Tag Archives: WalMart

The US Healthcare System Is Hemorrhaging: It is Bleeding Close to $1 TRILLION a Year, by Dagny Taggart

Perhaps someday we’ll find the solution for efficient, affordable health care and health insurance: let a free market provide them. Until then, we’re stuck with the current monstrosity. From Dagny Taggart at theorganicprepper.com:

The Affordable Care Act continues to be anything but affordable.

In fact, the healthcare system in the US is in terrible financial shape.

A new study has revealed that waste and needless spending in America’s healthcare system could amount to almost $1 trillion each year. This exceeds the total US military expenditures in 2019 – the world’s largest defense budget – and as much as all of Medicare and Medicaid combined.

This news should not shock anyone.

If you are one of the hundreds of thousands of Americans who are in serious debt due to medical expenses, you are likely not surprised by the new study’s findings. As we recently reported, 66.5 percent of all bankruptcies in the US are tied to medical issues, either because of high costs for care or time out of work. An estimated 530,000 families turn to bankruptcy each year because of medical issues and bills.

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More of the Unrelenting Data Collection Toward Totalitarian Rule, by Jeremiah Johnson

Now the government and corporations want your DNA. From Jeremiah Johnson at shtfplan.com:

Totalitarian – Of or being a form of government in which the political authority exercises absolute control over all aspects of life and opposition is outlawed; a practitioner or supporter of such a government.

– American Heritage Dictionary, 3rd Ed.

We have almost reached the point where the country can be referred to as “totalitarian” in accordance with the definition provided. Incrementally, it creeps forward: the “soft” tyranny. Curing, refining itself, and hardening, there will be a point of no return that is reached…a point where it has metastasized until it is both all encompassing and ubiquitous.

The problem is twofold: the incremental spread as mentioned, and the complacency and inability of people to recognize it for what it is. Someone posted a comment recently with a paragraph from Solzhenitsyn’s “Gulag Archipelago” where the author regretfully lamented the complacency displayed by the Russians as the country turned Communist overnight. His regret was that the citizenry could have stopped it with hatchets and pitchforks at that point if they had acted and been of one accord. I have recommended it as a “must read,” and strongly advise you to consider it as a “window” to what is happening in the U.S.

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Amazon Online Grocery Boom? Not So Fast… by Wolf Richter

A lot of money gets spent on groceries, but the percentage that falls to grocers bottom lines is surprisingly small. Now, with Amazon’s purchase of Whole Foods and its intention to expand online grocery shopping, that percentage will probably get even smaller. A shakeout is coming. From Wolf Richter at wolfstreet.com:

All big gorillas have been trying, but consumers just don’t want to.

Maybe Amazon has figured out that you’re not the only one who isn’t buying groceries online. Maybe it has figured out, despite all the money it has thrown at it, that selling groceries online is a very tough nut to crack. And no one has cracked it yet.

Numerous companies have been trying. Safeway started an online store and delivery service during the dotcom bubble and has made practically no headway. A plethora of startups, brick-and-mortar retailers, and online retailers have tried it, including the biggest gorillas of all — Walmart, Amazon, and Google. Google is trying it in conjunction with Costco and others. It just isn’t catching on.

And this has baffled many smart minds. Online sales in other products are skyrocketing and wiping out the businesses of brick-and-mortar retailers along the way. But groceries?

That’s one of the reasons Amazon is eager to shell out $14.7 billion to buy Whole Foods, its biggest acquisition ever, dwarfing its prior biggest acquisition, Zappos, an online shoe seller, for $850 million. Amazon cannot figure out either how to sell groceries online though it has tried for years. Now it’s looking for a new model — namely the old model in revised form?

This is why everyone who’s online wants to get a piece of the grocery pie: The pie is big. Monthly sales at grocery stores in June seasonally adjusted were $53 billion. For the year 2016, sales amounted to $625 billion:

But it’s going to be very tough for online retailers to muscle into this brick-and-mortar space, according to Gallup, based on its annual Consumption Habits survey, conducted in July. Consumers just aren’t doing it:

  • Only 9% of US households say they order groceries online at least once a month, either for pickup or delivery.
  • Only 4% do so at least once a week.
  • By contrast, someone in nearly all households (98%) goes to brick-and-mortar grocery stores at least once a month, and 83% go at least once a week.

To continue reading: Amazon Online Grocery Boom? Not So Fast…

WalMart Store Closures Leave Elderly Villagers With No Grocery Stores, Pharmacies, by Tyler Durden

Sometimes good intentions have unintended, and negative consequences. The people who fight WalMart openings are generally not the same people (employees and customers) who feel the pain when WalMart closes. From Tyler Durden at zerohedge.com:

Last week, WalMart doubled down on the wage hike debacle when the world’s largest retailer decided to give everyone a raise in February.

The all-in cost will be around $2.7 billion. While some were surprised at the move, it was easy to see coming. Indeed, we’ve long said that the company’s decision to hike wages for its lowest-paid employees would eventually necessitate similar raises for workers higher up the corporate ladder.

“The wage hierarchy has been distorted and that distortion had nothing to do with merit,” we wrote, back in August. “Higher paid employees don’t understand why everyone under them in the corporate structure suddenly makes more money and if people who are higher up on the corporate ladder don’t receive raises that keep the wage hierarchy proportional, they may simply quit which means that, for Wal-Mart, raising the minimum for the lowest paid workers to just $9/hour will end up costing the company around $1.5 billion if you include the additional raises the company will have to give to higher paid employees in order to retain their ‘talents’ and avoid a mid-level management mutiny.”

Sure enough, that’s exactly what happened – only the cost is far higher than even we anticipated.

The problem is that when your business model revolves around “everyday low prices,” each and every additional penny you give to your employees is a penny that’s not passed on to customers as savings. That’s a problem, given how competitive the discount retail space has become. On top of that, margins are already razor thin and pinching them further has a dramatic impact on profitability as evidenced by the shocking guidance cut WalMart delivered in October.

Initially, the company sought to make up for the money “lost” to the wage hike by squeezing the supply chain. When efforts to extract more savings from vendors weren’t sufficient, WalMart simply fired some folks, first at the home office in Bentonville and then at 269 stores where 16,000 employees learned this month that they no longer have a job.

But the employees at the shuttered stores aren’t the only ones affected by the decision to close hundreds of locations. Also out in the cold are local customers who in some cases will now be forced to effectively commute to the grocery store and pharmacy as the family-owned businesses which used to serve small communities were put out of business when WalMart came to town.

“Though mom-and-pop stores have steadily disappeared across the American landscape over the past three decades as the mega chain methodically expanded, there was at least always a Wal-Mart left behind to replace them,” Bloomberg writes. “Now the Wal-Marts are disappearing, too.”

Bloomberg tells the story of The Town’n Country grocery in Oriental, North Carolina which was “a local fixture” for nearly half a century – until WalMart showed up.

The Town’n Country closed last October after sales collapsed by a third. “They ruined our lives,” Renee Ireland Smith, who ran Town’n Country said. “They came in here with their experiment and ruined us,” she laments, referencing WalMart’s foray into smaller stores called “WalMart Express.” Here’s more:

“I was devastated when I found out. We had a pharmacy and a perfectly satisfactory grocery store. Maybe Wal-Mart sold apples for a nickel less,” said Barb Venturi, mayor pro tem for Oriental, with a population of about 900. “If you take into account what no longer having a grocery store does to property values here, it is a significant impact for us.”

Oriental is hardly alone. Wal-Mart Stores Inc. said on Jan. 15 it would be closing all 102 of its smaller Express stores, many in isolated towns, to focus on its supercenters and mid-sized Neighborhood Markets.

That’s a big problem for small towns, often with proportionately large elderly populations. For the older folks of Oriental — a retirement and summer vacation town along the inter-coastal waterway — the next-nearest grocery and pharmacy is a 50-minute round-trip drive.

Towns like Clearwater, Kansas, and Merkel, Texas, are among those hit by Wal-Mart closures. In Godley, Texas, with a population of roughly 1,000, Wal-Mart opened a small store just a year ago. Within months, the only other grocery store in town — Brookshire Brothers, part of an employee-owned regional chain — shut its doors. Now with Wal-Mart gone, the closest full-service grocery store is about a 20-minute drive away.

This is just one more example of why improving the quality of life for poorly paid hourly employees isn’t as simple as implementing across-the-board wage hikes.

To continue reading: WalMart Store Closures Leave Elderly Villagers with No Grocery Stores, Pharmacies

 

 

A Beleaguered Wal-Mart Sues A Broke Puerto Rico For “Astonishing” Tax Hike, by Tyler Durden

“Astonishing” tax hikes will be the order of the day as governments go broke. They’ll kill a lot of economic activity and won’t generate near the revenues politicians and bureaucrats will be counting on. They will express surprise and raise counterproductive taxes some more. From Tyler Durden at zerohedge.com:

It’s always amusing when unforeseen circumstances conspire to bring two previously disparate stories together in one hilarious boondoggle.

As regular readers are no doubt aware, Puerto Rico is broke. “Let us be clear: We have no cash left,” governor Alejandro Garcia Padilla told Congress last week, after the commonwealth used an absurd revenue clawback end-around to avoid defaulting on some $345 million in debt that came due on Tuesday.

The island owes another $300 million on January 1st and what might this week’s payment so important was that of the $354 million coming due, around $273 million was GO debt, and defaulting on that would mean a cascade of ugly litigation.

Of course the use of the clawback – which effectively allows the island to divert revenue earmarked for other bonds to GO debt repayments – is a bit like Greece tapping its IMF reserves to pay the IMF. That is, there’s a palpable sense of desperation here and the situation is going to get immeasurably worse without some manner of federal intervention.

Ok, so that’s Puerto Rico.

Regular readers are also no doubt aware that Wal-Mart has gotten itself into trouble this year after bowing to calls for increased wages for its lowest-paid employees. Those wage hikes (which are set to cost the retailer around $1.5 billion over two years) pinched margins, prompting the company to tighten the screws on suppliers with a series of measures that culminated in Wal-Mart demanding that its vendors pass on any savings they might have derived from the yuan deval.

The company also learned that when you hike wages for some employees but not others, the wage hierarchy gets thrown out of whack prompting workers higher up the ladder to either quit, or demand more money to restore the compensation pecking order.

Unable to cope and unable to squeeze anything else out of the supply chain without triggering a veritable vendor mutiny, Wal-Mart was forced to cut hours and then, to cut jobs at the Bentonville office.

It all fell apart in October when the retailer slashed its guidance, triggering a harrowing decline in the stock.

Well don’t look now, but a beleaguered Wal-Mart is suing a beleaguered Puerto Rico after the latter’s attempt to lift government revenue by raising taxes pushed the company’s tax burden in the commonwealth to nearly 92% of net income.

To continue reading: A Beleagured Wal-Mart Sues A Broke Puerto Rico For “Astonishing” Tax Hike

Economics 102: WalMart Cuts Worker Hours After Hiking Minimum Wages, by Tyler Durden

At most colleges the laws of supply and demand are taught in beginning microeconomics, which is usually Economics 101. Raise the price of something, and less of it will be demanded. Raise the price (wages) of labor, and something has to give, especially for the world’s low-cost retailer. From Tyler Durden, at zerohedge.com:

This year, some American executives who heeded loud calls for across-the-board wage hikes for America’s lowest-paid workers received a complimentary refresher course in undergrad economics courtesy of the free market.

Take Dan Price for instance, the 31-year old CEO of Seattle-based Gravity Payments Systems who found out the hard way that setting the pay floor at $70K comes with all manner of unintended consequences.

And then there’s Wal-Mart.

Earlier this year, the retail behemoth became one of several corporate heavyweights to raise wages for its meagerly compensated workers, around 500,000 of which are now set to receive at least $9/hour and $10/hour by Q1 2016. The move will cost somewhere around $1 billion this year.

Now one thing that should have been abundantly clear from the start is that if ever there were an employer that could ill-afford a $1 billion across-the-board pay raise without immediately making up the difference by either firing some employees, cutting hours, or squeezing the supply chain it’s Wal-Mart. After all, they’re the “low price leader”, and you don’t hold on to that title by passing labor costs on to customers.

Predictably, the company moved to extract more “value” from its suppliers and when that didn’t prove sufficient, the folks in Bentonville brought in the “plumbers.”

To continue reading; WalMart Cuts Worker Hours After Hiking Wages