{"id":26899,"date":"2017-11-15T22:59:47","date_gmt":"2017-11-16T03:59:47","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/the-end-of-everyday-isolationisms-potential-impact-on-walmarts-everyday-low-prices\/"},"modified":"2017-11-15T22:59:47","modified_gmt":"2017-11-16T03:59:47","slug":"the-end-of-everyday-isolationisms-potential-impact-on-walmarts-everyday-low-prices","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-end-of-everyday-isolationisms-potential-impact-on-walmarts-everyday-low-prices\/","title":{"rendered":"The End of Everyday: Isolationism\u2019s Potential Impact on Walmart\u2019s \u201cEveryday Low Prices\u201d"},"content":{"rendered":"

To feed their families, to build their homes, to live lives they can afford, millions of Americans \u00a0go to Walmart for \u201ceveryday low prices.\u201d The world\u2019s largest retailer has built its reputation, loyal customer base and $482 billion in revenue [1] by selling clothing, groceries, footwear, appliances, furniture and more, at consistently low prices year after year. Enabled by a highly globalized supply chain, Walmart has tied itself to the low-income American family yet employs workers and imports goods from other countries to keep its own costs low. As the political landscape has shifted and will continue to shift under President Trump, Walmart must pay keen attention to the trends and attitudes around isolationism and international trade because of its dependence on consistent low costs and on the low- and middle-income Americans who need those low price options to survive. The behemoth Walmart must focus on global trade trends in this new political era not only to maintain its own \u201ceveryday low\u201d costs but to stay true to its promise of the \u201ceveryday low prices\u201d that sustain low-income American lives.<\/span><\/p>\n

A core element of Walmart\u2019s strategy, the leveraging of low international manufacturing and labor costs is currently under scrutiny by Trump\u2019s administration. In a study released December 2015, the Economic Policy Institute posited Walmart imports from China displaced 400,000 American jobs, which comprises about 13% of the 3.2 million jobs displaced to China from 2001 to 2013. The retailer also had $49 billion in imports from China in 2013 [2]. One can conclude that the lower prices from outsourcing, combined with economies of scale, allow Walmart to charge low prices for its goods [3]. But ask Trump begins to issue isolationist policies, Walmart will need to rethink this strategy.<\/span><\/p>\n

Recently Trump has called the trade relationship with China into question, hinting to a future restriction or impeding of trade between the nations. Though agreement news has flurried recently, the past few months have shown Trump\u2019s skepticism around China\u2019s trade practices:<\/span><\/p>\n

\u201cWe must immediately address the unfair trade practices that drive this deficit, along with barriers to market success,\u201d Trump said. \u201cWe really have to look at access, forced technology transfer, and the theft of intellectual property…\u201d <\/span><\/i>[4]<\/span><\/p>\n

As the US political system calls out isolationist ideals, more Americans hark on the outsourcing of American jobs to developing countries. Currently, one of six men without a college degree is unemployed [5], creating an environment where Americans are looking to country leadership, particularly the President, for employment opportunities. As Trump pushes protectionism to help with jobs, he simultaneously casts a shadow on some of the largest companies in the world, like Walmart. Walmart though will need to be particularly careful due to the large overlap of their core customers with Trump\u2019s most avid listeners. The situation highlights the tension between the middle America and educated elite thoughts on global trade, and opportunities in the US. The outsourcing costs lower income workers their jobs but benefits Walmart in their millions of dollars of savings, a portion of which one may assume ends up in the pockets of the C-suite executives.<\/span><\/p>\n

Walmart claims to be addressing these issues by increasing its American-made products, creating $10 billion of worth in jobs from 2013 to 2020 but most analysts believe this to be a reactionary announcement to the report, as opposed to a prioritized goal [2]. Walmart also should focus on American labor, bringing manufacturing into the United States and employing the people who buy their products – the everyday American customers, the people who technically are paying regularly so that the Walmart execs exist at all. Walmart should also give its resources to localized training and educational programs in the low-income communities where it operates, taking a play from General Electrics playbook in China. GE, a company that also relies on low labor and manufacturing costs in China to buoy its business, has learned over the years that countries like China and India, now developing to be economic powers, are demanding – and in my opinion deserve – to gain on a long-term level from working with behemoths like Walmart. Access to education and technological training seem like a small price to pay, for the industry-leading gross profit margins that Walmart experiences. <\/span><\/p>\n

As Walmart considers its options, one can wonder what impact US labor and manufacturing costs would have on the retailer\u2019s everyday low prices and dedicated consumer base. But even if the prices are raised due to the increased costs of labor in the US, the everyday American family will benefit from the job creation. \u00a0Export-led growth in places like China and India has lifted people out of poverty [6] and the people who have fed Walmart its success also deserve a chance to profit from the company\u2019s power.<\/span><\/p>\n

 <\/p>\n

(Word count: 795)<\/span><\/p>\n

 <\/p>\n

SOURCES<\/span><\/p>\n

[1]Walmart Corporation, \u201cWalmart Annual Report 2016,\u201d<\/span><\/p>\n

https:\/\/s2.q4cdn.com\/056532643\/files\/doc_financials\/2016\/annual\/2016-Annual-Report-PDF.pdf<\/span><\/a><\/p>\n

[2] The New York Times, \u201cWalmart\u2019s Imports From China Displaced 400,000 Jobs, a Study Says,\u201d (Dec. 9, 2015) <\/span>https:\/\/www.nytimes.com\/2015\/12\/09\/business\/economy\/walmart-china-imports-job-losses.html<\/span><\/a><\/p>\n

[3] Center for Economic Policy and Research, \u201c<\/span>Wal\u2010Mart: Always Low Prices Means Always Low Wages,\u201d<\/span><\/p>\n

http:\/\/cepr.net\/publications\/briefings\/testimony\/walmart-low-wages<\/span><\/a><\/p>\n

[4] Politico, \u201cTrump\u2019s trade boasts in Asia mask looming China problem,\u201d <\/span>https:\/\/www.politico.com\/story\/2017\/11\/14\/trump-china-trade-deal-244896<\/span><\/a><\/p>\n

[5] The Economist, \u201cAn open and shut case,\u201d (Oct. 1, 2016)<\/span><\/p>\n

[6] Wall Street Journal, \u201cGlobalization in retreat | GE, the ultimate global player, is turning local,\u201d <\/span>\u00a0<\/span><\/i>(June 29, 2017)<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

As Trump raises skepticism on China's trade practices and promotes isolationist investment, Walmart should rethink its strategy away from reliance on low labor and manufacturing costs found in China, potentially to invest in its loyal customer base – the everyday American family.<\/p>\n","protected":false},"author":10227,"featured_media":26900,"comment_status":"open","ping_status":"closed","template":"","categories":[3515,1601,1202,3239,1519,637],"class_list":["post-26899","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-consumers","category-donald-trump","category-globalization","category-isolationism","category-trump","category-walmart","hck-taxonomy-organization-walmart","hck-taxonomy-industry-retail","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\nThe End of Everyday: Isolationism\u2019s Potential Impact on Walmart\u2019s \u201cEveryday Low Prices\u201d - 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