Name-calling

For the trade unions, ‘Walmartization’ bears as its identification tag union busting and social dumping. It is evidence of Darwinian theory hard at work. Directed at Woolworths (and, until recently, Pick n Pay), it is also SACCAWU’s battle-cry of the moment.

‘Walmartization’ is a bulky, but ambiguous label. One can add countless charges to the load. For me, the most outstanding flip side to the coin may be encapsulated in a single phrase: getting the best deal. By dint of its market size and power, Pick n Pay is able to drive supplier efficiency and pass the gains to consumers in the form of lower prices. And, in consumer terms, price carries great weight. Unlike the products of employee welfare or social responsibility initiatives, price is visible, tangible and verifiable.

What’s more, the cheapest goods – food and basic everyday necessities – are of the greatest value to the least affluent. Earlier this year, Pick n Pay introduced a subsidy on such items to help consumers counter the side-effects of food inflation, interest rate increases and rising debt. Whether that decision was inspired by altruistic sentiment or capitalist instinct is really beside the point.

Woolworths, which makes no bones about its higher LSM target market, has demonstrated that it is not immovable on price either. Indeed, following the publication of the retailer’s performance for the six months to June, CEO Simon Susman acknowledged that the retailers’ battle for survival had been reduced to a fight on price. And it is the retailer’s size that enabled it to adjust entry level prices accordingly.

It’s heartening to observe the industry players strategise, adapt and problem-solve. It’s a sign that competition is alive and well. And, when one considers that the typical behaviour of a predatory corporation is to cut prices in order to stamp out the competition - only to raise them again later - our ‘home-grown Wal-Marts’ seem to have more in common with relatives higher up the family tree.