New Internationalist

Happy birthday retail monsters

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Discount stores have been in North America for half a century but there’s not a lot to celebrate says Wayne Roberts.

Photo: Joe+Jeanette Archie, under a CC License
A Kmart store in 1979 Photo: Joe+Jeanette Archie, under a CC License

At a certain age, people stop making a fuss about their birthday, and maybe it’s the same with mega-corporations. 2012 is the 50th birthday of several of the biggest retailers in the world, and of the discount revolution they started, but no-one’s throwing a big party.

Few stores can compete with two of the giant-killers that launched back in 1962, Wal Mart and Target. They crushed most of the once-famous department stores that anchored shopping in the downtowns of most cities in North America, but which now barely survive on about three per cent of sales. Since then they’ve even finished off fellow discounters such as Kmart, which seemed most likely to succeed when it was born in 1962, but didn’t make it to 50.

Few forces can rival discount retail for transformative social, economic and environmental impact. It has literally and almost single-handedly reconfigured the shape of cities and scale of living standards across North America and in many places around the world.

The age of consumerism

What else was happening in 1962? Other than the Cuban Missile Crisis, Marilyn Monroe’s death, I Love Lucy’s debut, the Beatles’ first single, the opening of the Trans Canada Highway, a new car costing $2,500, a new house costing $15,000, a time when most moms were fulltime housewives, the average dad made $6,000 a year, and my highschool job as a stockboy at Simpson’s, in the epicenter of Toronto’s downtown?

What was happening was the powerful mix of suburbia and consumerism, both in their heyday, each feeding off the other. From the late 1940s to early 1970s, prosperity was the norm. Wages were on a steady climb up, credit was loose, installment buying was all the rage, and all politicians agreed that governments and consumers had a duty to spend to keep the economy humming.

When fewer things were bought, people paid more to get quality. When everything had to be bought, no budget could survive without buying everything on discount

In 1962, US President Kennedy pushed a giant tax cut to buoy consumer spending and head off recession. The idea that people would make toys, bake bread, build home additions, knit sweaters, repair cars, mend socks, grow food, wash dishes or clothes by hand, or cook from scratch was obsolete thinking from the impoverished past. Equally obsolete was the notion of consumer rights, though Ralph Nader burst onto the scene with that banner a few years after discounters dug in.

But mass consumerism killed the goose that lay the golden egg. The goose was the less is more rule. When fewer things were bought, people paid more to get quality. When literally everything had to be bought, no normal budget could survive without shopping to buy everything on discount. This was the huge opening discount retailers filled. They upped the self-service, stripped down the free delivery, free wrapping, easy returns and skilled sales staff to bring prices down.

Photo: ILoveMyPiccolo, under a CC License.
Photo: ILoveMyPiccolo, under a CC License.

Suburbia was the perfect landscape for discount retailing. Suburban developers and planners banned mixed residential/retail/work land use, thereby moving all shopping into malls that rented space almost exclusively to national and global specialty stores. Malls, commonly owned by corporate conglomerates, were commonly anchored by at least one supermarket (wet goods), one department store (for dry goods) and one major discounter

The corporate power that dominates suburban party politics and cultural politics to this day is vested in these malls, not as showy as the bank and other towers downtown, but key players when it comes to how local elections and cultural politics work in the areas of cities where most people live.

Discount winners and losers

Suburbs and the discounter business model played off each other in many ways. Discounters hired suburban housewives part-time, for example, thereby driving down wage costs and establishing the norm of employment without job security or fringe benefits.

Most important, discounting was maintained by revolutionizing the role of retailers. Instead of being passive entrepreneurs who bought in bulk, sold to individuals and kept a small margin for the middleperson role, discounters used volume purchases to dictate lower prices to wholesalers, who in turn dictated lower wages to employees and suppliers – eventually going offshore to get the wages down to rock bottom.

The echo bouncing off discount box stores is the ‘giant sucking sound’ of manufacturing jobs leaving ‘the industrialized world,’ – more properly, the de-industrializing world

The production monopolies that called the shots during the 1950s were gradually decimated in terms of domestic employment as the new retail giants took charge. Oligopoly, where two or three producers (of toothpaste, beer or pop, for example) duke it out in advertising budgets rather than wages or prices, was displaced by what’s called ‘monopolistic competition’, much more dog-eat-dog and tooth-and-claw than kinder gentler oligopolies that were often unionized.

The echo bouncing off discount box stores is the ‘giant sucking sound’ of manufacturing jobs leaving what’s still called, out of force of habit, ‘the industrialized world,’ but is, more properly, the de-industrializing world. As well as production jobs, the jobs that once went to tens of thousands of independent main street retailers in solo shops also disappeared, making for a double whammy of lost employment. Combined, discounter-driven elimination of formerly well-paid production and retail employment accounts for the fact that real incomes for most working people stopped going up about 40 years ago

Who would have guessed back in 1962 who and what would end up being discounted?

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