatever reason,

whether it's our success or our size,

Wal-Mart Stores Incorporated

has generated fear, if not envy, in some circles.

And that makes it more important than ever

that we focus on doing the right thing

and doing things right every time.

There's two things that we should do.

Number one is tell the Wal-Mart story.

Get the message out there.

And the second thing is stay the course.

Wal-Mart is too important to individual families who are stretching a budget.

We're too important to the suppliers who employ millions of people.

We're too important to our associates

for who we have so much love and value so much.

And your company will continue to demonstrate

our citizenship as a good employer

and a member of the communities that we serve so well around this world.

Ladies and gentlemen, I'll promise you this,

we're gonna stay the course.

And this company is gonna continue to grow.

Actually, H&H was started...

1962.

Started on Main Street in Middlefield.

Little country store that, at that time,

I was starting a family, and it was pretty difficult to know.

It was a big decision.

My brother-in-law and I decided we were going to take that step.

We went into business.

Started in a little one-room building that had a full basement.

We did all of the plumbing in the basement.

The upstairs retail area was very small.

We were there for a year and a half to two years,

then we moved on to a larger store in a shopping center

and spent several years there.

Then proceeded, in 1992, and built this facility here.

This gentleman here happens to be my son.

He's been a right-hand man for many, many years.

It was much easier to retire in '96

when he was here to take over.

One of the biggest parts, being in the rural areas,

what we call our hardware section--

The nuts and the bolts and the nails and all type of fasteners.

That's always been good

because a lot of the farmers were always mending machinery

and things around the farm.

Some of the kids that were kids when I was growing up in here,

now they've got families,

and they come in here for the fix-it-up-type things.

Probably since I was eight,

come down on Friday nights after school, work till 9:00.

Do you have the car?

I worked here since I was six.

Swept or helped customers when I was young, too.

At the end of the day, grandpa or dad would give us their pocket change.

I spent a lot of late nights in here, too,

especially when we were building it.

I generally arrive here about 7:15 in the morning,

and I unlock the door.

I come in and turn the lights on,

and I get the day money for each drawer in the registers

I open up the registers, and usually at that time,

Tom is here.

Tom goes ahead and kind of tidies up the front of the store

and sets out the American flag and the benches for our customers to sit on.

The Amish fellas on their way to work

will stop here for things they need for their day's projects.

They'll come and get plumbing or electrical supplies

or, a lot of times, sporting goods.

We have a busy sporting goods division.

Jon has been preparing for it,

trying to change stock and inventory.

Keeping in mind, basically, to stay with service.

If you can't compete in one area,

we're going to stay with something that is not offered

or that you can compete in.

I've probably been shopping here for 32 years or so.

All my needs that I need for hardware.

The mass merchandisers, to a great extent,

do not provide excellence in service.

I'll use Wal-Mart as an example.

You're really lucky if they have anyone in the plumbing section

who knows anything about plumbing.

We've been trying to get ready for them for the last, probably, 10 years.

I had a meeting with all the guys.

Explained the purpose of our job and make sure we do everything right.

Thorough. Explained what Wal-Mart did

and what we do and what we can do different.

This was brought to us by an Amish customer of mine.

He's so much against the Wal-Mart movement after reading this book

that he wanted to get some in and start passing them out or selling them to friends

whatever it cost him. So that's basically...

I got a few extra ones.

He's taking several of them and is getting rid of them, and I'm doing the same.

Will I? I have never been in a Wal-Mart store.

I never intend to go in a Wal-Mart store.

I've never had the need, and I've never liked their principles.

That's not nice to say at all, probably,

but I've seen a lot of small communities crucified and forced out.

Ma-and-pa operations that have been in business for years that are out on the street.

They just had to close their doors just because of one entity

and it appears that that is their intent,

to come into a community and force everybody out.

They did nothing but lay down the frickin' red carpet for them.

I know how hard it was for my dad, my grandfather

to build this building on this lot.

They went through everything to try to get the commissioners and stuff

to allow them to build here.

We had sign issues. Gotta be a certain size.

We had to make sure we had enough green around the area.

I'm all for free enterprise,

but when you look at the big picture,

the people who own the company are the richest people in the world.

So, in reality, I think they could spread that out.

I'm curious to see how much they'll actually give back to the community.

To even use American with Wal-Mart in the same sentence just...

Just I don't agree with at all. It's...

It's like a Chinese company to me, only with American board members.

It's not a mystery.

They come right out on record and said they don't buy American.

All it's done is give China a better distribution center.

Whereas before, they would have had to find contacts to sell to

and develop their own markets.

Now they've got a pipeline right into everybody's living room by going through Wal-Mart.

I think the government should have more control.

You talk about monopolies.

If Wal-Mart's not a monopoly, I don't know what is.

I'm not at all in favor of any kind of communism or socialism.

I believe America should always and forever remain free.

However, I think there need to be regulations established wherein...

You know, they busted up Standard Oil.

And they busted up Ma Bell.

But Wal-Mart seems to be going on a rampage through the American economy

and nobody's even paying attention.

I don't...

The logic of it escapes me.

I spend a lot of time thinking about it.

I'm a Republican. I'm a Conservative. And...

But I'm following very closely what's happening with the unions.

It used to be the union wage was something everybody would look up at

and say, "Wow, he's a union worker.

He's making $18 or $20 an hour."

I realized that's what we're paying our people.

We're not union.

I'm all for the unions doing whatever they can do,

whether it be Wal-Mart or Kmart or any store that's not gonna pay a fair wage.

I'm a staunch American. I love America.

It's the finest, freest country in the world.

I'd still, at my age, fight and die for this country

But it seems there are things going on within this country

particularly from a business and economic standpoint,

that aren't for the good of the people.

I mean, the people en masse.

A segment of the population is doing well by what's happening,

but the greater majority of the people are being made subservient.

Sam Walton, I don't think, would be comfortable with the way things are going.

I don't think this was why he started the store.

It wasn't to crush other competition.

We have people in this town,

families who can't feed their children.

And families who have the entirety of their belongings

in a car and in a trailer

and are spending most of their life in their car or at the mall

because they've been evicted from their homes.

Because they can't find work, they can't find work.

I think there's a lot of people that don't realize

there are those people in town, too.

You say that's in Middlefield.

-Oh, no. -Exactly.

That's not the case.

I was dreaming all of a sudden that the people in this town caught on to a great extent,

and we were all out in the street, protesting.

But I think the likelihood of that happening is...

We'll probably see pigs fly before that.

I put this business plan together

with the help of different organizations and people.

I went to several different banks to check on some funding

and when I got an appraisal on the business and the buildings,

the appraiser actually came in and devalued the building.

And, here, I figured it would be appreciating after 10 years.

And he came in with a lower value.

And I questioned him. I said, "How can this be?