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EYES AHEAD: Stacy Mitchell says the future is open for independent business. |
“Think big-box stores and bargains are synonymous? Think again,” declared a report on buying appliances in the September 2005 issue of Consumer Reports. “None of the major retailers outpriced the independents for ranges, refrigerators, and other large appliances, and only two were clear winners for small ones such as grills and vacuums. What’s more, readers found Wal-Mart no cheaper than other stores overall, despite its low-price slogan.” The report compared prices, service, section, product quality, and checkout ease at independent appliance dealers, Best Buy, Costco, Home Depot, Lowe’s, Sears, Target, and Wal-Mart. Overall, the local stores outscored their big competitors by a significant margin. Not only were they price-competitive — only Costco and Target beat them on price for small appliances and none of the chains did better on large appliances — but they offered a broader selection and better service. “Seventy-five percent of small-appliance buyers thought independent-store staffers were pleasant, informed, or helpful; five percent or fewer felt that way about Costco, Target, or Wal-Mart workers,” noted Consumer Reports. Wal-Mart ranked the lowest in terms of quality and selection; 40 percent of those who bought appliances at the chain had to settle for a different brand than they had planned to buy.
This raises yet another challenge in trying to determine how much big-box retailers save consumers: differences in product quality. While some products are uniform across stores, others are not. Under pressure from the chains to reduce costs, some manufacturers have redesigned their products with lower-quality components or developed special lines to sell exclusively at big-box stores, as Levi’s has done with its Signature line of jeans, which are not nearly as sturdy as its traditional line. Further muddying the waters, many retailers now manufacture their own products; both Best Buy and Wal-Mart, for example, produce television sets and other consumer electronics. “That’s one of the biggest advantages Wal-Mart has: the vendors have bent over backwards to do what Wal-Mart wants,” said [Iowa State University economist Kenneth] Stone. “They may ask for a different switch, one that’s cheaper, or a different belt on a vacuum cleaner. The manufacturer will give it a new model number. It can’t be compared with what anybody else has. But in the eyes of most people, it would look like the same product.
John Reny, who comanages his family’s chain of thirteen small department stores in rural Maine towns, recalled the day he first learned that suppliers were not always providing his stores and Wal-Mart with identical products. A salesman from Intercraft frames had come by to go over orders for the coming year and Reny asked him how Wal-Mart had the same eight-by-ten-inch frame for a lower price. “He said, ‘John, they’re not the same frames. They want that frame at this price, so we had to come up with a way to do it. The glass is thinner and the molding around the edge is not the same,’” recalled Reny. “Unless you put them side by side, you would never notice.” Quality differences obviously complicate price comparisons: if you pay 25 percent less for something, but it lasts half as long, then you have paid more, not less, for it.
Reprinted from Big-Box Swindle: The True Cost of Mega-Retailers and the Fight for America’s Independent Businesses by Stacy Mitchell. Copyright © 2006 by Stacy Mitchell. By permission of Beacon Press,www.beacon.org.
