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Carl E. Person
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Doomsday Notice! - Analysis and Forecast for Retailing Business; Major Chain Retailers Cannot Compete
against Wal-Mart and Are Doomed
1st Published 05/01/02; Last Update: 11/12/07 - 03:40 pm
All of the statements and opinions in this website are allegations, as distinguished from statements of fact or opinion. The obvious purpose of having allegations below, instead of statements of asserted fact or opinion, is to avoid unnecessary defamation and other litigation.
- Purpose of this Doomsday Thesis Website
- Major Corporations Are Unable to Compete with Wal-Mart
- The Government Is Unable to Solve the Wal-Mart (Doomsday) Problem
- Injured Competitors Do Not Complain about the Violations of Law Which Threaten the Competitors with Extinction
- Communities Are at a Loss on How to Deal with Wal-Mart, or Even Understand that Wal-Mart is a Serious Threat
- The Free Press Has Been Gobbled Up by a Few Wal-Mart Wannabees Who Presumably Are Waiting in Line to Merge with Wal-Mart
- Please Contact Me, Carl Person, If You Have Any Questions!
Author's Doomsday Thesis: This website is intended as the author's scratchpad or notebook for developing his "doomsday" thesis that, because of the growth and disparity in size between Wal-Mart and its nearest competitor, major retail chains in the United States competing with Wal-Mart know that they cannot survive and the officers of such companies are merely riding their losing businesses into the ground and taking for themselves as much as they can at the same time, instead of (i) publicly announcing the inability of their retail chain to compete; (ii) suing Wal-Mart for damages under the Robinson-Patman Act and other relevant statutes and doctrines; and (ii) liquidating the company's real estate, inventory, equipment and fixtures, and distributing the realized cash and/or securities to debtors and shareholders before the company's assets are fully dissipated through costly, losing competition with Wal-Mart.
Thus, the Doomsday Thesis is no more than other warnings which have gone unheeded in the past, such as (i) the proverbial, or not-so-proverbial watching of Rome, by its unconcerned leaders and citizens, while Rome was burning or losing its power; (ii) Professors Adolphe Berle and Gardiner Means announcing in 1932 in their book The Modern Corporation and Private Property that the control of American corporations was going into the hands of "professional managers", i.e, persons who were not shareholders of the corporations and had different interests from the shareholders, and that such persons could not be depended on to do the right thing for the country;(iii) the ever-increasing concentration of our U.S. economy; (iv) the ever-increasing percentage of our citizens and residents being placed in prison; (v) the ever-declining standard of living for most U.S. citizens and residents; (vi) the greater control over government by the professional managers of which Berle and Means warned; and (vii) their leveraging of control of the U.S. economy into control of the worldwide economy.
If the Doomsday Thesis is true, the following would also be true:
- Major corporations are unable today to compete with Wal-Mart;
- The government has been rendered unable to solve the Wal-Mart (doomsday) problem;
- Persons at the highest echelons of the corporations attempting to compete with Wal-Mart do not take action against the unlawful activities of Wal-Mart which are threatening the existence of their own corporations and jobs;
- Communities are at a loss on how to deal with Wal-Mart, or even understand that Wal-Mart is a serious problem, because of lack of information from any supposedly reliable sources (such as the press or the government)
- The free press has been gobbled up by a few Wal-Mart wannabees who presumably are waiting in line to merge with Wal-Mart to provide the one thing which Wal-Mart lacks, which is direct ownership of a major television or cable network and major chain of daily newspapers;
The average person might instinctively understand why a small business with sales of only $750,000 per year (selling auto parts or pharmaceuticals) might not be able to compete with a Wal-Mart across the street, believing that Wal-Mart is larger and can buy goods at a lower per-unit price by reason of assumed savings to the manufacturer. Actually, the reduction in price per unit given to Wal-Mart has nothing to do with any savings, it has everything to do with raw power -- the power to squeeze a manufacturer until it goes out of business by constantly demanding lower prices, until the manufacturer is on the same slippery slope to extinction as being experienced by Wal-Marts competitors.
If you think that having a business of $10,000,000 in sales per year would give you the ability to compete with Wal-Mart, think again!
Kmart, with 4,000 times that amount in annual sales (i.e., sales of $40 billion per year) cannot compete with Wal-Mart and recently filed for bankruptcy! Yes, the 2nd largest retailer in the U.S., and a direct, no. 1 competitor of Wal-Mart, cannot compete with Wal-Mart.
The press (never being able to discuss this Wal-Mart problem openly, for fear of losing its distribution in Wal-Mart stores) opined that Kmart failed to offer its goods as the same low (or allegedly low) prices at which Wal-Mart was offering the same goods, and therefore Kmart went out of business because its business was managed poorly.
This same, absurd analysis probably was offered to the public as to the bankruptcies of these other Wal-Mart competitors: J. C. Penney, Montgomery Wards, Ames, Jamesway, Bradleys, Lechters, and Pergament.
A few days ago, J. C. Penney announced that it was reorganizing its business to be able to compete (so they claim) with Wal-Mart by having centralized purchasing, for the purpose of being able to obtain greater concessions of manufacturers, or to put it another way, inasmuch as the government is not stopping Wal-Mart from violating the law, J. C. Penney is going to take the law into its own hands and demand unlawful price rebates from manufacturers the same way Wal-Mart has been conducting its Bentonville business, to be able to prolong the J. C. Penney business a little while longer.
Why is the price at which Wal-Mart buys its goods so critical? For those not well-versed in economics, competition is considered by those professing to have an expertise in "economics" to have three components: (i) price, (ii) service, and (iii) quality, and by far the most important component in competition is price.
Price is so important that a statute (the Clayton Antitrust Act) was enacted in 1914 which tried to ensure that persons buying goods for resale were able to buy them at the same price per unit as large-scale purchasers, but the statute had too many loopholes and it did not do the job.
In 1936, during the depression, the Clayton Antitrust Act was amended by the addition of various sections which were called the "Robinson-Patman Act" (RPA), which were intended to cure the deficiencies of the comparable provisions in the 1914 statute, and truly prohibit the large retail chains (then the food chains such as A&P) from buying their inventory of goods at lower per-unit prices than were being paid by their competitors.
For years, the Federal Trade Commission effectively enforced the RPA and there was competition among competing retail stores of different sizes, until approximately 1981, when President Reagan was inaugurated, and the decline in enforcement began, which enabled companies which violated the RPA as a way of increasing their profits (in what Berle and Means foresaw would be the major problem) to pull ahead of those that did not violate the RPA.
Wal-Mart grew from a small company in the early 1960's to the largest retailer (perhaps largest business without qualification) in the world, with competitors unable to compete in price, the most important aspect of competition, because of Wal-Mart's per-unit cost advantage, and its related below-cost employees (subsidized by the local, state and federal governments through welfare and other social-support payments to many of Wal-Mart's employees), Wal-Mart's ability to obtain its inventory without payment until long after Wal-Mart has resold (or returned) the goods; and the subsidies provided by local governments in the form of sales taxes and real estate taxes, which are turned over to Wal-Mart (sales tax) or eliminate or reduced (real estate taxes). With these absolutely lowest costs in the nation, no competitor can compete in price with Wal-Mart, which is the most important factor in competition.
As to quality of goods, the quality of Firestone tires or Exide batteries or Crest toothpaste is the same at Wal-Mart as it is across the street where the same goods are sold at much higher prices.
In the area of services, the third aspect of competition, competitors who pay more for the same goods (on a per-unit basis) find it hard to find any extra money with which to offer better services, to try to encourage potential customers to pay more for the Firestore tires than they would pay at Wal-Mart. Free coffee at the small tire store across the street from Wal-Mart is hardly an incentive for the consumer to pay $10-$20 more per tire at the independent retailer across the street.
Thus, slowly but surely, Wal-Mart grinds down all competition, including J. C. Penney and Kmart, and even Target and Venture. The C.E.O. of Target recently stated that "Wal-Mart is the most evil competitor" or something like that. The C.E.O. of Barnes & Noble (which company buys many more books from publishers than Wal-Mart) last November (2001) complained to the press that Wal-Mart was obtaining a better per-unit price for books than Barnes & Noble, and that it was hurting competition between Wal-Mart and Barnes & Noble - Duh! Duh!
The failure of the Federal Trade Commission, Justice Department and state Attorneys General to commence antitrust actions on behalf of the government to stop violations of the RPA has encouraged major law firms and accounting firms (including Arthur Andersen) to tell their clients that they can violate the RPA with near impugnity, a possible cost comparable to the cost (and return) of buying a key legislator or two or three. We see that a $50,000 or $100,000 political contribution (to obtain a key legislative vote) can wind up with about $1 billion in tax benefits for the political contributor's corporate interests. Well the same thing is true with the RPA: in exchange for the occasional attorneys' and experts' fees, copying costs and settlement and judgment costs for the one lawsuit brought for each of 10 million persons injured, the major chain retailer violating the RPA enjoys billions of dollars of sales and profits it should not have had. Incidentally, the manufacturers which provide those illegal rebates to the major chain retailers are rewarded with being put into near or actual bankruptcy and being forced into merger or consolidation on disadvantageous terms with their more successful competitors, and in the long run even the most successful manufacturers (and publishers) in the U.S. are falling victim to the RPA violations of Wal-Mart and other major chain retailers, who incessantly demand lower and lower prices or have the manufacturer run the risk of losing these most unprofitable customers.
Why don't the manufacturers refuse to give in to these incessant demands? Probably out of fear that the major retailer will return all of the unsold goods for credit, stop buying any more, and stop payment of 1-2 years worth of outstanding payables which they have not yet paid to the manufacturer, which would or could put the manufacturer out of business, at least the manufacturer so thinks.
The various governmental agencies are staffed by persons who are going to try to get a job after their 2-3 years of training in the governmental agency, at one or more of the various major law firms representing the companies which are violating the RPA, which might account for some reluctance to try to enforce the RPA.
But that has probably little to do with it. The person at the top of the agency, and the elected person (governor or president) who named him/her, decides what the agency is going to do, or not do, and it is clear that from the highest authority the word is out: Leave Big Business Alone, No Matter What They Do, unless the public outcry becomes so loud that we have to pretend that we are first learning about the problem and have to make it appear that we are going to do something to cure the problem.
There is no government enforcement, which means that the public's money is there for the taking, without any government officials standing guard.
Injured Competitors Do Not Complain about the Violations of Law Which Threaten the Competitors with Extinction
I often wondered why injured competitors such as Woolworth, J. C. Penney, Lechters, Ames, Bradleys, Jamesway and others do not complain about these violations of the RPA which are making them increasingly non-competitive with the market leader, Wal-Mart, and putting them out of business.
First of all, the competitors, if they are savvy, and represented by the same attorneys and accounting firms, understand that you can violate the RPA with impugnity, and probably are trying as hard as they can to violate the RPA, but haven't been able to exercise as much muscle as Wal-Mart to obtain the same level of secret rebates. Having participated in the violations, they perhaps feel that a court would not permit them to recover damages from Wal-Mart or the manufacturers under the doctrine of "unclean hands", in which the court will leave wrongdoers in the position in which they are found by the court, without any relief.
Actually, in antitrust law, the doctrine of "unclean hands" is not applied to disqualify a wrongdoer from obtaining relief. One of the reasons is that the wrongdoer has to engage in wrongdoing to stay alive as a business. See >RPA Website, article on Unclean Hands.
More importantly, these injured corporations are only pieces of paper (called a "charter" or "certificate of incorporation"), not human beings, and do not yet have the power to think. The humans which work for them, other than the C.E.O., have no power to initiate an action against competitors for violation of the RPA, and the C.E.O. probably doesn't want to do that because it might cause the manufacturers to either cut back on the secret rebates (i.e., increase the price to the C.E.O.'s corporation) or refuse to deal with the company any further, at the (illegal) insistence of the larger retailers getting the higher rebates who buy much more per year from the manufacturer.
Also, the C.E.O. wants to be able to get a job in the industry after his current company goes out of business, or fires him in an effort to find someone else to finish the job of riding the corporation into extinction.
As a result, we see that none of the major retailers blow the whistle on any of the larger competitors (with the rare exception of Target referring to Wal-Mart as "ruthless", or something like that; and Barnes & Noble's C.E.O. complaining that the book publishers are giving Wal-Mart lower per-unit prices, even though B&N buys more books than Wal-Mart).
What is needed is for injured towns and villages to start asserting their claims for damages against the major retailers. I have written a website on how this can take place, see website entitled Using One Person (or a Small Number of Persons) as Plaintiff(s) to Sue on Behalf of a Robinson-Patman Act Public or Publicly-Owned Victim Whose Officials Are Not Willing to Commence an RPA Action for the Victim Such as Ashland VA, and Kmart and Other Chains Unable to Compete with the Leading Superstore Chain
Communities Are at a Loss on How to Deal with Wal-Mart, or Even Understand that Wal-Mart is a Serious Threat
Communities throughout the United States are floundering with the problem. Their accounting and business leaders are not advising them on the problem, or are giving them the wrong advice, for whatever reasons.
Communities are suffering by the opening up of major retail chain stores, because they are there for the purpose of putting the existing competitors out of business, and are quite effective in doing that because of there unlawful lower costs (and unlimited inventory for which no payment is made until 1-2 years after the inventory is resold or returned) by the superstores.
Government action is not to be forthcoming.
Articles in the major media explaining what is happening are also not forthcoming.
Professional help has been already retained by the other side of the problem.
The remaining professionals may not have the knowledge or experience to provide any meaningful insight into the problem.
The customary attack by communities, if they can ever get together to agree on a course of attack, is to set up zoning obstacles.
These zoning obstacles are merely a form of litigation which can be overcome, and in fact can be the basis for countersuits against the community for violation of Wal-Mart's civil rights!
No, the answer is different than trying to get a majority of the townpeople in a single affected community to support a specific program.
The answer is that one person alone can bring suit to stop a major retail chain from opening up a new store in the community.
The lawsuit, of course, could have 2 or more plaintiffs, to share the costs.
The action would be for injunctive relief alone, if trying to stop a store from opening up; and the action would be for damages and injunctive relief if the store has already opened and there have been damages, such as competitors going out of business, a loss of tax revenues by the town, increased welfare costs by the town, decline in values of real estate within the town (affecting property owners), and other damages.
The action can bring one or more persons together from numerous towns in the area, even cutting across county and state lines, and can ask for and possibly obtain an injunction prohibiting the major chain from opening up within a radius of 25 miles or so from each of the plaintiffs.
Persons interested in learning more about this should look at: Using One Person (or a Small Number of Persons) as Plaintiff(s) to Sue on Behalf of a Robinson-Patman Act Public or Publicly-Owned Victim Whose Officials Are Not Willing to Commence an RPA Action for the Victim Such as Ashland VA, and Kmart and Other Chains Unable to Compete with the Leading Superstore Chain
The kind of information available in these two websites is not available from any major (or minor?) magazine, newspaper or government agency, which lack of availability from supposed reliable sources has kept communities and their leaders in a state of confusion, looking for different ways to cure their problem, when the nature of the problem and its cure is right there, staring them in the face.
The Free Press Has Been Gobbled Up by a Few Wal-Mart Wannabees Who Presumably Are Waiting in Line to Merge with Wal-Mart
Marshall McCluhan's famous dictum that "The medium is the message" may not be wholly clear to everyone but it does seem to cover our present situation: Because the trusted media are not saying anything is wrong, the viewers and readers reach the factual conclusion that Wal-Mart's growth is good for the country, that it is not illegal, and that persons and communities injured by such growth are merely predictable and desirable victims of economic progress designed to further all of us in our pursuit of life, liberty and the pursuit of happiness.
The ever-increasing mergers of the press into larger and fewer media companies, and in turn their acquisition by larger companies (to extol the virtues of monopolies and ever-increasing economic, political and social injustice), make it less possible for anyone to find out what is happening to the rights we thought were protected by the U.S. Constitution and in the state constitutions.
At one time there were about 25 daily newspapers in New York City, and now NYC is down to a basic three (NY Times, NY News, and NY Post), with a 4th daily being promised (to represent the right wing, according to reports in the other newspapers).
Many other cities, towns and villages only have a single newspaper, and a single television station, with legislation being proposed to enable the two to merge, I think.
My experience, during the past 30 years, is that the wire services, major daily newspapers, television and radio networks, and local radio and television stations do not report (or adequately report) on the way that businesses grow, in violation of law, and deprive persons of their property and civil rights. Yes, there are glimpses of what is happening, but there is no sustained criticism of the establishment or the direction in which the establishment is taking the United States. You read more about immigrant policy than you read about how jobs are being eliminated by violations of the antitrust statutes. You read instead that it is good for Americans to send their jobs overseas because in years to come the countries overseas may send some jobs back to us. You don't read anywhere that Wal-Mart's violation of the Robinson-Patman Act has destroyed an estimated 1,000,000 businesses in the United States (my estimate), and has caused a loss of millions of jobs for Americans (once again, my estimate), and has caused the vast majority of about 1 million Wal-Mart employees to work for poverty-level wages.
The press, because of its ownership and economic and political orientation, cannot be expected to lead the U.S. into a higher standard of living, more opportunity, less corporate welfare, more and better jobs for Americans.
Instead, the free press waits to be acquired by someone wanting to use the medium to sell its message to the public, through acquisition. Wal-Mart through violation of the RPA has been able to reach the top of the corporate heap; the other companies are relying more on acquiring media companies, in their quest as Wal-Mart wannabees (i.e., to get to the top in their own fields of business). Telling the public what is going on is quite inconsistent with the objectives of the owners of the press.
But the individual can do something. The individual still can fight for his/her rights by going into court to obtain injunctive relief and damages for what is taking place.
If enough people do this, it will take the profit out of violation of law, and restore many of the rights which are are losing otherwise.
If you or your company, community, friends or associates have any questions about any of the issues raised above, please contact me, Carl E. Person, right away, through any of these communications means: email@example.com, telephone number 212-307-4444 and fax number 212-307-0247.
Attorney Carl E. Person, LawMall Editor/Publisher, firstname.lastname@example.org
telephone number 212-307-4444 and fax number 212-307-0247
For Carl Person's c.v. or resume, click on Carl Person C.V.