These days are times for the Waltons of Wal-Mart to be dancing in the streets of Bentonville, Arkansas. After all, the economy is tanking and millions of people are heading for a painful few years, people are losing their homes, gasoline prices are on the rise, health care is continuing to evaporate--these are precisely the kinds of economic conditions that the Waltons of Wal-Mart thrive on. Indeed, it is the Wal-Mart economic model.
Sensing an opportunity and smelling the tragedy facing millions of people, Wal-Mart execs are moving aggressively to make sure their cash registers keep ringing:
Wal-Mart announced Tuesday that it will chop prices between 10 to 30 percent this week on groceries, electronics and other home-related products in an effort to keep its cash-strapped consumers excited about shopping.
While its rivals, including Target (TGT, Fortune 500), have seen sales decelerate dramatically in recent weeks from a consumer spending slowdown, Wal-Mart (WMT, Fortune 500) has been benefiting from more shoppers trading down to its discount stores.
The world's largest retailer recently reported that its December same-store sales rose 2.4 percent, which was at the high-end of its expectations for the month.
Not only is Wal-Mart seeing the recession as a way to draw in more cash-strapped customers, they want to exacerbate an already bad situation by encouraging people to pile on more debt:
In addition to the extra discounts on "thousands of products," the retailer said it will offer no interest for 18 months on purchases of $250 or more with a Wal-Mart Credit Card.
No interest? Does that sound familiar? Yes, that was precisely what brokers and lenders were saying to people who bought homes they could not afford--you can do so right away with almost no money down and zero or close-to-zero interest...except that the interest payments exploded to impossible levels after a few years.
In many ways, this is the perfect economic storm for Wal-Mart. Millions of people have nothing left to hang on to. They have no cash left. No home equity left to draw on. Gasoline prices are on the rise. Wages aren't going anywhere in real terms. Hundreds of thousands of workers will likely lose their jobs in the coming year.
It's a beautiful thing for Wal-Mart.
The company can discriminate against women.
It can dodge taxes that the rest of us pay.
You can keep offering low prices on goods made in China because people in China have no real protections.
And, glory of all glories, when things really get rough for most of the population, your cash registers will hum along, ringing with the sounds of misery and poverty. The Waltons will rake in billions more--even as more people become impoverished. Ain't the free-market great?